<PAGE> 1
As filed with the Securities and Exchange Commission on May 1, 1996
Registration No. 33-44964
Investment Company Act File No. 811-6526
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. ___ /___/
Post-Effective Amendment No. 26 / X /
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 28 / X /
(Check appropriate box or boxes)
THE COVENTRY GROUP
----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
----------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (614) 470-8000
--------------
Jeffrey L. Steele, Esq.
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
----------------------------------------------------------------------
(Name and Address of Agent for Service)
Copies to:
Walter B. Grimm
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
It is proposed that this filing will become effective (check appropriate box)
<TABLE>
<S> <C> <<C> <C>
[X] Immediately upon filing pursuant to [ ] on ( ) pursuant to paragraph
paragraph (b), or (b), or
[ ] 75 days after filing pursuant to [ ] on ( ) pursuant to paragraph
paragraph (a), or (a), of Rule 485.
- ------------------
</TABLE>
* Registrant has registered an indefinite number of shares of all series
then existing or subsequently established under the Securities Act of
1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940,
which it expressly reaffirms. Registrant filed the notice required by
Rule 24f-2 with respect to its fiscal year ended March 31, 1995, on
May 25, 1995, and Registrant intends to file the Notice required by
Rule 24f-2 with respect to its fiscal year ended March 31, 1996 within
sixty days of March 31, 1996.
<PAGE> 2
CROSS REFERENCE SHEET
---------------------
The enclosed materials relate only to the seven AMCORE Mutual Funds
which consist of: the AMCORE Vintage U.S. Government Obligations Fund, AMCORE
Vintage Fixed Income Fund, AMCORE Vintage Intermediate Tax-Free Fund, AMCORE
Vintage Equity Fund, AMCORE Vintage Balanced Fund, AMCORE Vintage Aggressive
Growth Fund and AMCORE Vintage Fixed Total Return Fund, each of which are
separate investment series of the Coventry Group (the "Group"). Information
relating to the Group's other investment series, consisting of Brenton U.S.
Government Money Market Fund; Brenton Intermediate U.S. Government Securities
Fund; Brenton Intermediate Tax-Free Fund; Brenton Value Equity Fund; Ernst Asia
Fund; Ernst Global Resources Fund; Ernst Global Asset Allocation Fund; Ernst
Global Smaller Companies Fund; Ernst Australia-New Zealand Fixed Income Fund;
and The Shelby Fund, is contained in previously filed Post-Effective
Amendments.
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C> <C>
1. Cover page.................. Cover Page
2. Synopsis.................... Fee Table
3. Condensed Financial
Information................. Financial Highlights
4. General Description of
Registrant.................. Investment Objective and
Policies; Investment Restrictions;
General Information -
Description of the Group and Its Shares
5. Management of the Fund...... Management of the Group
5A. Management's Discussion of
Fund Performance............ Provided in Registrant's Annual
Report to Shareholders
6. Capital Stock and Other
Securities.................. How to Purchase and Redeem Shares;
Dividends and Taxes; General Information -
Description of the Group and Its Shares;
General Information - Miscellaneous
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
7. Purchase of Securities
Being Offered............... Valuation of Shares; How to Purchase and Redeem Shares
8. Redemption or Repurchase.... How to Purchase and Redeem Shares
9. Pending Legal Proceedings... Inapplicable
</TABLE>
<TABLE>
<CAPTION>
Statement of Additional
-----------------------
Form N-1A Part B Item Information Caption
- --------------------- -------------------
<S> <C> <C>
10. Cover Page.................. Cover Page
11. Table of Contents.......... Table of Contents
12. General Information and
History..................... The Coventry Group;
Additional Information
13. Investment Objectives and
Policies.................... Investment Objective and Policies
14. Management of the Fund...... Management of the Group -
Trustees and Officers
15. Control Persons and Principal
Holders of Securities....... Additional Information -
Description of Shares
16. Investment Advisory and other
Services.................... Management of the Group
17. Brokerage Allocation........ Management of the Group -
Portfolio Transactions
18. Capital Stock and other
Securities.................. Additional Information -
Description of Shares
19. Purchase, Redemption and
Pricing of Securities
Being Offered............... Additional Purchase and
Redemption Information
20. Tax Status.................. Additional Information -
Additional Tax Information
</TABLE>
- 2 -
<PAGE> 4
<TABLE>
<S> <C> <C>
21. Underwriters................ Management of the Group -
Distributor
22. Calculation of Performance
Data........................ Additional Information
23. Financial Statements........ Financial Statements
</TABLE>
- 3 -
<PAGE> 5
[AMCORE LOGO]
U.S. GOVERNMENT OBLIGATIONS FUND
FIXED INCOME FUND
INTERMEDIATE TAX-FREE FUND
EQUITY FUND
BALANCED FUND
AGGRESSIVE GROWTH FUND
FIXED TOTAL RETURN FUND
For current yield, purchase,
and redemption
information, call (800)
438-6375.
The Coventry Group (the "Group") is an open-end management investment
company which issues its shares in separate classes. Each class relates to a
separate portfolio of assets. The portfolios advised by AMCORE Capital
Management, Inc. ("AMCORE") are the AMCORE Vintage U.S. Government Obligations
Fund (the "U.S. Government Fund"), the AMCORE Vintage Fixed Income Fund (the
"Fixed Income Fund"), the AMCORE Vintage Intermediate Tax-Free Fund (the
"Tax-Free Fund"), the AMCORE Vintage Equity Fund (the "Equity Fund"), the AMCORE
Vintage Balanced Fund (the "Balanced Fund"), the AMCORE Vintage Aggressive
Growth Fund (the "Aggressive Growth Fund") and the AMCORE Vintage Fixed Total
Return Fund (the "Fixed Total Return Fund") (collectively, the "Funds").
The U.S. Government Fund's investment objective is to seek current income
consistent with maintaining liquidity and stability of principal. The U.S.
Government Fund invests exclusively in short-term U.S. Treasury bills, notes and
other short-term obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and repurchase agreements with respect thereto.
THE U.S. GOVERNMENT FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00
PER SHARE, BUT THERE CAN BE NO ASSURANCE THAT NET ASSET VALUE WILL NOT VARY. AN
INVESTMENT IN THE U.S. GOVERNMENT FUND IS NEITHER INSURED NOR GUARANTEED BY THE
UNITED STATES GOVERNMENT.
The investment objective of the Fixed Income Fund is to seek total return
consistent with the production of current income and the preservation of
capital. The Fixed Income Fund invests primarily in fixed income securities that
have a stated or remaining maturity of 15 years or less and expects to maintain
a dollar-weighted average portfolio maturity of 4 to 6 years.
The investment objective of the Tax-Free Fund is to seek current income,
consistent with the preservation of capital, that is exempt from federal income
taxes. The Tax-Free Fund invests primarily in a diversified portfolio of
intermediate-term tax-free fixed income securities.
The investment objective of the Equity Fund is long-term capital
appreciation. The Equity Fund invests primarily in a diversified portfolio of
equity securities.
The investment objective of the Balanced Fund is to seek long-term growth of
capital and income. The Balanced Fund invests primarily in a diversified
portfolio of equity securities and high quality fixed income securities.
The investment objective of the Aggressive Growth Fund is long-term capital
growth. The Aggressive Growth Fund invests primarily in common stocks and other
equity-type securities of small, medium and large capitalized companies that
exhibit a strong potential for price appreciation relative to other equity
securities.
The investment objective of the Fixed Total Return Fund is to seek long-term
total return. The Fixed Total Return Fund invests primarily in a diversified
portfolio of fixed income securities including certain types of fixed income
securities that may exhibit greater volatility than those invested in by the
Fixed Income Fund.
AMCORE Capital Management, Inc., Rockford, Illinois, acts as the investment
adviser to the Funds. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, AMCORE FINANCIAL, INC., AMCORE BANK N.A., ROCKFORD OR
THEIR AFFILIATES, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN THE
FUNDS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
BISYS Fund Services Inc., Columbus, Ohio ("the Distributor") acts as the
Fund's administrator and distributor. BISYS Fund Services Ohio Inc., Columbus,
Ohio, acts as the Fund's transfer agent (the "Transfer Agent") and performs
certain accounting services for the funds.
Additional information about the Funds, contained in a Statement of
Additional Information, has been filed with the Securities and Exchange
Commission (the "Commission") and is available upon request without charge by
writing to the Funds at their address or by calling the Funds at the telephone
number shown above. The Statement of Additional Information bears the same date
as this Prospectus and is incorporated by reference in its entirety into this
Prospectus.
This Prospectus sets forth concisely the information about the Funds that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference.
------------------
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 May 1, 1996
<PAGE> 6
PROSPECTUS SUMMARY
<TABLE>
<S> <C>
The Funds................................. AMCORE Vintage U.S. Government Obligations Fund
(the "U.S. Government Fund"), AMCORE Vintage
Fixed Income Fund (the "Fixed Income Fund"),
AMCORE Vintage Intermediate Tax-Free Fund (the
"Tax-Free Fund"), AMCORE Vintage Equity Fund
(the "Equity Fund"), AMCORE Vintage Balanced
Fund (the "Balanced Fund"), AMCORE Vintage Ag-
gressive Growth (the "Aggressive Growth Fund")
and AMCORE Vintage Fixed Total Return Fund
(the "Fixed Total Return Fund"), each a
diversified investment portfolio
(collectively, the "Funds") of The Coventry
Group, an open-end, management investment
company organized as a Massachusetts business
trust.
Shares Offered............................ Shares of beneficial interest ("Shares") of the
Funds.
Offering Price............................ The public offering price of the U.S. Government
Fund's Shares is equal to the net asset value
per Share, which the U.S. Government Fund will
seek to maintain at $1.00.
The public offering price of the Fixed Income
Fund, the Tax-Free Fund, the Equity Fund, the
Balanced Fund, the Aggressive Growth Fund and
the Fixed Total Return Fund's Shares is equal
to the net asset value per Share.
Minimum Purchase.......................... $1,000 minimum for the initial investment with a
$50 minimum for subsequent investments. (See
"HOW TO PURCHASE AND REDEEM SHARES-- Purchases
of Shares and Auto Invest Plan" for a
discussion of lower minimum purchase amounts).
Investment Objective...................... The U.S. Government Fund seeks current income
consistent with maintaining liquidity and
stability of principal.
The Fixed Income Fund seeks total return
consistent with the production of current
income and the preservation of capital.
The Tax-Free Fund seeks current income,
consistent with the preservation of capital,
that is exempt from federal income taxes.
The Equity Fund seeks long-term capital
appreciation.
The Balanced Fund seeks long-term growth of
capital and income.
</TABLE>
2
<PAGE> 7
<TABLE>
<S> <C>
The Aggressive Growth Fund seeks long-term
capital growth.
The Fixed Total Return Fund seeks long-term
total return. Total return includes a combination
of interest income from the Fund's underlying
fixed income securities, appreciation in the
value of these fixed income securities and
gains realized upon the sales of such
securities.
Investment Policy......................... The U.S. Government Fund invests exclusively in
short-term U.S. Treasury bills, notes and other
short-term obligations issued or guaranteed by
the U.S. Government or its agencies or
instrumentalities, and repurchase agreements
with respect thereto.
Under normal market conditions, the Fixed Income
Fund invests primarily in fixed income
securities that have a stated or remaining
maturity of 15 years or less and expects to
maintain a dollar-weighted average portfolio
maturity of 4 to 6 years.
Under normal market conditions, the Tax-Free
Fund invests primarily in tax-exempt
obligations that have a stated maturity of 25
years or less and expects to maintain a
dollar-weighted average portfolio maturity of
5 to 9 years.
Under normal market conditions, the Equity Fund
invests primarily in equity securities of
large capitalization companies with strong
earnings potential.
Under normal market conditions, the Balanced
Fund invests primarily in a diversified
portfolio of equity securities and high
quality fixed income securities.
Under normal market conditions, the Aggressive
Growth Fund invests primarily in equity
securities of small, medium and large
capitalized companies that exhibit a strong
potential for price appreciation relative to
other equity securities.
Under normal market conditions, the Fixed Total
Return Fund invests primarily in a diversified
portfolio of fixed income securities including
certain types of fixed income securities that
may exhibit greater volatility than those
invested in by the Fixed Income Fund.
</TABLE>
3
<PAGE> 8
<TABLE>
<S> <C>
Investment Adviser........................ AMCORE Capital Management, Inc., Rockford,
Illinois.
Dividends................................. The U.S. Government Fund intends to declare
dividends from net income daily and pay such
dividends monthly. The Fixed Income Fund and
the Tax-Free Fund intend to declare dividends
from net investment income and pay such
dividends monthly. The Equity Fund, the
Balanced Fund, the Aggressive Growth Fund and
the Fixed Total Return Fund intend to declare
dividends from net investment income quarterly
and pay such dividends quarterly.
Distributor............................... BISYS Fund Services Inc., Columbus, Ohio.
</TABLE>
4
<PAGE> 9
FEE TABLE
<TABLE>
<CAPTION>
U.S.
GOVERNMENT FIXED INCOME TAX-FREE EQUITY
FUND FUND FUND FUND
---------- ------------- -------- ------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price).......................................... 0% 0% 0% 0 %
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................... 0% 0% 0% 0 %
Deferred Sales Load (as a percentage of original purchase
price or redemption proceeds, as applicable)............. 0% 0% 0% 0 %
Redemption Fees (as a percentage of amount redeemed, if
applicable).............................................. 0% 0% 0% 0 %
Exchange Fee............................................... $ 0 $ 0 $ 0 $ 0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees............................................ .40% .60% .60% .75 %
12b-1 Fees(2).............................................. .00% .00% .00% .00 %
Other Expenses............................................. .61% .63% .73% .61 %
---------- ------ -------- ------
Total Fund Operating Expenses After Waivers(3)............. 1.01% 1.23% 1.33% 1.36 %
=========== ============== ======== ======
</TABLE>
EXAMPLE
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
U.S. Government Fund............................................ $10 $32 $56 $124
Fixed Income Fund............................................... $13 $39 $68 $149
Tax-Free Fund................................................... $14 $42 $73 $160
Equity Fund..................................................... $14 $43 $74 $164
</TABLE>
The purpose of the above table is to assist a potential purchaser of a Fund's
Shares in understanding the various costs and expenses that an investor in a
Fund will bear directly or indirectly. The table has been restated to reflect
the current fees for the Funds. Such expenses do not include any fees charged by
AMCORE Bank N.A., Rockford ("AMCORE Bank"), AMCORE Trust Company or any of their
affiliates to customer accounts which may have invested in Shares of the Fund.
See "MANAGEMENT OF THE GROUP" and "GENERAL INFORMATION" for a more complete
discussion of the Shareholder transaction expenses and annual operating expenses
for the Fund. 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) A Participating Organization (as defined in this Prospectus) or a Bank (as
defined in this Prospectus) may charge a Customer's (as defined in the
Prospectus) account fees for automatic investment and other investment
management services provided in connection with investment in the Fund.
(See "HOW TO PURCHASE AND REDEEM INVESTOR SHARES--Purchases of Shares.")
(2) The Group has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which a Fund is authorized to pay or reimburse the
Distributor a periodic amount calculated at an annual rate not to exceed
0.25% of the average daily net assets of such Fund. Currently, however, it
is intended that no such amounts will be paid under the Plan by any of the
Funds. Shareholders will be given at least 30 days' notice prior to the
payment of any fees under the Plan. As a result of expenses payable in
connection with the Plan, it is possible that long-term shareholders may
pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers.
(3) Absent the reduction of distribution fees, "Total Fund Operating Expenses"
as a percentage of average daily net assets would have been 1.26% for the
U.S. Government Fund, 1.48% for the Fixed Income Fund, 1.58% for the
Tax-Free Fund and 1.61% for the Equity Fund.
5
<PAGE> 10
<TABLE>
<CAPTION>
AGGRESSIVE FIXED
BALANCED GROWTH TOTAL RETURN
FUND FUND FUND
-------- ---------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)............................................................ 0% 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage
of offering price)................................................ 0% 0% 0%
Deferred Sales Load (as a percentage of original purchase price or
redemption proceeds, as applicable)............................... 0% 0% 0%
Redemption Fees (as a percentage of amount redeemed, if
applicable)....................................................... 0% 0% 0%
Exchange Fee........................................................ $ 0 $ 0 $ 0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees..................................................... 0.75% 0.95% 0.75%
12b-1 Fees After Fee Waivers(2)..................................... 0.00% 0.00% 0.00%
Other Expenses...................................................... 0.85% 0.80% 0.71%
-------- ----- -----
Total Fund Operating Expenses After Fee Waivers(3).................. 1.60% 1.75% 1.46%
======== ========== ============
</TABLE>
EXAMPLE
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Balanced Fund....................................................................... $ 16 $50
Aggressive Growth Fund.............................................................. $ 18 $55
Fixed Total Return Fund............................................................. $ 15 $46
</TABLE>
The purpose of the above table is to assist a potential purchaser of a Fund's
Shares in understanding the various costs and expenses that an investor in
a Fund will bear directly or indirectly. Such expenses do not include any
fees charged by AMCORE Bank N.A., Rockford ("AMCORE Bank"), AMCORE Trust
Company or any of their affiliates to customer accounts which may have
invested in Shares of the Fund. See "MANAGEMENT OF THE GROUP" and "GENERAL
INFORMATION" for a more complete discussion of the Shareholder transaction
expenses and annual operating expenses for the Fund. 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) A Participating Organization (as defined in this Prospectus) or a Bank (as
defined in this Prospectus) may charge a Customer's (as defined in the
Prospectus) account fees for automatic investment and other investment
management services provided in connection with investment in the Fund.
(See "HOW TO PURCHASE AND REDEEM INVESTOR SHARES--Purchases of Shares.")
(2) The Group has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which a Fund is authorized to pay or reimburse the
Distributor a periodic amount calculated at an annual rate not to exceed
0.25% of the average daily net assets of such Fund. Currently, however, it
is intended that no such amounts will be paid under the Plan by any of the
Funds. Shareholders will be given at least 30 days' notice prior to the
payment of any fees under the Plan. As a result of expenses payable in
connection with the Plan, it is possible that long-term shareholders may
pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers.
(3) Absent the waiver of the full amount of distribution fees during the
current fiscal year, it is estimated that "Total Fund Operating Expenses,"
as a percentage of average daily net assets, would have been 1.85% for the
Balanced Fund, 2.00% for the Aggressive Growth Fund and 1.71% for the Fixed
Total Return Fund.
6
<PAGE> 11
FINANCIAL HIGHLIGHTS
The tables below set forth certain financial data, other operating
information and investment results for each of the Funds since their inception
expressed in one share outstanding throughout the period. The Financial
Highlights contained in the tables below are derived from the financial
statements audited by Ernst & Young LLP, independent auditors for the Funds. The
Financial Highlights should be read in conjunction with the financial
statements, related notes, and other financial information included
in the Statement of Additional Information.
<TABLE>
<CAPTION>
U.S. GOVERNMENT FUND
---------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 21, 1992
MARCH 31, MARCH 31, MARCH 31, TO MARCH 31,
1996 1995 1994 1993(1)
----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 1.000 $ 1.000 $ 1.000 $ 1.000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................. .051 .042 .027 .007
Net Gains or Losses on Securities
(both realized and unrealized)...... .000 .000 .000 .000
----------- ----------- ----------- --------
Total From Investment
Operations..................... .051 .042 .027 .007
LESS DISTRIBUTIONS
Dividends (from net investment
income)............................. (.051) (.042) (.027) (.007)
Distributions (from capital gains).... .000 .000 .000 .000
Returns of Capital.................... .000 .000 .000 .000
----------- ----------- ----------- --------
Total Distributions.............. (.051) (.042) (.027) (.007)
NET ASSET VALUE, END OF PERIOD............ $ 1.000 $ 1.000 $ 1.000 $ 1.000
============ ============ ============ ===================
TOTAL RETURN.............................. 5.24% 4.32% 2.73% 0.75%*
ANNUALIZED RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000)........... $ 153,836 $ 137,888 $ 105,345 $ 87,928
Ratio of Expenses to Average Net Assets... 0.54% 0.50% 0.56% 0.58%**
Ratio of Net Investment Income to Average
Net Assets.............................. 5.08% 4.26% 2.70% 2.68%**
Ratio of Expenses to Average Net
Assets(2)............................... 0.72% 0.98% 1.02% 1.14%**
Ratio of Net Investment Income to Average
Net Assets(2)........................... 4.90% 3.78% 2.23% 2.12%**
Portfolio Turnover Rate................... N/A N/A N/A N/A
</TABLE>
- ---------
(1) Period from Commencement of Operations.
(2) During the period, the investment advisory, administration and distribution
fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the rates would have been as indicated.
* Aggregate Total Return
** Annualized
7
<PAGE> 12
<TABLE>
<CAPTION>
EQUITY FUND
---------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 15, 1992
MARCH 31, MARCH 31, MARCH 31, TO MARCH 31,
1996 1995 1994 1993(1)
----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 11.44 $ 10.05 $ 10.20 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................. .13 .15 .19 .05
Net Gains or Losses on Securities
(both realized and unrealized)...... 3.27 1.41 (.14) .19
----------- ----------- ----------- --------
Total From Investment
Operations..................... 3.40 1.56 .05 .24
LESS DISTRIBUTIONS
Dividends (from net investment
income)............................. (0.13) (.15) (.20) (.04)
Distributions (from capital gains).... (0.23) (.02) .00 .00
Returns of Capital.................... .00 .00 .00 .00
----------- ----------- ----------- --------
Total Distributions.............. (0.36) (.17) (.20) (.04)
NET ASSET VALUE, END OF PERIOD............ $ 14.48 $ 11.44 $ 10.05 $ 10.20
============ ============ ============ ===================
TOTAL RETURN(2)........................... 29.96% 15.74% .45% 2.45%*
ANNUALIZED RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000)........... $ 210,950 $ 149,233 $ 125,203 $ 74,720
Ratio of Expenses to Average Net Assets... 1.09% 1.07% 0.54% 0.23%**
Ratio of Net Investment Income to Average
Net Assets.............................. 0.96% 1.47% 1.97% 2.40%**
Ratio of Expenses to Average Net
Assets(3)............................... 1.09% 1.35% 1.37% 1.43%**
Ratio of Net Investment Income to Average
Net Assets(3)........................... 0.96% 1.19% 1.15% 1.20%**
Portfolio Turnover Rate................... 33.23% 20.54% 3.98% 0.00%
</TABLE>
- ---------
(1) Period from Commencement of Operations.
(2) The percentages do not reflect sales loads. Effective October 5, 1994, the
Fund ceased imposing sales loads upon its purchase.
(3) During the period, the investment advisory, administration and distribution
fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the rates would have been as indicated.
* Aggregate Total Return
** Annualized
8
<PAGE> 13
<TABLE>
<CAPTION>
FIXED INCOME FUND
---------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED DECEMBER 15, 1992
MARCH 31, MARCH 31, MARCH 31, TO MARCH 31,
1996 1995 1994 1993(1)
----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 9.71 $ 9.92 $ 10.28 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................. .61 .54 .59 .18
Net Gains or Losses on Securities
(both realized and unrealized)...... .23 (.22) (.33) .27
----------- ----------- ----------- --------
Total From Investment
Operations..................... .84 .32 .26 .45
LESS DISTRIBUTIONS
Dividends (from net investment
income)............................. (.62) (.53) (.59) (.17)
Distributions (from capital gains).... .00 .00 (.03) .00
Returns of Capital.................... .00 .00 .00 .00
----------- ----------- ----------- --------
Total Distributions.............. (.62) (.53) (.62) (.17)
NET ASSET VALUE, END OF PERIOD............ $ 9.93 $ 9.71 $ 9.92 $ 10.28
============ ============ ============ ===================
TOTAL RETURN(2)........................... 8.74% 3.46% 2.43% 4.54%*
ANNUALIZED RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000)........... $ 84,752 $ 81,673 $ 90,301 $ 50,127
Ratio of Expenses to Average Net Assets... 0.97% 0.94% 0.51% 0.29%**
Ratio of Net Investment Income to Average
Net Assets.............................. 5.77% 5.53% 5.74% 6.58%**
Ratio of Expenses to Average Net
Assets(3)............................... 0.97% 1.22% 1.24% 1.34%**
Ratio of Net Investment Income to Average
Net Assets(3)........................... 5.77% 5.26% 5.01% 5.53%**
Portfolio Turnover Rate................... 113.25% 32.38% 32.03% 17.44%
</TABLE>
- ---------
(1) Period from Commencement of Operations.
(2) The percentages do not reflect sales loads. Effective October 5, 1994, the
Fund ceased imposing sales loads upon its purchase.
(3) During the period, the investment advisory, administration and distribution
fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the rates would have been as indicated.
* Aggregate Total Return
** Annualized
9
<PAGE> 14
<TABLE>
<CAPTION>
TAX-FREE FUND
---------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED FEBRUARY 16, 1993
MARCH 31, MARCH 31, MARCH 31, TO MARCH 31,
1996 1995 1994 1993(1)
----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 9.97 $ 9.91 $ 10.05 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................. .43 .43 .42 .05
Net Gains or Losses on Securities
(both realized and unrealized)...... .30 .07 (.13) .04
----------- ----------- ----------- --------
Total From Investment
Operations..................... .73 .50 .29 .09
LESS DISTRIBUTIONS
Dividends (from net investment
income)............................. (.43) (.43) (.42) (0.04)
Distributions (from capital gains).... .00 (.01) (.01) .00
Returns of Capital.................... .00 .00 .00 .00
----------- ----------- ----------- --------
Total Distributions.............. (.43) (.44) (.43) (0.04)
NET ASSET VALUE, END OF PERIOD............ $ 10.27 $ 9.97 $ 9.91 $ 10.05
============ ============ ============ ===================
TOTAL RETURN(2)........................... 7.43% 5.29% 2.79% 0.90%*
ANNUALIZED RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000)........... $ 42,436 $ 30,717 $ 32,983 $ 13,043
Ratio of Expenses to Average Net Assets... 0.75% 0.73% 0.57% 0.42%**
Ratio of Net Investment Income to Average
Net Assets.............................. 4.21% 4.42% 4.19% 4.31%**
Ratio of Expenses to Average Net
Assets(3)............................... 1.02% 1.30% 1.38% 1.47%**
Ratio of Net Investment Income to Average
Net Assets(3)........................... 3.94% 3.84% 3.37% 3.26%**
Portfolio Turnover Rate................... 14.21% 5.77% 13.26% 0.00%
</TABLE>
- ---------
(1) Period from Commencement of Operations.
(2) The percentages do not reflect sales loads. Effective October 5, 1994, the
Fund ceased imposing sales loads upon its purchase.
(3) During the period, the investment advisory, administration and distribution
fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the rates would have been as indicated.
* Aggregate Total Return
** Annualized
10
<PAGE> 15
<TABLE>
<CAPTION>
BALANCED FIXED TOTAL AGGRESSIVE
FUND RETURN FUND GROWTH FUND
--------------- ---------------- ------------------
JUNE 1, 1995 TO JUNE 15, 1995 TO SEPTEMBER 29, 1995
MARCH 31, MARCH 31, TO MARCH 31,
1996(a) 1996(a) 1996(a)
--------------- ---------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 10.00 $ 10.00 $ 10.00
--------------- ---------------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................ 0.24 0.44 --
Net Gains or Losses on Securities (both
realized and unrealized)................... 1.08 (0.11) 0.90
--------------- ---------------- --------
Total from Investment Operations........ 1.32 0.33 0.90
--------------- ---------------- --------
LESS DISTRIBUTIONS
Dividends (from net investment income)....... (0.24) (0.43) --
Distributions (from capital gains)........... -- (0.01) (0.02)
Returns of Capital........................... .00 .00 .00
--------------- ---------------- --------
Total Distributions..................... (0.24) (0.44) (0.02)
--------------- ---------------- --------
NET ASSET VALUE, END OF PERIOD................... $ 11.08 $ 9.89 $ 10.88
=============== ================= ===================
TOTAL RETURN(2).................................. 13.29%(b) 3.40%(b) 9.10%(b)
ANNUALIZED RATIOS/SUPPLEMENTARY DATA
Net Assets,End of Period (000)................... $ 13,516 $ 41,078 $ 23,319
Ratio of Expenses to Average Net Assets.......... 1.32%(c) 1.18%(c) 1.57%(c)
Ratio of Net Investment Income to Average
Net Assets..................................... 2.66%(c) 5.53%(c) 0.08%(c)
Ratio of Expenses to Average Net Assets(3)....... 1.32%(c) 1.18%(c) 1.57%(c)
Ratio of Net Investment Income to Average Net
Assets(3)...................................... 2.66%(c) 5.53%(c) 0.08%(c)
Portfolio Turnover Rate.......................... 61.72% 69.30% 4.31%
</TABLE>
- ---------
(1) Period from Commencement of Operations.
(2) The percentages do not reflect sales loads. Effective October 5, 1994, the
Fund ceased imposing sales loads upon its purchase.
(3) During the period, the investment advisory, administration and distribution
fees were voluntarily reduced. If such voluntary fee reductions had not
occurred, the rates would have been as indicated.
* Aggregate Total Return
** Annualized
11
<PAGE> 16
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS OF THE FUNDS
Each Fund has its own investment objective and policies, which are described
below. There is no assurance that a Fund will be successful in achieving its
investment objectives. The investment objective of each 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 a Fund (as described in the Statement of
Additional Information). The other policies of a Fund may be changed without a
vote of the holders of a majority of Shares unless (1) the policy is expressly
deemed to be a fundamental policy of the Fund or (2) the policy is expressly
deemed to be changeable only by such majority vote.
AMCORE VINTAGE U.S. GOVERNMENT OBLIGATIONS FUND.
The investment objective of the U.S. Government Fund is to seek current income
consistent with maintaining liquidity and stability of principal. The Fund seeks
to maintain a stable net asset value of $1.00 per Share.
The U.S. Government Fund invests exclusively in U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government Obligations") which have remaining
maturities of 397 calendar days (thirteen months) or less, and in repurchase
agreements with respect to U.S. Government Obligations. The short-term U.S.
Government Obligations in the Fund's portfolio will differ only in their
interest rates, maturities and times of issuance. The dollar-weighted average
maturity of the obligations held by the U.S. Government Fund will not exceed 90
days.
AMCORE VINTAGE FIXED INCOME FUND.
The investment objective of the Fixed Income Fund is to seek total return
consistent with the production of current income and the preservation of
capital. Total return will consist of interest from underlying securities and
capital appreciation reflected in unrealized increases in the value of portfolio
securities (realized by the Shareholder only if the Shareholder has sold its
Shares) or realized from the purchase and sale of securities. Because the market
value of fixed income securities can be expected to vary inversely to changes in
prevailing interest rates, investing in such fixed income securities can provide
an opportunity for capital appreciation when interest rates are expected to
decline.
Under normal conditions, the Fixed Income Fund will invest substantially all,
but in no event less than 75%, of the value of its total assets in fixed income
securities with stated or in remaining maturities of 15 years or less or
securities with a stated or remaining maturity in excess of 15 years if such
securities have an unconditional put to sell or redeem the security within 15
years from the date of purchase. Such securities will include but not be limited
to, corporate debt securities (including notes, bonds and debentures) and U.S.
Government Obligations. The Fixed Income Fund expects to maintain a
dollar-weighted average portfolio maturity of four to six years.
The remainder of the Fixed Income Fund's assets may be comprised of U.S.
Government Obligations and mortgage-related securities with stated or remaining
maturities that exceed 15 years, high quality money market instruments
(commercial paper, certificates of deposit and bankers' acceptances), variable
amount master demand notes, variable and floating rate notes, taxable municipal
bonds, leasing instruments and trust certificates and asset backed securities.
In addition, the Fixed Income Fund may engage in certain loans of portfolio
securities, repurchase agreements and reverse repurchase agreements. The Fixed
Income Fund may also invest in securities of other investment companies and in
other investment portfolios advised by AMCORE.
The Fixed Income Fund expects to invest in bonds, notes and debentures of a
wide range of U.S. corporate issuers. Such obligations, in the case of
debentures, will represent unsecured promises to pay, in the case of notes and
bonds, may be secured by mortgages on real property or security interests in
12
<PAGE> 17
personal property and will in most cases differ in their interest rates,
maturities and times of issuance. The Fixed Income Fund will invest in such
corporate debt securities only if they are rated within the three highest rating
categories at the time of purchase by a nationally recognized statistical rating
organization (an "NRSRO") or, if unrated, found by AMCORE to be of comparable
quality. The respective rating services apply classifications in each rating
category to indicate the security's ranking within the category. The Fixed
Income Fund may invest in securities within any of the classifications in a
category. For a description of the rating symbols of certain NRSROs, see the
Appendix to the Statement of Additional Information.
Subject to the foregoing limitations, the Fixed Income Fund may invest in U.S.
dollar-denominated international certificates of deposit, banker's acceptances
and foreign fixed income issues for which the primary trading market is in the
United States ("Yankee Obligations").
The Fixed Income Fund will purchase commercial paper rated at the time of
purchase within the two highest rating categories by an NRSRO or, if not rated,
found by AMCORE to be of comparable quality. See the Appendix to the Statement
of Additional Information for a description of these ratings.
For temporary defensive purposes, the Fixed Income Fund may invest all or any
portion of its assets in the money market instruments and repurchase agreements
described above when, in the opinion of AMCORE, it is in the best interests of
the Fund to do so.
AMCORE VINTAGE INTERMEDIATE TAX-FREE FUND.
The Tax-Free Fund seeks to produce current income, consistent with the
preservation of capital, that is exempt from federal income taxes to the extent
described below. The Tax- Free Fund invests primarily in a diversified portfolio
of intermediate-term tax-free fixed income securities.
Under normal market conditions at least 80% of the net assets of the Tax-Free
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 regular federal income taxes and not treated as a preference
item for individuals for purposes of the federal alternative minimum tax
("Municipal Securities"). It should be noted that interest on such bonds will
nonetheless be part of an adjustment to the alternative minimum taxable income
for purposes of the alternative minimum tax imposed on corporations as well as
the environmental tax imposed on corporations under Section 59A of the Internal
Revenue Code of 1986, as amended. Under normal market conditions, the Tax-Free
Fund will invest in Municipal Securities that have a stated or remaining
maturity of 25 years or less or in Municipal Securities with a stated or
remaining maturity in excess of 25 years if such securities have an
unconditional put to sell or redeem the securities within 25 years from the date
of purchase. The Tax-Free Fund expects to maintain a dollar-weighted average
portfolio maturity of five to nine years.
Under normal market conditions, the Tax-Free Fund may invest up to 20% of its
net assets in obligations the interest on which is either subject to regular
federal income taxation or treated as a preference item for purposes of the
federal alternative minimum tax ("Taxable Obligations"). At times, AMCORE may
determine that, because of unstable conditions in the markets for Municipal
Securities, pursuing the Tax-Free Fund's basic investment strategies is
inconsistent with the best interests of the Shareholders of the Tax-Free Fund.
At such times, AMCORE may use temporary defensive strategies differing from
those designed to achieve the Tax-Free Fund's investment objective, by
increasing the Tax-Free Fund's holdings in Taxable Obligations to over 20% of
the Tax-Free Fund's total assets and by holding uninvested cash reserves pending
investment. Taxable Obligations may include U.S. Government Obligations (some of
which may be subject to repurchase agreements), certificates of deposit, demand
and time deposits, and bankers' acceptances of selected banks, and com-
13
<PAGE> 18
mercial paper meeting the Tax-Free Fund's quality standards (as described below)
for tax-exempt commercial paper. These obligations are described further in the
Statement of Additional Information.
The Tax-Free Fund may also invest in private activity bonds. Interest on
private activity bonds is exempt from the regular federal income tax only if the
bonds fall within certain defined categories of qualified private activity bonds
and meet the requirements specified in those respective categories. Even if
private activity bonds so qualify, interest on private activity bonds may be
subject to the alternative minimum tax, and, in the case of corporate investors,
to the environmental tax under Code Section 59A. However, private activity bonds
will only be considered Municipal Securities for the purposes of this Prospectus
if the interest thereon is not an item of tax preference for individuals. For
additional information on the federal alternative minimum tax, see "DIVIDENDS
AND TAXES."
The Tax-Free Fund invests in Municipal Securities that are rated within the
three highest rating categories at the time of purchase by an NRSRO in the case
of bonds and rated within the two highest rating categories in the case of
notes, tax-exempt commercial paper, and variable rate demand obligations. The
respective rating services apply classifications in each rating category to
indicate the security's ranking within the category. The Tax-Free Fund may
invest in securities within any of the classifications in a category. The Fund
may also invest up to 10% of the Tax-Free Fund's total assets in Municipal
Securities that are unrated at the time of purchase but are determined to be of
comparable quality by AMCORE pursuant to guidelines approved by the Group's
Board of Trustees. Municipal Securities may be purchased in reliance upon a
rating only when the rating organization is not affiliated with the issuer or
guarantor of the Municipal Securities. The applicable Municipal Securities
ratings are described in the Appendix to the Statement of Additional
Information.
The two principal classifications of Municipal Securities that may be held by
the Tax-Free 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 the 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 Tax-Free Fund are in
most cases revenue securities and are not payable from the unrestricted revenues
of the issuer. Consequently, the credit quality of private activity bonds is
usually directly related to the credit standing of the corporate user of the
facility involved.
Municipal Securities in which the Tax-Free Fund may invest may also include
"moral obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds 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 that created the issuer.
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 Tax-Free Fund, AMCORE,
nor legal counsel to either will review the proceedings relating to the issuance
of Municipal Securities or the basis for such opinions.
The Tax-Free Fund does not intend to invest more than 25% of its total assets
in Municipal Securities which are related in such a way that an economic,
business, or political development or change affecting one such security would
likewise affect the other Municipal Securities. Examples of such securities are
obligations the repayment of which is dependent upon similar types of projects
or projects located in the same state. Such investments would be made only if
deemed necessary or appropriate by AMCORE. To the extent that the Tax-Free
Fund's assets are concentrated in Municipal Securities that are so related, the
Tax-Free Fund will be subject to the peculiar risks presented by
14
<PAGE> 19
such Municipal Securities, such as negative developments in a particular
industry or state, to a greater extent than it would be if the Tax-Free Fund's
assets were not so concentrated.
Municipal Securities purchased by the Tax-Free 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 Tax-Free 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 which are not
readily marketable, exceeds 15% of the Tax-Free Fund's net assets only if such
notes are subject to a demand feature that will permit the Fund to receive
payment of the principal within seven days after demand by the Tax-Free Fund.
The Tax-Free Fund may also invest in master demand notes in order to satisfy
short-term needs or, if warranted, as part of its temporary defensive investment
strategy. Such notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a United States commercial bank acting as agent for the
payees of such notes. Master demand notes are direct lending arrangements
between the Tax-Free Fund and the issuer of such notes. Master demand notes are
callable on demand by the Tax-Free Fund, but are not marketable to third
parties. The quality of master demand notes will be reviewed by AMCORE at least
quarterly, which review will consider the earning power, cash flow and debt-to-
equity ratios indicating the borrower's ability to pay principal together with
accrued interest on demand. While master demand notes are not typically rated by
credit rating agencies, issuers of such notes must satisfy the same criteria for
the Tax-Free Fund set forth above for commercial paper.
AMCORE VINTAGE EQUITY FUND.
The investment objective of the Equity Fund is long term capital appreciation.
The Equity Fund will invest primarily in equity securities of large
capitalization companies with strong earnings potential and will strive for high
over-all return while minimizing risk through the selection of quality dividend
paying equity securities.
Under normal market conditions, the Equity Fund will invest substantially all,
but in no event less than 75%, of its total 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 Equity Fund's assets may be invested in U.S. Government Obligations and
repurchase agreements with respect thereto. The Equity Fund may also use call
options on equity securities, as described below. Because the market value of
fixed income securities, such as U.S. Government Obligations, can be expected to
vary inversely to changes in prevailing interest rates, investing in such fixed
income securities can provide an opportunity for capital appreciation when
interest rates are expected to decline.
The Equity 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.
In addition, the Equity Fund may invest, without limit, in any combination of
the U.S. Government Obligations, money market instruments and repurchase
agreements referred to above when, in the opinion of AMCORE, it is determined
that a temporary defensive position is warranted based upon current market
conditions. The Equity Fund may also invest in securities of other investment
companies including the other investment portfolios advised by AMCORE, as
described more fully under "Other Investment Policies."
Subject to the foregoing limitations, the Equity Fund may invest in foreign
securities through the purchase of American Depository Receipts ("ADRs").
Ownership of unsponsored ADRs may
15
<PAGE> 20
not entitle the Equity Fund to financial or other reports from the issuer, to
which it would be entitled as the owner of sponsored ADRs. Investment in foreign
securities is subject to special risks that differ in some respects from those
related to investments in securities of U.S. domestic issuers. Such risks
include trade balances and imbalances, and related economic policies, future
adverse political, economic and social developments, the possible imposition of
withholding taxes on interest and dividend income and other taxes, possible
seizure, nationalization, or expropriation of foreign investments or deposits,
currency blockage, less stringent disclosure requirements, the possible
establishment of exchange controls or taxation at the source, or the adoption of
other foreign governmental restrictions. For additional information regarding
the special risks associated with investments in foreign securities, see
"Foreign Investments" in the Statement of Additional Information.
AMCORE VINTAGE BALANCED FUND.
The investment objective of the Balanced Fund is to seek long-term growth of
capital and income. The Balanced Fund will invest in a diversified portfolio of
equity securities and high quality fixed income securities. The investment
manager will allocate holdings within established ranges to best take advantage
of economic conditions, general market trends, interest rate levels, and changes
in fiscal and monetary policies.
To the extent that the Balanced Fund invests in equity securities, it will
invest in the same types of equity securities identified above as permissible
investments for the Equity Fund, which consist of common stocks, preferred
stocks, securities convertible into common stocks, warrants and any rights to
purchase common stocks. Under normal market conditions, the Balanced Fund may
invest up to 75% of its total assets in equity securities. The Balanced Fund may
invest in foreign securities through the purchase of ADRs, as described above in
connection with the Equity Fund.
To the extent that the Balanced Fund invests in fixed income securities, it
will invest in the same types of fixed income securities identified as
permissible investments for the Fixed Total Return Fund, which consist of
corporate debt securities (including notes, bonds and debentures), and U.S.
Government Obligations, as well as money market instruments. The fixed income
portion of the Balanced Fund will be subject to the same investment parameters
applicable to the Fixed Total Return Fund as regards security maturity
limitations (15 years or less maximum maturity) and dollar-weighted average
portfolio maturity (three to seven years).
Under normal market conditions the Balanced Fund will invest at least 25% of
its total assets in fixed income securities. In addition, the Balanced Fund may
invest, without limit, in any combination of U.S. Government Obligations, money
market instruments and repurchase agreements when, in the opinion of AMCORE, it
is determined that a temporary defensive position is warranted based upon
current market conditions.
AMCORE VINTAGE AGGRESSIVE GROWTH FUND.
The investment objective of the Aggressive Growth Fund is long-term capital
growth. The Aggressive Growth Fund will invest primarily in equity securities of
companies that exhibit a strong potential for price appreciation relative to the
general equity markets. Dividend income is not a factor in selecting investment
securities.
The Aggressive Growth Fund may invest in the same types of equity securities
identified above as permissible investments for the Equity Fund, which consist
of common stocks, preferred stocks, securities convertible into common stocks,
warrants and any rights to purchase common stocks. The Aggressive Growth Fund
may invest in foreign securities through the purchase of ADRs, as described
above in connection with the Equity Fund.
The manager will consider numerous factors in a company, among them; quality
of management over time, the company's leadership in its field, distinctive
marketing capabilities, return on equity over the past 3-5 years, cash flows,
debt levels, and earnings growth. The Fund will seek positions in high growth
industries, firms with products in niche markets, and
16
<PAGE> 21
stocks which are perceived to be temporarily undervalued. Positions may be
accumulated in industry sectors or firms which are felt to be particularly
attractive; positions may be decreased or eliminated in industry sectors or
firms which are less attractive.
The Aggressive Growth Fund may invest, without limit, in any combination of
U.S. Government Obligations, money market instruments and repurchase agreements
when, in the opinion of AMCORE, it is determined that a temporary defensive
position is warranted based upon current market conditions.
AMCORE VINTAGE FIXED TOTAL RETURN FUND.
The investment objective of the Fixed Total Return Fund is to seek long-term
total return by investing in a diversified portfolio of fixed income securities.
Total return includes a combination of interest income from the Fund's
underlying fixed income securities, appreciation in the value of these fixed
income securities and gains realized upon the sale of such securities. Because
the market value of fixed income securities can be expected to vary inversely to
changes in prevailing interest rates, investing in such fixed income securities
provides an opportunity for appreciation when interest rates decline and risk
when interest rates rise. It is anticipated that the Fund will place primary
emphasis on capital appreciation as well as capital preservation through
periodic adjustment of the average maturity or duration of the Fund's portfolio
with the level of current income being a secondary consideration and that
investments will be made without regard to tax ramifications.
Under normal market conditions, the Fixed Total Return Fund will invest in the
same types of fixed income securities having the same average maturities
identified above as permissible investments for the Balanced Fund (i.e., three
to seven years dollar-weighted average portfolio maturity and 15 years or less
maximum security limitation), which consist of corporate debt securities
(including notes, bonds and debentures) and U.S. Government Obligations, as well
as money market instruments.
The Fixed Total Return Fund may invest in corporate debt securities rated
within the four highest rating categories at the time of purchase by an NRSRO,
or if unrated, found by AMCORE to be of comparable quality. Securities rated in
the fourth highest rating category have speculative characteristics, even though
they are of investment-grade quality, and in recognition of this fact, no more
than 15% of the Fund's total assets will be invested in securities rated in the
fourth rating category. The Fixed Total Return Fund, unlike the Fixed Income
Fund, may invest in Treasury Zero Coupon securities but it will not invest more
than 10% of its total assets in such securities.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. Government Obligations invested in by a 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, such as Treasury bills, notes, bonds
and certificates of indebtedness, and obligations issued or guaranteed by the
agencies or instrumentalities of the U.S. Government, but not supported by such
full faith and credit. 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 Treasury; others 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.
A Fund will invest in the obligations of such agencies or instrumentalities only
when AMCORE believes that the credit risk with respect thereto is minimal. The
U.S. Government does not guarantee the market value of any security; therefore,
the market value of the U.S. Government Obligations in a Fund's portfolio and of
the Shares
17
<PAGE> 22
of a Fund can be expected to fluctuate as interest rates change.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
Mortgage-related securities in which the Fixed Income Fund may invest
represent pools of mortgage loans assembled for sale to investors by various
governmental agencies (such as the Government National Mortgage Association) and
government-related organizations (such as the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation), as well as by
private issuers (such as commercial banks, savings and loan institutions,
mortgage bankers and private mortgage insurance companies). Collateralized
mortgage obligations structured as pools of mortgage pass-through certificates
or mortgage loans ("CMOs") will be purchased only if they meet the rating
requirements set forth above with respect to the Fixed Income Fund's investments
in debt securities of U.S. corporations. For additional information on the Fixed
Income Fund's investments in mortgage-related securities, see the Statement of
Additional Information.
Although certain mortgage-related securities may be guaranteed by a third
party or otherwise similarly secured, the market value of the security, which
may fluctuate, is not so secured. Thus, for example, if the 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 due to changes in interest
rates or prepayments of the underlying mortgage collateral. As with other
interest-bearing securities, the prices of mortgage-related securities are
inversely affected by changes in interest rates. However, although 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, the stated maturity of a mortgage-related security may be shortened by
unscheduled prepayments on the underlying mortgages and, accordingly, it is not
possible to predict accurately the security's return to the Fund. In addition,
regular payments received in respect to mortgage-related securities include both
interest and principal. No assurance can be given to the return the Fund will
receive when these amounts are reinvested.
Asset-backed securities (unrelated to first mortgage loans) in which the Fixed
Income Fund may invest represent fractional interests in pools or leases, retail
installment loans or revolving credit receivables, both secured (such as
Certificates for Automobile Receivables or "CARSSM") and unsecured (such as
Credit Card Receivable Securities or "CARDSSM"). These assets are generally held
by a trust and payments of principal and interest or interest only are passed
through monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Asset-backed securities will be purchased only if they meet the rating
requirements set forth above with respect to the Fixed Income Fund's investments
in debt securities of U.S. corporations.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Nevertheless, principal
repayment rates tend not to vary much with interest rates and the short-term
nature of the underlying car loans or other receivables tend to dampen the
impact of any change in the prepayment level. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs or enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors. If consistent with its investment
objective and policies, the Fixed Income Fund may invest in other asset-backed
securities that may be developed in the future.
Issuers of mortgage-backed and asset-backed securities often issue one or more
classes of which one
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(the "Residual") is in the nature of equity. The Fixed Income Fund will not
invest in any Residual.
REPURCHASE AGREEMENTS
Securities held by a Fund may be subject to repurchase agreements. Under the
terms of a repurchase agreement, a Fund would acquire securities from member
banks of the Federal Deposit Insurance Corporation and from registered
broker-dealers which AMCORE 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 a 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 although, for the U.S. Government Fund, not subject to the
same maturity requirements as those in which a 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 not less than the
repurchase price (including accrued interest). This requirement will be
continually monitored by AMCORE. 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, a 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 a
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 OBJECTIVE AND POLICIES-- Additional Information on
Portfolio Instruments-- Repurchase Agreements" in the Statement of Additional
Information.
REVERSE REPURCHASE AGREEMENTS
Each 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 Fund would sell certain of its 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 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
Obligations, 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 a Fund may decline below the price at which
it is obligated to repurchase the securities. Reverse repurchase agreements are
considered to be borrowings by an investment company under the 1940 Act. For
further information about reverse repurchase agreements, see "INVESTMENT
OBJECTIVES AND POLICIES--Additional Information on Portfolio
Instruments--Reverse Repurchase Agreements" in the Statement of Additional
Information.
FUTURES CONTRACTS AND RELATED OPTIONS
The Funds may invest in futures contracts and options on futures contracts to
the extent permitted by the Commodity Futures Trading Commission ("CFTC") and
the Commission and thus will engage in such transactions solely for bona fide
hedging purposes to manage risk associated with various portfolio securities and
not for speculative purposes. Such transactions, including stock or bond index
futures contracts, or options thereon, act as a hedge to protect a Fund from
fluctuations in the value of its securities caused by anticipated changes in
interest rate or market conditions without necessarily buying or selling the
securities. Hedging is a specialized investment technique that entails skills
different from other investment management. A stock or bond index futures
contract is an agreement in
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which one party agrees to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the index value (which
assigns relative values to the common stock or bonds included in the index) as
the close of the last trading day of the contract and the price at which the
agreement is originally made. No physical delivery of the underlying stock or
bond in the index is contemplated. Similarly, it may be in the best interest of
a Fund to purchase or sell interest rate futures contracts, or options thereon,
which provide for the future delivery of specified securities.
The purchase and sale of futures contracts or related options will not be a
primary investment technique of the Funds. The Funds will not purchase or sell
futures contracts (or related options thereon) if, immediately after purchase,
the aggregate initial margin deposits and premiums paid by a Fund on its open
futures and options positions, exceeds 5% of the liquidation value of the Fund
after taking into account any unrealized profits and unrealized losses on any
such futures or related options contracts into which it has entered.
CALL OPTIONS
The Equity Fund, the Balanced Fund and the Aggressive Growth Fund may write
covered call options on securities owned by the Fund. Such instruments may also
be referred to as equity derivatives. Derivatives generally are instruments
whose value is derived from or related to the value of some other instrument,
asset or specified benchmark, such as a specific stock or stock index. A call
option gives the purchaser of the option the right to buy, and obligates the
seller of the option to sell, the underlying security at the stated exercise
price at any time prior to the expiration date of the option, regardless of the
market price of the security. When a Fund writes a covered call option and such
option is exercised, it will forgo the appreciation, if any, on the underlying
security in excess of the exercise price. In order to close out a call option it
has written, a Fund may enter into a "closing purchase transaction"--the
purchase of a call option on the same security with the same exercise price and
expiration date as the call option which the Fund previously wrote on any
particular securities. When a portfolio security subject to a call option is
sold, the Fund may effect a closing purchase transaction to close out any
existing call option on that security. If a Fund is unable to effect a closing
purchase transaction, it will not be able to sell the underlying security until
the option expires or the Fund delivers the underlying security upon exercise.
Under normal conditions, it is not expected that these Funds would permit the
underlying value of their portfolio securities subject to such options to exceed
15% of net assets.
PUTABLE SECURITIES
The Fixed Income Fund, the Fixed Total Return Fund, the Balanced Fund and the
Tax-Free Fund may acquire puts with respect to fixed income securities or
Municipal Securities as described above. Under a put, a Fund would have the
right to sell or redeem a specified security at a certain time or within a
certain period of time at a specified price. The security is sold to a third
party or redeemed by the issuer as provided contractually. The put may be an
independent feature or may be combined with a reset feature that is designed to
reduce downward price volatility as interest rates rise by enabling the holder
to liquidate the investment prior to maturity. The Funds may acquire putable
securities to facilitate portfolio liquidity, shorten the maturity of the
underlying security, or to permit the investment of funds at a more favorable
rate of return. The price of a putable security may be higher than the price
which otherwise would be paid for the security without such put feature, thereby
increasing the security's cost and reducing its yield. The time remaining to the
put date will apply for purposes of determining the maximum maturity of such
securities.
LENDING OF PORTFOLIO SECURITIES
From time to time in order to generate additional income, a 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 a Fund any dividends or interest paid on the
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securities. In addition, loans will be subject to termination by a Fund or the
borrower at any time.
A 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 AMCORE has determined are creditworthy under guidelines established by
the Group's Board of Trustees. While the lending of securities may subject a
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, a Fund will receive 100% collateral on loaned securities in the form
of cash or U.S. Government Obligations. This collateral will be valued daily by
AMCORE and, should the market value of the loaned securities increase, the
borrower will be required to furnish additional collateral to the Fund. Although
each of the Funds does not expect to do so on a regular basis, it may lend
portfolio securities in amounts representing up to 15% of the value of the
Fund's total assets. Fees earned by the Tax-Free Fund from lending its
securities will constitute taxable income to the Fund which, when distributed to
shareholders, will likewise generally be treated as taxable income.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
A Fund may purchase securities on a when-issued or delayed-delivery basis. A
Fund will engage in when-issued and delayed-delivery transactions only for the
purpose of acquiring portfolio securities consistent with its investment
objectives and policies, 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 involve a risk that the yield obtained in the
transaction will be less than those available in the market when delivery takes
place. A Fund will generally not pay for such securities or start earning
interest on them until they are received. When a 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, a Fund relies
on the seller to complete the transaction; the seller's failure to do so may
cause a Fund to miss a price or yield considered to be advantageous.
The Fixed Income Fund's, the Fixed Total Return Fund's, the Tax-Free Fund's
and the U.S. Government Fund's commitments to purchase when-issued securities
will not exceed 25%, and the Equity Fund's, the Balanced Fund's and the
Aggressive Growth Fund's commitments will not exceed 5%, of the value of its
total assets absent unusual market conditions. Each of the Funds does not intend
to purchase when-issued securities for speculative purposes but only in
furtherance of its investment objectives.
OTHER INVESTMENT POLICIES
Each of the Funds, except the U.S. Government Fund, may also invest up to 5%
of its total assets in another investment company, including the U.S. Government
Fund, not to exceed 10% of the value of its total assets in the securities of
other investment companies. In order to avoid the imposition of additional fees
as a result of investing in Shares of the U.S. Government Fund, AMCORE and the
Administrator (see "MANAGEMENT OF THE GROUP--Investment Adviser", "MANAGEMENT OF
THE GROUP--Administrator and Distributor") will waive any portion of their usual
service fees from that Fund that are attributable to investments therein by
another Fund. A Fund will incur additional expenses due to the duplication of
expenses as a result of investing in mutual funds other than the Funds.
Additional restrictions on a Fund's investments in the securities of other
mutual funds are contained in the Statement of Additional Information.
The Funds will not execute portfolio transactions through, acquire portfolio
securities issued by, make savings deposits in, or enter into repurchase
agreements or reverse repurchase agreements with AMCORE, the Distributor or
their affiliates, and will not give preference to AMCORE Bank's corre-
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spondents with respect to such transactions, securities, savings deposits, and
agreements.
INVESTMENT RESTRICTIONS
A 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 such a Fund (as
defined in the Statement of Additional Information).
Each of the Fixed Income Fund, the Tax-Free Fund, the Equity Fund, the
Balanced Fund, the Aggressive Growth Fund and the Fixed Total Return 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.
Each of the Fixed Income Fund, the Equity Fund, the Balanced Fund, the
Aggressive Growth Fund and the Fixed Total Return Fund will not:
1. 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 (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the U.S.
Government or its agencies or 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.
The Tax-Free Fund will not:
1. 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 (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the U.S.
Government or its agencies or instrumentalities; (b) there is no limitation
with respect to Municipal Securities, which, for purposes of this limitation
only, do not include private activity bonds that are backed only by the assets
and revenues of a non-governmental user; (c) 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 (d) 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.
2. Write or sell puts, calls, straddles, spreads or combinations thereof
except that the Fund may acquire puts with respect to Municipal Obligations in
its portfolio and sell those puts in conjunction with a sale of those
Municipal Obligations.
Each of the Funds will not:
1. Borrow money or issue senior securities, except that the Fund may borrow
from banks or enter into reverse repurchase agreements for temporary purposes
in amounts up to 10% of the value of its total assets at the time of such
borrowing; or 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
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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.
2. 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, each Fund is subject to
certain other investment restrictions set forth under "INVESTMENT OBJECTIVES AND
POLICIES--Investment Restrictions" in the Funds' Statement of Additional
Information.
VALUATION OF SHARES
The net asset value of each of the Funds, except the U.S. Government Fund, is
determined and its Shares are priced as of the close of regular trading on the
New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on each
Business Day. The net asset value of the U.S. Government Fund is determined and
its Shares are priced as of 12:00 noon Central Time and the close of regular
trading on the NYSE on each Business Day ("Valuation Times"). As used herein, a
"Business Day" constitutes any day on which the NYSE is open for trading, the
Federal Reserve Bank of Chicago is open, and any other day except days on which
there are not sufficient changes in the value of the Fund's portfolio securities
that the Fund's net asset value might be materially affected and days during
which no Shares are tendered for redemption and no orders to purchase Shares are
received. Currently, either the NYSE or Federal Reserve Bank of Chicago are
closed on New Year's Day, Martin Luther King, Jr. Day, President's 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 of the Fund less the liabilities charged to the Fund
by the number of its outstanding Shares.
For the Fixed Income Fund, the Tax-Free Fund, the Equity Fund, The Balanced
Fund, the Aggressive Growth Fund and the Fixed Total Return Fund (the "Variable
NAV Funds"), the net asset value per share will fluctuate as the value of the
Variable NAV Fund's investment portfolio changes.
The securities in the Variable NAV Funds 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.
The assets in the U.S. Government Fund are valued based upon the amortized
cost method, which the Trustees of the Group believe fairly reflect the
market-based net asset value per Share. Pursuant to rules and regulations of the
Commission regarding the use of the amortized cost method, the U.S. Government
Fund will maintain a dollar-weighted average portfolio maturity of 90 days or
less. Although the Group seeks to maintain the U.S. Government Fund's net asset
value per share at $1.00, there can be no assurance that the net asset value
will not vary.
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HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares of the Funds are sold on a continuous basis by the Group's Distributor,
BISYS Fund Services Inc. The principal office of the distributor is 3435 Stelzer
Road, Columbus, Ohio 43219. If you wish to purchase Shares, contact the Funds at
(800) 438-6375.
PURCHASES OF SHARES
Shares of the Funds are continuously offered and may be purchased directly
either by mail, by telephone or by electronic transfer. Shares may also be
purchased through a broker-dealer who has established a dealer agreement with
the Distributor. The minimum investment is generally $1,000 for the initial
purchase of Shares and $50 for subsequent purchases. For purchases that are made
in connection with 401(k) plans, 403(b) plans and other similar plans or payroll
deduction plans, the minimum investment amount for initial and subsequent
purchases is $25. In the case of such retirement plan investments, the minimum
purchase amounts are not restricted to the purchase of Shares of one Fund. Thus,
the $25 minimum amount may be spread among any of the Funds. (But, see "HOW TO
PURCHASE AND REDEEM SHARES-- Auto Invest Plan" below for minimum investment
requirements under the Auto Invest Plan).
Purchasers of Shares of the Funds will pay the sum of the next calculated net
asset value per Share after the Distributor's receipt of an order to purchase
Shares in good form ("public offering price") (see "HOW TO PURCHASE AND REDEEM
SHARES" below).
In the case of orders for the purchase of Shares placed through a
broker-dealer, the 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 Funds by the Valuation Time.
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
Business Day.
Purchases By Mail
To purchase Shares of a Fund, complete an Account Application and return it
along with a check (or other negotiable bank draft or money order) in at least
the minimum initial purchase amount, made payable to the appropriate Fund to:
AMCORE Vintage Funds
Dept. L-1392
Columbus, Ohio 43260-1392
An Account Application form can be obtained by calling the Funds at (800)
438-6375. Subsequent purchases of Shares of a Fund may be made at any time by
mailing a check payable to a Fund, to the above address.
Purchases by Telephone
Shares of a Fund may be purchased by calling the Funds at (800) 438-6375, if
your Account Application has been previously received by the Distributor.
Payment for Shares ordered by telephone is made by electronic transfer to the
Funds' custodian. Prior to wiring funds and in order to ensure that wire orders
are invested promptly, investors must call the Funds at the number above to
obtain instructions regarding the bank account number to which the funds should
be wired and other pertinent information.
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 AMCORE Bank, its related companies or
their correspondents ("Banks"). Shares of a Fund sold to the Banks acting in a
fiduciary, advisory, custodial, or other similar capacity on behalf of
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Customers will normally be held of record by the Banks. With respect to Shares
sold, it is the responsibility of the holder of record to transmit purchase or
redemption orders to the Distributor and to deliver funds for the purchase
thereof by the Fund's custodian within the settlement requirements defined in
the Securities Exchange Act of 1934. If payment is not received within the
prescribed time periods or a check timely received does not clear, the purchase
will be canceled and the investor could be liable for any losses or fees
incurred. Any questions regarding current settlement requirements or electronic
payment instructions should be directed to the Group at (800) 438-6375.
Purchases of Shares in a Fund will be effected only on a Business Day (as
defined in "VALUATION OF SHARES"). The public offering price of the Variable NAV
Funds will be the net asset value per Share (see "VALUATION OF SHARES") as
determined on the Business Day the order is received by the Distributor, but
only if the Distributor receives the order by the Valuation Time. Otherwise, the
price will be determined as of the Valuation Time on the next Business Day. In
the case of an order for the purchase of Shares placed through a broker-dealer,
it is the responsibility of the broker-dealer to transmit the order to the
Distributor promptly.
Shares of the U.S. Government 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. An order to purchase Shares of the
U.S. Government Fund will be deemed to have been received 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 of the U.S.
Government Fund which is transmitted by federal funds wire will be available the
same day for investment by the Funds' custodian, if received prior to the last
Valuation Time (see "VALUATION OF SHARES"). 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 U.S.
Government Fund strongly recommends that investors of substantial amounts use
federal funds to purchase Shares.
An order received prior to a Valuation Time on any Business Day for the U.S.
Government Fund will be executed at the net asset value determined as of the
next Valuation Time on the date of receipt. An order received after the last
Valuation Time on any Business Day will be executed at the net asset value
determined as of the next Valuation Time on the next Business Day of the U.S.
Government Fund. Shares purchased before 11:00 a.m., Central Time, begin earning
dividends on the same Business Day. Shares purchased after 11:00 a.m., Central
Time, begin earning dividends on the next Business Day. All Shares of the U.S.
Government Fund continue to earn dividends through the day before their
redemption.
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
a 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.
The Group reserves the right to reject any order for the purchase of a Fund's
Shares in whole or in part including purchases made with foreign and third party
checks.
Every Shareholder of record will receive a confirmation of each transaction in
his or her account, which will also show the total number of Shares of a 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. Shareholders may rely on these statements in lieu of certificates.
Certificates representing Shares of the Funds will not be issued.
The Distributor, at its expense, will also provide other compensation to
dealers in connection with sales of Shares of a Fund. Compensation may include
financial assistance to dealers in connection
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<PAGE> 30
with conferences, sales or training programs for their employees, seminars for
the public, advertising campaigns regarding one or more of the Funds, and other
dealer-sponsored special events. In some instances, this compensation may be
made available only to certain dealers whose representatives have sold or are
expected to sell a significant amount of Shares. Compensation will also include
payment for travel expenses, including lodging, incurred in connection with
trips taken by invited registered representatives and members of their families
to locations within or outside of the United States for meetings or seminars of
a business nature. Compensation will also include the following types of non-
cash compensation offered through sales contests: (1) vacation trips, including
the provision of travel arrangements and lodging at luxury resorts at exotic
locations; (2) tickets for entertainment events (such as concerts, cruises and
sporting events) and (3) merchandise (such as clothing, trophies, clocks and
pens). Dealers may not use sales of Shares to qualify for this compensation to
the extent such may be prohibited by the laws of any state or any self-
regulatory agency, such as the National Association of Securities Dealers, Inc.
None of the aforementioned compensation is paid for by the Funds or their
Shareholders.
AMCORE INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
An AMCORE IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement program.
AMCORE 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 AMCORE IRA distribution requests must be made in writing to the
Distributor. Any additional deposits to an AMCORE IRA must distinguish the type
and year of the contribution.
For more information on an AMCORE IRA call the Funds at (800) 438-6375.
Investment in Shares of the Tax-Free Fund would not be appropriate for any IRA.
Shareholders are advised to consult a tax adviser on AMCORE IRA contribution and
withdrawal requirements and restrictions.
AUTO INVEST PLAN
The Auto Invest Plan enables Shareholders of the Funds to make regular monthly
or quarterly purchases of Shares through automatic deductions from their bank
accounts (which must be with a domestic member of the Automatic Clearing House).
With Shareholder authorization, the Transfer Agent will deduct the amount
specified from the Shareholder's bank account which will automatically be
invested in Shares at the public offering price on the dates of the deduction.
The required minimum initial investment when opening an account using the Auto
Invest Plan is $250; the minimum amount for subsequent investments in a Fund is
$25. To participate in the Auto Invest Plan, Shareholders should complete the
appropriate section of the account application which can be acquired by calling
(800) 438-6375. For a Shareholder to change the Auto Invest instructions, the
request must be made in writing to the Distributor.
EXCHANGE PRIVILEGE
The Funds offer an exchange program whereby Shareholders are entitled to
exchange their Shares for Shares of the other Funds. Such exchanges will be
executed on the basis of the relative net asset values of the Shares exchanged.
The Shares exchanged must have a current value that equals or exceeds the
minimum investment that is required (either the minimum amount required for
initial or subsequent investments as the case may be) for the Fund whose Shares
are being acquired. Share exchanges will only be permitted where the Shares to
be acquired may legally be sold in the investor's state of residence. An
exchange is considered to be a sale of Shares for federal income tax purposes on
which a Shareholder may realize a taxable gain or loss. A Shareholder may make
an exchange request
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<PAGE> 31
by calling the Funds at (800) 438-6375 or by providing written instructions to
the Funds. An investor should consult the Funds for further information
regarding exchanges. During periods of significant economic or market change,
telephone exchanges may be difficult to complete. If a Shareholder is unable to
contact the Funds by telephone, a Shareholder may also mail the exchange request
to the Funds at the address listed under "HOW TO PURCHASE AND REDEEM
SHARES--Redemption By Mail." The Funds reserve the right to modify or terminate
the exchange privilege described above at any time and to reject any exchange
request. If an exchange request in good order is received by the Distributor by
the last Valuation Time, on any Business Day, the exchange usually will occur on
that day. Any Shareholder who wishes to make an exchange should obtain and
review the current prospectus of the Fund in which he or she wishes to invest
before making the exchange. Shareholders wishing to make use of the Funds'
exchange program must so indicate on the Account Application.
This option will be suspended for a period of 30 days following a telephonic
address change.
AUTO EXCHANGE
Auto Exchange enables Shareholders to make regular, automatic withdrawals from
the U.S. Government Fund and use those proceeds to benefit from dollar-cost
averaging by automatically making purchases of shares of another AMCORE Fund.
With shareholder authorization, the Group's transfer agent will withdraw the
amount specified (subject to the applicable minimums) from the shareholder's
U.S. Government Fund account and will automatically invest that amount in the
AMCORE Fund designated by the Shareholder at the public offering price on the
date of such deduction. In order to participate in the Auto Exchange,
Shareholders must have a minimum initial purchase of $10,000 in their U.S.
Government Fund account and maintain a minimum account balance of $1,000. To
participate in the Auto Exchange, Shareholders should complete the appropriate
section of the Account Registration Form, which can be acquired by calling the
Distributor. To change the Auto Exchange instructions or to discontinue the
feature, a Shareholder must send a written request to the AMCORE Vintage Funds,
Department L-1392, Columbus, OH 43260-1392. The Auto Exchange may be amended or
terminated without notice at any time by the Distributor.
REDEMPTION OF SHARES
Shareholders may redeem their Shares on any day that net asset value is
calculated (see "VALUATION OF SHARES"). Redemptions will be effected at the net
asset value per share next determined after receipt of a redemption request in
good order. Redemptions may ordinarily be requested by mail or by telephone.
All or part of a Customer's Shares may be required to be redeemed in
accordance with instructions and limitations pertaining to his or her account
held by a Bank. For example, if a Customer has agreed to maintain a minimum
balance in his or her account, and the balance in that account falls below that
minimum, the Customer may be obliged to redeem, or the Bank may redeem for and
on behalf of the Customer, all or part of the Customer's Shares to the extent
necessary to maintain the required minimum balance. There may be no notice
period affording Shareholders an opportunity to increase the account balance in
order to avoid an involuntary redemption under these circumstances.
REDEMPTION BY MAIL
A written request for redemption must be received by the Funds in order to
honor the request. The Funds' address is: 3435 Stelzer Road, Columbus, Ohio
43219. 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 (1) it
has reason to believe
27
<PAGE> 32
that the signature is not genuine, (2) it has reason to believe that the
transaction would otherwise be improper, or (3) 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 requirement
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 or the proceeds are either
mailed or wired to a commercial bank account previously designated on the
Account Application. There is no charge for having redemption requests mailed to
a designated bank account.
If the Group receives a redemption order but a shareholder has not clearly
indicated the amount of money or number of shares involved, the Group cannot
execute the order. In such cases, the Group will request the missing information
and process the order on the day such information is received.
REDEMPTION BY TELEPHONE
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 or sent electronically to a commercial bank account
previously designated on the Account Application. Electronic payment requests
may be made by the Shareholder by telephone to the Funds at (800) 438-6375. For
a wire redemption, the then-current wire redemption charge may be deducted from
the proceeds of a wire redemption. This charge, if applied, is presently $7.50
for each 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 Funds by telephone, a Shareholder may also
mail the redemption request to the Distributor at the address listed above under
"HOW TO PURCHASE AND REDEEM SHARES--Redemption by Mail". Neither the
Distributor, the Transfer Agent, AMCORE nor the Group 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 Funds'
telephone transaction procedures, upon instructions reasonably believed to be
genuine. The Fund will employ procedures designed to provide reasonable
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 phone conversations, sending confirmations to shareholders 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.
This option will be suspended for a period of 30 days following a telephonic
address change.
REDEMPTION BY CHECK
Free check writing is available for the U.S. Government Fund. With this
service, a Shareholder may write up to five checks a month in amounts of $250 or
more. To establish this service and to obtain checks at the time the account is
opened, a Shareholder must complete the Signature Card that accompanies the
Account Application Form. To establish this service and obtain checks after
opening an account in the U.S. Government Fund, the Shareholder must contact the
Funds by telephone or mail to obtain an Account Application Form and complete
and return the signature card. A Shareholder will receive the dividends and
distributions declared on the Shares to be redeemed up to the day that a check
is presented for payment. Upon 30 days' prior written notice to Shareholders,
the check writing privilege may be modified or terminated. An investor may not
close a Fund account by writing a check.
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables Shareholders of a Fund to make regular
monthly or quarterly redemptions of Shares. With Shareholder authorization, the
Transfer Agent will automatically re-
28
<PAGE> 33
deem 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 Auto Withdrawal Plan, Shareholders
should call (800) 438-6375 for more information. Purchases of additional Shares
concurrent with withdrawals may be disadvantageous to certain Shareholders
because of tax liabilities. For a Shareholder to change the Auto Withdrawal
instructions the request must be made in writing to the Distributor.
DIRECTED DIVIDEND OPTION
A Shareholder may elect to have all income dividends and capital gains
distributions paid by check or reinvested in any of the Group's other funds,
(provided the other Fund is maintained at the minimum required balance).
The Directed Dividend Option may be modified or terminated by the Group at any
time after notice to participating Shareholders. Participation in the Directed
Dividend Option may be terminated or changed by the Shareholder at any time by
writing the Distributor. The Directed Dividend Option is not available to
participants in an AMCORE IRA.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered 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 Group will attempt to honor requests from
Shareholders for (a) same day payments upon redemption of U.S. Government Fund
Shares if the request for redemption is received by the Distributor before 12:00
noon Central Time on a Business Day or, if the request for redemption is
received after 12:00 noon Central Time, to honor requests for payment on the
next Business Day, or (b) next day payments upon redemption of the Variable NAV
Funds if received by the Distributor 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 Fund or the Shareholders of the Fund to sell
or liquidate portfolio securities in an amount sufficient to satisfy requests
for payments in that manner.
At various times, a Fund may be requested to redeem Shares for which it has
not yet received good payment. In such circumstances, a 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 10 days or more. A Fund intends to pay cash
for all Shares redeemed, but under abnormal conditions which make payment in
cash unwise, a Fund may make payment wholly or partly in portfolio securities at
their then-current market value equal to the redemption price. In such cases, an
investor may incur brokerage costs in converting such securities to cash.
Due to the relatively high cost of handling small investments, the Funds
reserve 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 (but not
as a result of a decrease in the market price of such Shares), the account of
such Shareholder has a value of less than $500. Before the Funds exercise their
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 an amount which will increase the value of the account
to at least $500.
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION--Matters Affecting
Redemption" in the Statement of Additional Information for examples of when the
Group may, under applicable law and regulation, suspend the right of redemption
if it appears appropriate to do so in light of the Group's responsibilities
under the 1940 Act.
29
<PAGE> 34
DIVIDENDS AND TAXES
DIVIDENDS
The Fixed Income Fund and Tax-Free Fund each intend to declare their net
investment income monthly as a dividend to Shareholders at the close of business
on the day of declaration. The U.S. Government Fund intends to declare its net
investment income daily as a dividend to Shareholders at the close of business
on the day of declaration. These Funds will generally pay such dividends
monthly. Each Fund also intends to distribute its capital gains, if any, at
least annually, normally in December of each year. The Equity Fund, the Balanced
Fund, the Aggressive Growth Fund and the Fixed Total Return Fund intend to
declare their net investment income quarterly as a dividend to Shareholders at
the close of business on the day of declaration, and generally will pay such
dividends quarterly. A Shareholder will automatically receive all income
dividends and capital gains distributions in additional full and fractional
Shares of a Fund at net asset value as of the date of payment, unless the
Shareholder elects to receive dividends or distributions in cash. Such election
must be made on the Account Application; any change in such election must be
made in writing to the Funds at 3435 Stelzer Road, Columbus, Ohio 43219, and
will become effective with respect to dividends and distributions having record
dates after its receipt by the Transfer Agent. Dividends are paid in cash not
later than seven business days after a Shareholder's complete redemption of his
or her Shares.
If you elect to receive distributions in cash, and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions 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 checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
FEDERAL TAXES
The following discussion is intended for general information only. Investors
should consult with their tax adviser as to the tax consequences of an
investment in the Funds, including the status of distributions from the Funds
under applicable state or local law.
Each 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, each Fund must meet certain income, distribution and
diversification requirements. In any year in which a Fund qualifies as a
regulated investment company and timely distributes all of its income and
substantially all of its net tax-exempt interest income, the Fund generally will
not pay any U.S. federal income or excise tax.
Dividends that are distributed by a Fund that are derived from interest income
exempt from federal income tax and are designated by the Fund as
"exempt-interest dividends" will be exempt from regular federal income taxation.
However, if tax exempt interest earned by the Fund constitutes an item of tax
preference for purposes of the alternative minimum tax, then a portion of the
exempt-interest dividends paid by the Fund may likewise constitute an item of
tax preference. In addition, any exempt-interest dividends received by corporate
shareholders may constitute an adjustment to alternative minimum taxable income
for purposes of the alternative minimum tax and the environmental tax imposed
under Code Sections 55 and 59A, respectively. Only the Tax-Free Fund is expected
to be eligible to designate certain of its dividends as "exempt-interest
dividends."
Exempt-interest dividends of a Fund, although exempt from regular federal
income tax, are includible in the tax base for determining the extent to which
Social Security and railroad benefits will be subject to federal income tax. All
shareholders are required to report the receipt of dividends and
30
<PAGE> 35
distributions, including exempt-interest dividends, on their federal income tax
returns.
Dividends paid out of a Fund's investment company taxable income (including
dividends, taxable interest and net short-term capital gains) will be taxable to
a U.S. Shareholder as ordinary income. A portion of the Equity Fund, Balanced
Fund and Aggressive Growth Fund's income may consist of dividends paid by U.S.
corporations. Therefore, a portion of the dividends paid by these Funds may be
eligible for the corporate dividends-received deduction. Because no portion of
the other Funds' income is expected to consist of dividends paid by U.S.
corporations, no portion of the dividends paid by those Funds is expected to 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 by a Fund as capital gain dividends are
taxable as long-term capital gains, regardless of the length of time the
Shareholder has held a Fund's Shares. Dividends are generally treated in the
same manner whether received in cash or reinvested in additional Fund Shares.
A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by a Fund in October, November or December of that year
to shareholders of record on a date in such a month and paid by a 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.
Each year the Funds will notify Shareholders of the tax status of dividends
and distributions.
Investments in securities that are issued at a discount will result each year
in income to a Fund equal to a portion of the excess of the face value of the
securities over their issue price, even though the Fund receives no cash
interest payments from the securities. Such income generally will, however, have
to be distributed to shareholders on a timely basis.
A portion of the income earned by the Tax-Free Fund may be taxable rather than
tax-exempt. Accordingly, a portion of the dividends paid by the Tax-Free Fund
may be taxable to Shareholders.
Any gain or loss realized by a Shareholder upon the sale or other disposition
of Shares of a Fund, or upon receipt of a distribution in complete liquidation
of a Fund, generally will be a taxable capital gain or loss which will be
long-term or short-term, generally depending upon the Shareholder's holding
period for the Shares. In some cases, Shareholders will not be permitted to take
sales charges into account in determining the amount of gain or loss realized on
the disposition of their shares. See "Additional Tax Information" in the
Statement of Additional Information.
Shareholders should be aware that redeeming shares of the Tax-Free Fund after
tax-exempt interest income has been accrued by the Fund but before that income
has been declared as a dividend may be disadvantageous. This is because the
gain, if any, on the redemption will be taxable, even though such gain may be
attributable in part to the accrued tax-exempt interest which, if distributed to
the shareholder as a dividend rather than as redemption proceeds, might have
qualified as an exempt-interest dividend.
The Funds may be required to withhold U.S. federal income tax at the rate of
31% of all reportable dividends (which does not include exempt-interest
dividends) and capital gain distributions (as well as redemptions for all Funds
except the U.S. Government Fund), 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.
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<PAGE> 36
STATE AND LOCAL TAXES
The Group is organized as a Massachusetts business trust and, under current
law, neither the Group nor any Fund is liable for any income or franchise tax in
the Commonwealth of Massachusetts as long as each Fund qualifies as a regulated
investment company under the Code.
Distributions from all of the Funds may be subject to state and local taxes.
Distributions of a Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local taxes in certain states. In certain states, distributions
of the Tax-Free Fund which are derived from interest on obligations of that
state or its municipalities or any political subdivisions thereof may be exempt
from state and local taxes. Shareholders should consult their tax advisers
regarding the possible exclusion for state and local income tax purposes of the
portion of dividends paid by a Fund which is attributable to interest from
obligations of the U.S. Government and its agencies, authorities and
instrumentalities, and the particular tax consequences to them of an investment
in a Fund, including the application of state and local tax laws.
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, of whom two 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 BISYS Fund Services, 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. BISYS Fund Services Inc.
receives fees from the Funds for acting as administrator. BISYS Fund Services
Ohio, Inc. receives fees from the Funds for acting as Transfer Agent and for
providing certain fund accounting services.
INVESTMENT ADVISER
AMCORE Capital Management, Inc., 501 Seventh Street, Rockford, Illinois
("AMCORE"), is the investment adviser for the Funds. AMCORE is a wholly-owned
subsidiary of AMCORE Bank, which is controlled by AMCORE Financial Inc., a bank
holding company.
AMCORE, previously a division of AMCORE Bank, has been providing investment
management services through AMCORE Bank or AMCORE Trust Company, or one of their
predecessors, for almost 100 years. AMCORE Bank also offers a wide range of
other financial services to its clients. Further, AMCORE Trust Company ranks as
one of the 200 largest trust companies in the United States. As of March 31,
1995, AMCORE Trust Company served as administrator and AMCORE served as
investment adviser for approximately $2.4 billion in assets, consisting of $1.3
billion in individual assets, $836 million in pension and profit sharing assets
and $232 million in corporate trust assets.
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for
32
<PAGE> 37
the day-to-day management of the Fund's portfolios:
<TABLE>
<S> <C>
FIXED INCOME, FIXED TOTAL RETURN,
TAX-FREE AND BALANCED FUNDS
Elizabeth S. Pierson AMCORE Capital
Vice President and Management, Inc. (or
Senior Fixed Income a predecessor) since
Manager 1984. Ms. Pierson
began her investment
career in 1984. She
has a B.S. degree
from the University
of Illinois,
Champaign-Urbana and
is a Chartered
Financial Analyst.
She has been
responsible for
investment management
and credit
responsibilities in
numerous individually
managed advisory
portfolios. She also
manages the fixed
securities of the
Balanced Fund.
EQUITY FUND
Darrell C. Thompson AMCORE Capital
Senior Vice Management, Inc. (or
President and a predecessor) since
Senior Equity 1973. He began his
Manager investment career in
1957. He has a B.S.
from Southern Illi-
nois University. He
has been responsible
for investment
operations in the
Equity Fund since its
inception.
AGGRESSIVE GROWTH FUND
Clyde N. Power AMCORE Capital
Vice President and Management, Inc.
Equity Manager since 1995. He has
been responsible for
investment operations
in the Aggressive
Growth Fund since its
inception. Prior to
July 1995 he was em-
ployed by Union Bank
of San Francisco as
Managing Director of
Investing Operations.
He began his
investment career in
1972. He has a B.B.A.
from the University
of Wisconsin -
Milwaukee and is a
Chartered Financial
Analyst.
BALANCED FUND
Julie A. O'Rourke AMCORE Capital
Assistant Vice Management, Inc. (or
President and a predecessor) since
Equity Manager 1991 where she began
her investment
career. She has a
B.S. from Rockford
College, Rockford,
Illinois, and is a
Chartered Financial
Analyst. Other
responsibilities
include equity
research and equity
account management.
She is chairperson of
the Equity Research
Committee. She has
the responsibility of
managing the equity
securities of the
Balanced Fund.
</TABLE>
Subject to the general supervision of the Group's Board of Trustees and in
accordance with a Fund's investment objective and restrictions, AMCORE manages
the investments of a Fund, makes decisions with respect to and places orders for
all purchases and sales of a Fund's portfolio securities, and maintains a Fund's
records relating to such purchases and sales.
For the services provided and expenses assumed pursuant to its investment
advisory agreement with
33
<PAGE> 38
the Group, AMCORE receives a fee computed daily and paid monthly, at the annual
rate of sixty one-hundredths of one percent (.60%) of each of the Fixed Income
Fund and the Tax-Free Fund's average daily net assets, at the annual rate of
forty one-hundredths of one percent (.40%) of the U.S. Government Fund's average
daily net assets, at the annual rate of seventy-five one-hundredths of one
percent (.75%) of each of the Equity Fund, the Fixed Total Return Fund and the
Balanced Fund's average daily net assets and at the annual rate of ninety-five
one-hundredths of one percent (.95%) of the Aggressive Growth Fund's average
daily net assets. Unlike advisory fees paid by most other investment companies,
these fees do not change as a result of the amount of assets in a Fund. The
investment advisory fees and administrative fees paid by the Fixed Income Fund,
Tax-Free Fund, Equity Fund, Balanced Fund, Aggressive Growth Fund and Fixed
Total Return Fund, absent fee waivers, are higher than those paid by most other
investment companies. AMCORE may periodically waive all or a portion of its
advisory fee to increase the net income of a Fund available for distribution as
dividends. AMCORE may not seek reimbursement of such waived fees at a later
date. The waiver of such fee will cause the yield of a Fund to be higher than it
would otherwise be in the absence of such a waiver.
ADMINISTRATOR AND DISTRIBUTOR
Winsbury 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 Fund Services Inc. is wholly-owned by 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 Funds'
administration and operation. For expenses assumed and services provided as
administrator pursuant to its management and administration agreement with the
Funds, the Administrator receives a fee computed daily and paid periodically,
calculated at an annual rate of twenty one-hundredths of one percent (.20%) of
the Fund's average daily net assets. The Administrator may periodically waive
all or a portion of its administrative fee to increase the net income of a 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 of a Fund to be higher than it would otherwise be in the absence
of such a waiver.
The Distributor acts as agent for the Funds in the distribution of their
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.
EXPENSES AND PORTFOLIO TRANSACTIONS
AMCORE 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, if any) purchased for the Funds.
The policy of each of the Funds, regarding purchases and sales of securities
for its portfolio, is that primary consideration be given to obtaining the most
favorable prices and efficient execution of transactions. In seeking to
implement the Fund's policies, AMCORE effects transactions with those brokers
and dealers whom AMCORE believes provide the most favorable prices and are
capable of providing efficient executions. If AMCORE 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 AMCORE. 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 AMCORE in serving both the Funds
34
<PAGE> 39
and other clients and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to AMCORE in carrying out
its obligations to the Funds.
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 commission charged by other broker-dealers in
recognition of their research or execution services. In order to cause the Funds
to pay such higher commissions, AMCORE 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 AMCORE's overall responsibilities to the Funds. In
reaching this determination, AMCORE 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.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Group has adopted a
Distribution and Shareholder Service Plan (the "Plan"), under which each Fund is
authorized to pay or reimburse The BISYS Fund Services Inc., as Distributor, a
periodic amount calculated at an annual rate not to exceed twenty-five one
hundredths of one percent (.25%) of the average daily net assets of the Fund.
Such amount may be used to pay banks (including AMCORE Bank) for administrative
and shareholder services and to pay broker-dealers and other institutions for
similar services, including distribution services (each such bank, broker-dealer
and other institution is hereafter referred to as a "Participating
Organization"), pursuant to an agreement between The Winsbury Company and the
Participating Organization. Under the Plan, a Participating Organization may
include The Winsbury Company, its subsidiaries and its affiliates.
As authorized by the Plan, the Distributor has entered into a Rule 12b-1
Agreement with AMCORE Bank pursuant to which AMCORE Bank has agreed to provide
certain administrative and shareholder support services in connection with
Shares of a Fund purchased and held by AMCORE Bank for the accounts of its
Customers and Shares of a Fund purchased and held by Customers of AMCORE Bank
directly, including, but not limited to, processing automatic investments of
AMCORE Bank's Customer account cash balances in Shares of a Fund and
establishing and maintaining the systems, accounts and records necessary to
accomplish this service, establishing and maintaining Customer accounts and
records, processing purchase and redemption transactions for Customers,
answering routine Customer questions concerning the Funds and providing such
office space, equipment, telephone facilities and personnel as is necessary and
appropriate to accomplish such matters. In consideration of such services,
AMCORE Bank may receive a monthly fee, computed at the annual rate of
twenty-five one-hundredths of one percent (.25%) of the average aggregate net
asset value of the Shares of the Fund held during the period in Customer
accounts for which AMCORE Bank has provided services under this Agreement. BISYS
Fund Services Inc. will be compensated by a Fund in an amount equal to any
payments it makes to AMCORE Bank under the Rule 12b-1 Agreement. Currently, it
is intended that no such amounts will be paid under the Plan or the Rule 12b-1
Agreement by any of the Funds.
ADMINISTRATIVE SERVICES PLAN
The Group has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay compensation to banks and other
financial institutions (each a "Service Organization"), which may include the
Adviser, its correspondent and affiliated banks, and BISYS Fund Services Inc.,
which agree to provide certain ministerial, recordkeeping and/or administrative
support services for their customers or account holders (collectively,
"customers") who are the beneficial or record owner of Shares of that Fund. In
consideration for such services, a Service Organization receives a fee from a
Fund, computed daily and paid monthly, at an annual rate of up to .25% of the
average daily net asset value of Shares
35
<PAGE> 40
of that Fund owned beneficially or of record by such Service Organization's
customers for whom the Service Organization provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Service Organizations receiving such compensation to
perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of Shares of the Funds,
such as processing dividend and distribution payments from the Fund on behalf of
customers, providing periodic statements to customers showing their positions in
the Shares of the Fund, providing sub-accounting with respect to Shares
beneficially owned by such customers and providing customers with a service that
invests the assets of their accounts in Shares of the Fund pursuant to specific
or pre-authorized instructions.
As authorized by the Services Plan, the Group has entered into a Servicing
Agreement with an affiliate of the Adviser pursuant to which the affiliate has
agreed to provide certain administrative support services in connection with
Shares of the Funds owned of record or beneficially by its customers. Such
administrative support services may include, but are not limited to, (i)
processing dividend and distribution payments from a Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the affiliate; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
affiliate's customers or the information necessary for sub-accounting; (vi) if
required by law, forwarding shareholder communications from a Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to its customers; (vii) aggregating and
processing purchase, exchange, and redemption requests from customers and
placing net purchase, exchange, and redemption orders for customers; and (viii)
providing customers with a service that invests the assets of their account in
the Shares pursuant to specific or pre-authorized instructions. In consideration
of such services, the Group, on behalf of each Fund, has agreed to pay the
affiliate a monthly fee, computed at an annual rate of twenty-five
one-hundredths of one percent (.25%) of the average aggregate net asset value of
Shares of that Fund held during the period by customers for whom the affiliate
has provided services under the Servicing Agreement.
CUSTODIAN
The First National Bank of Chicago, One First National Plaza, Chicago,
Illinois 60670 (the "Custodian") serves as custodian for the Funds. Pursuant to
the Custodian Agreement with the Group, the Custodian receives compensation from
each 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.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Fund Services Ohio, Inc. ("BISYS Fund Services" or the "Transfer
Agent"), an affiliate of Winsbury, 3435 Stelzer Road, Columbus, Ohio 43219,
serves as the Funds' transfer agent pursuant to a Transfer Agency Agreement for
the Funds and receives a fee for such services. BISYS Fund Services also
provides certain accounting services for the Funds pursuant to a Fund Accounting
Agreement and receives a fee for such services. See "MANAGEMENT OF THE COMPANY--
Transfer Agency and Fund Accounting Services" in the Statement of Additional
Information for further information.
BANKING LAWS
AMCORE and AMCORE Bank believe that they possess the legal authority to
perform the advisory services and the administrative and shareholder support
services for the Funds contemplated by the investment advisory agreement and the
Rule 12b-1 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 interpreta-
36
<PAGE> 41
tions of present and future statutes and regulations could change the manner in
which AMCORE or AMCORE Bank could continue to perform such services for the
Funds. It is not anticipated, however, that any change in the Funds' 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 auditors. 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 and the Plan.
Overall responsibility for the management of the Funds 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.
An annual or special meeting of shareholders is not generally required by the
Declaration of Trust, the 1940 Act or other applicable authority. To the extent
that such a meeting is 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. The Group will, to the extent required under the
1940 Act, assist Shareholders in calling such a meeting. 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.
As of April 30, 1996, the Funds believe that AMCORE Trust Company indirectly
possessed or shared power to dispose of or vote with respect to more than 25% of
the outstanding shares of each of the Funds, except the U.S. Government Fund,
and therefore may be considered to be a controlling person of those Funds for
purposes of the Investment Company Act of 1940.
PERFORMANCE INFORMATION
From time to time the Funds may advertise their 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
37
<PAGE> 42
calculated for the period since the establishment of the Fund and will reflect
the imposition of the maximum sales charge. 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 redemption value of the investment at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions) and annualizing the difference. 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 for
each of the Variable NAV Funds will be computed by dividing the Fund's net
investment income per share earned during a recent one-month period by the
Fund's per share maximum offering price (reduced by any undeclared earned income
expected to be paid shortly as a dividend) on the last day of the period and
annualizing the result.
The yield of the U.S. Government Fund refers to the income generated by an
investment therein over a seven-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 an annual 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 the U.S. Government Fund is assumed to be reinvested weekly.
The effective yield is slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
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. 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 it includes capital items which are often non-recurring in
nature, whereas yield does not include such items.
The Tax-Free Fund may also present its tax equivalent yield and tax equivalent
effective yield which reflect 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 and effective yield,
respectively, of the Tax-Free Fund. The tax equivalent yield and tax equivalent
effective yield will be significantly higher than the yield and effective yield
of the Tax-Free Fund.
Investors may also judge the performance of the Fund by comparing its
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 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, sales literature 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. Any fees charged by AMCORE Bank or any of its
affiliates with respect to customer accounts for investing in shares of the
Funds will not be included in performance calculations; such fees, if charged,
will reduce the actual performance from that quoted.
Additional information regarding the investment performance of the Funds is
contained in the annual report of the Funds which may be obtained without charge
by writing or calling the Funds.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent auditors.
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 pro-
38
<PAGE> 43
ceeds 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.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of a Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of Shareholders of a 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 (b) the holders of more than 50% of
the outstanding votes of Shareholders of a 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) 438-6375.
39
<PAGE> 44
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 45
INVESTMENT ADVISER
AMCORE Capital Management, Inc.
501 Seventh Street
Rockford, Illinois 61104
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services Inc.
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
INDEPENDENT AUDITORS
Ernst & Young LLP
10 West Broad Street
Suite 2300
Columbus, Ohio 43215
<TABLE>
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TABLE OF CONTENTS Page
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<S> <C>
Prospectus Summary.................... 2
Fee Table............................. 5
Financial Highlights.................. 7
Investment Objectives, Policies and
Risk Factors........................ 12
Investment Restrictions............... 22
Valuation of Shares................... 23
How to Purchase and Redeem Shares..... 24
Dividends and Taxes................... 30
Management of the Group............... 32
General Information................... 37
</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.
[AMCORE Capital Management, Inc. Logo]
Investment Adviser
BISYS FUND SERVICES INC.
PROSPECTUS DATED APRIL 30, 1996
<PAGE> 46
AMCORE Vintage U.S. Government Obligations Fund
AMCORE Vintage Fixed Income Fund
AMCORE Vintage Intermediate Tax-Free Fund
AMCORE Vintage Equity Fund
AMCORE Vintage Balanced Fund
AMCORE Vintage Aggressive Growth Fund
AMCORE Vintage Fixed Total Return Fund
Each an Investment Portfolio of
The Coventry Group
Statement of Additional Information
May 1, 1996
This Statement of Additional Information is not a prospectus, but should be
read in conjunction with the prospectus for the AMCORE Vintage U.S. Government
Obligations Fund (the "U.S. Government Fund"), the AMCORE Vintage Fixed Income
Fund (the "Fixed Income Fund"), the AMCORE Vintage Intermediate Tax-Free Fund
(the "Tax-Free Fund"), the AMCORE Vintage Equity Fund (the "Equity Fund"), the
AMCORE Vintage Balanced Fund (the "Balanced Fund"), the AMCORE Vintage
Aggressive Growth Fund (the "Aggressive Growth Fund") and the AMCORE Vintage
Fixed Total Return Fund (the "Fixed Total Return Fund") each dated the same
date as the date hereof (the "Prospectus"), hereinafter referred to
collectively as the "Funds" and singly, a "Fund". The Funds are seven separate
investment portfolios of The Coventry Group (the "Group"), an open-end
management investment company. This Statement of Additional Information is
incorporated in its entirety into the Prospectus. Copies of the Prospectus may
be obtained by writing the Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or
by telephoning toll free (800) 438-6375.
<PAGE> 47
TABLE OF CONTENTS
-----------------
<TABLE>
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Page
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<S> <C>
THE COVENTRY GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Information on Portfolio Instruments . . . . . . . . . . . . . . . . . . . . 1
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Valuation of the U.S. Government Fund . . . . . . . . . . . . . . . . . . . . . . . . . 18
Valuation of the Variable NAV Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 19
Matters Affecting Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
MANAGEMENT OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Banking Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Administrative Services Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Transfer Agency and Fund Accounting Services . . . . . . . . . . . . . . . . . . . . . . 36
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Description of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Vote of a Majority of the Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . 38
Additional Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Additional Tax Information Concerning the Tax-Free Fund . . . . . . . . . . . . . . . . 45
Yields and Total Returns of the U.S. Government Fund . . . . . . . . . . . . . . . . . . 47
Yields and Total Returns of the Variable NAV Funds . . . . . . . . . . . . . . . . . . . 48
Performance Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
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<PAGE> 48
STATEMENT OF ADDITIONAL INFORMATION
THE COVENTRY GROUP
The Coventry Group (the "Group") is an open-end management investment
company which issues its Shares in separate series. Each series of Shares
relates to a separate portfolio of assets. The portfolios advised by AMCORE
Capital Management, Inc. ("AMCORE") are each referred to generally as a "Fund".
This Statement of Additional Information deals with the seven Funds, the AMCORE
Vintage U.S. Government Obligations Fund, the AMCORE Vintage Fixed Income Fund,
the AMCORE Vintage Intermediate Tax-Free Fund, the AMCORE Vintage Equity Fund,
the AMCORE Vintage Balanced Fund, the AMCORE Vintage Aggressive Growth Fund and
the AMCORE Vintage Fixed Total Return. Much of the information contained in
this Statement of Additional Information expands upon subjects discussed in the
Prospectus of the Funds. Capitalized terms not defined herein are defined in
such Prospectus. No investment in Shares of a Fund should be made without
first reading the Prospectus. References to the "Variable NAV Funds" shall
mean all of the Funds except the U.S. Government Fund.
INVESTMENT OBJECTIVE AND POLICIES
Additional Information on Portfolio Instruments
- -----------------------------------------------
The following policies supplement the investment objective and
policies of the Funds as set forth in their respective Prospectuses.
BANK OBLIGATIONS. Each Fund, with the exception of the U.S.
Government Fund, may invest in bank obligations such as bankers' acceptances,
certificates of deposit, and time deposits.
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.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks having, at the time of investment, capital, surplus,
and undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of
deposit and time deposits will be those of domestic and foreign banks and
savings and loan associations, if (a) at the time of investment the depository
institution has capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of its most recently published
<PAGE> 49
financial statements), or (b) the principal amount of the instrument is insured
in full by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER. Commercial paper consists of unsecured promissory
notes issued by corporations. Issues of commercial paper normally have
maturities of less than nine months and fixed rates of return.
The Fixed Income Fund and the Tax-Free Fund may purchase commercial
paper consisting of issues rated at the time of purchase within the two highest
rating categories by a nationally recognized statistical rating organization
(an "NRSRO"). The Balanced Fund, Aggressive Growth Fund and Equity Fund may
purchase commercial paper consisting of issues rated at the time of purchase
within the three highest rating categories by an NRSRO. The Fixed Total Return
Fund may purchase commercial paper consisting of issues rated at the time of
purchase within the four highest rating categories by an NRSRO. These Funds
may also invest in commercial paper that is not rated but is determined by
AMCORE under guidelines established by the Group's Board of Trustees, to be of
comparable quality.
VARIABLE AMOUNT MASTER DEMAND NOTES. Variable amount master demand
notes, in which the Fixed Income Fund, the Fixed Total Return Fund, the
Balanced Fund and the Tax-Free Fund may invest, are unsecured demand notes that
permit the indebtedness thereunder to vary and provide for periodic
readjustments in the interest rate according to the terms of the instrument.
They are also referred to as variable rate demand notes. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, a
Fund may demand payment of principal and accrued interest at any time or during
specified periods not exceeding one year, depending upon the instrument
involved, and may resell the note at any time to a third party. AMCORE 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 dollar-weighted average
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
interest rate adjustment or the period of time remaining until the principal
amount can be recovered from the issuer through demand.
VARIABLE AND FLOATING RATE NOTES. The Tax-Free Fund, the Fixed Total
Return Fund, the Balanced Fund and the Fixed Income Fund may acquire variable
and floating rate notes, subject to such Fund's investment objective, policies
and restrictions. A
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<PAGE> 50
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 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
AMCORE under guidelines approved by the Group's Board of Trustees to be of
comparable quality at the time of purchase to rated instruments eligible for
purchase under the Fund's investment policies. In making such determinations,
AMCORE 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 continuously monitor their financial
condition. Although there may be no active secondary market with respect to a
particular variable or floating rate note purchased by a Fund, the Fund may
resell the note any time to a third party. The absence of an active secondary
market, however, could make it difficult for the Fund to dispose of a variable
or floating rate note in the event the issuer of the note defaulted on its
payment obligations and the Fund could, as a result or for other reasons,
suffer a loss to the extent of the default. Variable or floating rate notes
may be secured by bank letters of credit.
U.S. GOVERNMENT OBLIGATIONS. The U.S. Government Fund will invest
exclusively in short-term U.S. Treasury bills, notes and other obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities subject to its investment objective and policies
(collectively, "U.S. Government Obligations"). The Variable NAV Funds may also
invest in U.S. Government Obligations. Obligations of certain agencies and
instrumentalities of the U.S. Government are supported by the full faith and
credit of the U.S. Treasury; others are supported by the right of the issuer to
borrow from the Treasury; 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 will invest in the obligations of such agencies or
instrumentalities only when AMCORE believes that the credit risk with respect
thereto is minimal.
STRIPPED TREASURY SECURITIES. The Variable NAV Funds may invest in
certain U.S. Government Obligations referred to as
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<PAGE> 51
"Stripped Treasury Securities." Stripped Treasury Securities are U.S. Treasury
securities that have been stripped of their unmatured interest coupons (which
typically provide for interest payments semi-annually), interest coupons that
have been stripped from such U.S. Treasury securities, and receipts and
certificates for such stripped debt obligations and stripped coupons. Stripped
bonds and stripped coupons are sold at a deep discount because the buyer of
those securities receives only the right to receive a future fixed payment on
the security and does not receive any rights to periodic interest payments on
the security.
Stripped Treasury Securities will include coupons that have been
stripped from U.S. Treasury bonds, which may be held through the Federal
Reserve Bank's book-entry system called "Separate Trading of Registered
Interest and Principal of Securities" ("STRIPS") or through a program entitled
"Coupon Under Book-Entry Safekeeping" ("CUBES").
The U.S. Government does not issue Stripped Treasury Securities
directly. The STRIPS program, which is ongoing, is designed to facilitate the
secondary market in the stripping of selected U.S. Treasury notes and bonds
into separate interest and principal components. Under the program, the U.S.
Treasury continues to sell its notes and bonds through its customary auction
process. A purchaser of those specified notes and bonds who has access to a
book-entry account at a Federal Reserve bank, however, may separate the
Treasury notes and bonds into interest and principal components. The selected
Treasury securities thereafter may be maintained in the book-entry system
operated by the Federal Reserve in a manner that permits the separate trading
and ownership of the interest and principal payments.
CUBES, like STRIPS, are direct obligations of the U.S. Government.
CUBES are coupons that have previously been physically stripped from U.S.
Treasury notes and bonds, but which were deposited with the Federal Reserve
Bank's book-entry system and are now carried and transferable in book-entry
form only. Only stripped U.S. Treasury coupons maturing on or after January
15, 1988, that were stripped prior to January 5, 1987, were eligible for
conversion to book-entry form under the CUBES program.
By agreement, the underlying debt obligations will be held separate
from the general assets of the custodian and nominal holder of such securities,
and will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of or against the custodian or any person claiming through
the custodian, and the custodian will be responsible for applying all payments
received on those underlying debt obligations to the related receipts or
certificates without making any deductions
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<PAGE> 52
other than applicable tax withholding. The custodian is required to maintain
insurance for the protection of holders of receipts or certificates in
customary amounts against losses resulting from the custody arrangement due to
dishonest or fraudulent action by the custodian's employees. The holders of
receipts or certificates, as the real parties in interest, are entitled to the
rights and privileges of the underlying debt obligations, including the right,
in the event of default in payment of principal or interest to proceed
individually against the issuer without acting in concert with other holders of
those receipts or certificates or the custodian.
FOREIGN INVESTMENTS. The Equity Fund, the Fixed Income Fund, the
Fixed Total Return Fund, the Balanced Fund and the Aggressive Growth Fund may,
subject to their respective investment objectives and policies, invest in
certain obligations or securities of foreign issuers. Permissible investments
include American Depository Receipts ("ADRs") for the Equity Fund, the Balanced
Fund and the Aggressive Growth Fund and Yankee Obligations (as described in the
Prospectus) for the Fixed Income Fund, the Fixed Total Return Fund, the
Balanced Fund and the Aggressive Growth Fund. Investment in securities issued
by foreign branches of U.S. banks, foreign banks, or other foreign issuers,
including ADRs may subject such Funds to investment risks that differ in some
respects from those related to investment in obligations of U.S. domestic
issuers. Such risks include 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 other taxes, and the adoption
of other foreign governmental restrictions.
Additional risks include 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 many securities traded in
these markets may be less liquid and their prices more volatile than U.S.
securities, and the risk that custodian and brokerage costs may be higher.
Foreign issuers of securities or obligations are often subject to accounting
treatment and engage in business practices different from those respecting
domestic issuers of similar securities or obligations. Foreign branches of
U.S. banks and foreign banks may be subject to less stringent reserve
requirements than those applicable to domestic branches of U.S. banks.
FUTURE CONTRACTS. As discussed in the Prospectus, the Funds may invest
in futures contracts and options thereon (stock or bond index futures contracts
or interest rate futures or options) to hedge or manage risks associated with a
Fund's securities investments. To enter into a futures contract, an amount of
cash and cash equivalents, equal to the market value of the futures contracts,
is deposited in a segregated account with the Fund's Custodian and/or in a
margin account with a broker to collateralize the position and thereby ensure
that the use of such futures is unleveraged. Positions in futures contracts may
be closed out only on an exchange that provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, a Fund would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if a Fund had insufficient
cash, it might have to sell portfolio securities to meet daily margin
requirements at a time when it would be disadvantageous to do so. In addition, a
Fund might be required to make delivery of the instruments underlying futures
contracts it holds. The inability to close options and futures positions also
could have an adverse impact on a Fund's ability to hedge or manage risks
effectively.
Successful use of futures by a Fund is also subject to the Adviser's
ability to predict movements correctly in the direction of the market. There is
an imperfect correlation between movements in the price of the future and
movements in the price of the securities that are the subject of the hedge. In
addition, the price of futures may not correlate perfectly with movement in the
cash market due to certain market distortions. Due to the possibility of price
distortion in the futures market and because of the imperfect correlation
between the movements in the cash market and movements in the price of futures,
a correct forecast of general market trends or interest rate movements by the
Adviser may still not result in a successful hedging transaction over a short
time frame.
The trading of futures contracts is also subject to the risk of
trading halts, suspension, exchange or clearing house equipment failures,
government intervention, insolvency of a brokerage firm or clearing house or
other disruption of normal trading activity, which could at times make it
difficult or impossible to liquidate existing position or to recover excess
variation margin payments.
CALL OPTIONS. The Equity Fund, the Balanced Fund and the Aggressive
Growth Fund may write (sell) "covered" call options
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and purchase options to close out options previously written by them. Such
options must be listed on a National Securities Exchange and issued by the
Options Clearing Corporation. The purpose of writing covered call options is
to generate additional premium income for a Fund. 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. Covered call options
will generally be written on securities which, in AMCORE's opinion, are not
expected to make any major price moves in the near future but which, over the
long term, are deemed to be attractive investments for a Fund.
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, he may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring him 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 repurchasing an option
identical to that previously sold. To secure his obligation to deliver the
underlying security in the case of a call option, a writer is required to
deposit in escrow the underlying security or other assets in accordance with
the rules of the Options Clearing Corporation. A Fund will write only covered
call options. (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 all call
options exceeds 15% of the market value of its net assets.)
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with a Fund's
investment objective. 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 the Funds will not do), but
capable of enhancing a 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
retains the risk of loss should the price of the security decline. Unlike one
who owns securities not subject to an option, a Fund has no control over when
it may be required to sell the underlying securities, since it may be assigned
an exercise notice at any time prior to the expiration of its obligation as a
writer. If a call option which a Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain
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may be offset by a decline in the market value of the underlying security
during the option period. If the call option is exercised, the 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 a Fund's
Custodian. The 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 assets.
The premium received is the market value of an option. The premium a
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, AMCORE, 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 such option. 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 a Fund is computed (close of the
New York Stock Exchange), or, in the absence of such sale, the latest asked
price. The liability will be extinguished upon expiration of the option, the
purchase of an identical option in a 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. The Funds will pay transaction
costs in connection with the writing of options to close out previously written
options. Such transaction costs are
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normally higher than those applicable to purchases and sales of portfolio
securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
PUT OPTIONS. The Tax-Free Fund may acquire "puts" with respect to
Municipal Securities held in its portfolio and the Fixed Income Fund, the Fixed
Total Return Fund and the Balanced Fund may acquire "puts" with respect to debt
securities held in their portfolio. A put is a right to sell or redeem a
specified security (or securities) at a certain time or within a certain period
of time at a specified exercise price. The put may be an independent feature
or may be combined with a reset feature that is designed to reduce downward
price volatility as interest rates rise by enabling the holder to liquidate the
investment prior to maturity.
The amount payable to a Fund upon its exercise of a "put" is normally
(i) the Fund's acquisition cost of the securities subject to the put (excluding
any accrued interest which the Fund paid on the 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 the
portfolio assets. Puts may also be used to facilitate that reinvestment of
assets at a rate of return more favorable than that of the underlying security.
Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of
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calculating the remaining maturity of those securities and the dollar-weighted
average portfolio maturity of a Fund's assets.
The Tax-Free Fund, the Fixed Income Fund, the Fixed Total Return Fund
and the Balanced Fund will, if necessary or advisable, pay for puts either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the puts (thus reducing the yield to maturity otherwise
available for the same securities).
WHEN-ISSUED SECURITIES. As discussed in the Prospectuses of the
Funds, each of the Funds may purchase securities on a when-issued or
delayed-delivery 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 Fund will
generally not pay for such securities or start earning interest on them until
they are received. When a Fund agrees to purchase securities on a when-issued
basis, the Custodian will set aside cash or liquid portfolio securities equal
to the amount of the commitment in a separate account. Normally, the Custodian
will set aside portfolio securities to satisfy the purchase commitment, and in
such a case, the Fund may be required subsequently to place additional assets
in the separate account in order to assure that the value of the account
remains equal to the amount of the Fund's commitment. It may be expected that
the Fund's net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets aside
cash. In addition, because a Fund will set aside cash or liquid portfolio
securities to satisfy its purchase commitments in the manner described above,
the Fund's liquidity and the ability of AMCORE to manage it might be affected
in the event its commitments to purchase when-issued securities ever exceeded
25% of the value of its total assets.
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 incurring a loss or missing the opportunity to obtain a price
considered to be advantageous. The Funds will engage in when issued delivery
transactions only for the purpose of acquiring portfolio securities consistent
with the Funds' investment objectives and policies, not for investment
leverage.
MORTGAGE-RELATED SECURITIES. The Fixed Income Fund, the Fixed Total
Return Fund and the Balanced Fund may, consistent with their respective
investment objectives and policies, invest in mortgage-related securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Mortgage-
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related securities, for purposes of the Prospectus and this Statement of
Additional Information, represent pools of mortgage loans assembled for sale to
investors by various governmental agencies such as the Government National
Mortgage Association and government-related organizations such as the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation,
as well as by nongovernmental issuers such as commercial banks, savings and
loan institutions, mortgage bankers and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a Fund purchases a mortgage-related security
at a premium, that portion may be lost if there is a decline in the market
value of the security whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true, since in periods of declining interest rates the
mortgages underlying the securities are prone to prepayment, thereby shortening
the average life of the security and shortening the period of time over which
income at the higher rate is received. Conversely, when interest rates are
rising, the rate of prepayment tends to decrease, thereby lengthening the
average life of the security and lengthening the period of time over which
income at the lower rate is received. For these and other reasons, a
mortgage-related security's average maturity may be shortened or lengthened as
a result of interest rate fluctuations and, therefore, it is not possible to
predict accurately the security's return to the 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. Treasury to make payments under its
guarantee. Mortgage-related securities issued by the Federal National Mortgage
Association ("FNMA") include FNMA
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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 stockholders.
Fannie Maes are guaranteed as to timely payment of the principal and interest
by FNMA. Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also
known as "Freddie Macs" or "PCs"). The FHLMC is a corporate instrumentality of
the United States, created pursuant to an Act of Congress, which is owned
entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the
United States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by the
FHLMC. The FHLMC guarantees either ultimate collection or timely payment of
all principal payments on the underlying mortgage loans. When the FHLMC does
not guarantee timely payment of principal, FHLMC may remit the amount due on
account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable.
The Fixed Income Fund, the Fixed Total Return Fund and the Balanced
Fund may also invest in mortgage-related securities which are collateralized
mortgage obligations ("CMOs") structured on pools of mortgage pass-through
certificates or mortgage loans. The CMOs in which these Funds may invest
represent securities issued by a private corporation or a U.S. Government
instrumentality that are backed by a portfolio of mortgages or mortgage-backed
securities held under an indenture. The issuer's obligations to make interest
and principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. CMOs are issued with a number of classes or series
which have different maturities and which may represent interests in some or
all of the interest or principal on the underlying collateral or a combination
thereof. CMOs of different classes are generally retired in sequence as the
underlying mortgage loans in the mortgage pool are repaid. In the event of
sufficient early prepayments on such mortgages, the class or series of a CMO
first to mature generally will be retired prior to its maturity. Thus, the
early retirement of a particular class or series of a CMO held by a Fund would
have the same effect as the prepayment of mortgages underlying a
mortgage-backed pass-through security. Mortgage-related securities will be
purchased only if rated within the three highest bond rating categories
assigned by an NRSRO or, if unrated, which AMCORE deems to present attractive
opportunities and are of comparable quality.
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OTHER ASSET-BACKED SECURITIES. The Fixed Income Fund and the Fixed
Total Return Fund may also invest in interests in pools of receivables, such as
motor vehicle installment purchase obligations (known as Certificates of
Automobile Receivables or CARSSM) and credit card receivables (known as
Certificates of Amortizing Revolving Debts or CARDSSM). Such securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pools of assets. Such
securities may also be debt instruments which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and issuing such debt.
Such securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain time period by a letter of credit issued by a financial institution
(such as a bank or insurance company) unaffiliated with the issuers of such
securities. Non-mortgage backed securities will be purchased by the Fixed
Income Fund only when rated within the three highest rating categories by an
NRSRO at the time of purchase. In addition, such securities generally will
have remaining estimated lives at the time of purchase of 7 years or less.
SECURITIES OF OTHER INVESTMENT COMPANIES. Each Fund, except the U.S.
Government Fund, may invest in securities issued by the other investment
companies, including Shares of the U.S. Government Fund. Each of these Funds
currently intends to limit its investments so that, as determined immediately
after a securities purchase is made: (a) not more than 5% of the value of its
total assets will be invested in the securities of any one investment company;
(b) not more than 10% of the value of its total assets will be invested in the
aggregate in securities of investment companies as a group; (c) not more than
3% of the outstanding voting stock of any one investment company will be owned
by any of the Funds; and (d) not more than 10% of the outstanding voting stock
of any one investment company will be owned in the aggregate by the Funds. As
a shareholder of another investment company, a Fund would bear, along with
other shareholders, its pro rata portion of that company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations.
In order to avoid the imposition of additional fees as a result of investing in
Shares of the U.S. Government Fund, AMCORE and the Administrator will waive any
portion of their usual service fees that are attributable to investments
therein by another Fund. Investment companies in which a Fund may invest may
also impose a sales or
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distribution charge in connection with the purchase or redemption of their
shares and other types of commissions or charges. Such charges will be payable
by the Funds and, therefore, will be borne directly by Shareholders.
REPURCHASE AGREEMENTS. Securities held by each Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, a Fund would
acquire securities from member banks of the Federal Deposit Insurance
Corporation and registered broker-dealers which AMCORE deems creditworthy under
guidelines approved by the Group's 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 continually 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, the Fund holding such obligation
would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price under the
agreement, or to the extent that the disposition of such securities by the Fund
were delayed pending court action. Additionally, there is no controlling legal
precedent confirming that a Fund would be entitled, as against a claim by such
seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although the Board of Trustees of the Group believes that, under
the regular procedures normally in effect for custody of a Fund's securities
subject to repurchase agreements and under federal laws, a court of competent
jurisdiction would rule in favor of the Group if presented with the question.
Securities subject to repurchase agreements will be held by that Fund's
custodian or another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a Fund
under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. As discussed in the Prospectuses, each
Fund may borrow funds for temporary purposes by entering into reverse
repurchase agreements in accordance with that Fund's investment restrictions.
Pursuant to such agreements, a Fund would sell portfolio securities to
financial institutions such as banks and broker-dealers, and agree to
repurchase the securities at a mutually agreed-upon date and price. At the
time a Fund enters into a reverse repurchase agreement, it will place in a
segregated custodial account assets such as U.S. Government securities or
other liquid, high grade debt securities consistent with the Fund's investment
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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 the securities sold by a
Fund may decline below the price at which a Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered to be borrowings by a
Fund under the 1940 Act.
MUNICIPAL SECURITIES. Under normal market conditions, at least 80% of
the net assets of the Tax-Free Fund will be invested in Municipal Securities,
the interest on which is exempt from the regular federal income tax and not
treated as a preference item for purposes of the federal alternative minimum
tax imposed on non-corporate taxpayers.
Municipal Securities include debt obligations issued by governmental
entities 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. Private activity bonds that are issued by
or on behalf of public authorities to finance various privately-operated
facilities are included within the term Municipal Securities if the interest
paid thereon is exempt from regular federal individual income taxes and is not
treated as a preference item for purposes of the federal alternative minimum
tax.
Other types of Municipal Securities which the Tax-Free Fund may
purchase are short-term General Obligation Notes, Tax Anticipation Notes, Bond
Anticipation Notes, Revenue Anticipation Notes, Tax-Exempt Commercial Paper,
Project Notes, Construction Loan Notes and other forms of short-term tax-exempt
loans. Such instruments are issued with a short-term maturity in anticipation
of the receipt of tax funds, the proceeds of bond placements or other revenues.
The Tax-Free Fund will not purchase municipal lease obligations.
Project Notes are issued by a state or local housing agency and are
sold by the Department of Housing and Urban Development. While the issuing
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.
As described in the Prospectus, the two principal classifications of
Municipal Securities consist of "general
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obligation" and "revenue" issues. The Tax-Free Fund may also acquire "moral
obligation" issues, which are normally issued by special purpose authorities.
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 obligation and the rating of the issue. The ratings of Moody's
and S&P 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 securities with the same maturity, interest rate and
rating may have different yields, while securities of the same maturity and
interest rate with different ratings may have the same yield. Subsequent to
purchase, 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 Tax-Free
Fund. AMCORE will consider such an event in determining whether the Fund
should continue to hold the obligation.
An issuer's obligations for 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 or upon the ability of municipalities to
levy taxes. 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
- -----------------------
The following are fundamental investment restrictions and are in
addition to the investment restrictions set forth in the Prospectus. Under
these restrictions a Fund may not:
1. Underwrite securities issued by other persons, except to the
extent that a Fund may be deemed to be an underwriter under certain securities
laws in the disposition of "restricted securities";
2. Purchase or sell commodities or commodities contracts, except
to the extent disclosed in the current Prospectus of the Funds;
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3. Purchase or sell real estate (although investments by the
Equity Fund and the Fixed Income Fund in marketable securities of companies
engaged in such activities are not prohibited by this restriction);
The following additional investment restrictions are not fundamental
and may be changed with respect to a particular Fund without the vote of a
majority of the outstanding Shares of that Fund. A Fund may not:
1. Enter into repurchase agreements with maturities in excess of
seven days if such investments, together with other instruments in that Fund
that are not readily marketable or are otherwise illiquid, exceed 15% of that
Fund's total assets (10% of total assets in the case of the U.S. Government
Fund).
2. Purchase securities on margin, except for use of short-term
credit necessary for clearance of purchases of portfolio securities;
3. Engage in any short sales;
4. Purchase participation or direct interests in oil, gas or
other mineral exploration or development programs (although investments by the
Equity Fund and the Fixed Income Fund in marketable securities of companies
engaged in such activities are not prohibited in this restriction);
5. Purchase securities of other investment companies, except (a)
in connection with a merger, consolidation, acquisition or reorganization, and
(b) a Fund may invest in other investment companies, including other Funds for
which AMCORE acts as adviser, as specified in the Prospectus subject to such
restrictions as may be imposed by the 1940 Act or any state laws.
6. Invest more than 5% of total assets in puts, calls, straddles,
spreads or any combination thereof.
7. With respect to the Equity Fund, the Balanced Fund, the
Aggressive Growth Fund, the Fixed Total Return Fund, and the Fixed Income Fund,
invest more than 5% of total assets in securities of issuers which together
with any predecessors have a record of less than three years continuous
operation.
If any percentage restriction described above 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 of the Funds is calculated by
dividing the lesser of a 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, 1996, the annual turnover rate of
the Equity Fund was 33.23%, the annual turnover rate of the Fixed Income Fund
was 113.25%, the annual turnover rate of the Tax-Free Fund was 14.21%, the
annual turnover rate of the Balanced Fund was 61.72%, the annual turnover rate
of the Fixed Total Return Fund was 69.30%, and the annual turnover rate of the
Aggressive Growth Fund was 4.31%. However, portfolio turnover for any of the
Funds 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 a
Fund. Portfolio turnover will not be a limiting factor in making investment
decisions.
Because the U.S. Government Fund intends to invest entirely in
securities with maturities of less than one year and because the Commission
requires such securities to be excluded from the calculation of the portfolio
turnover rate, the portfolio turnover with respect to the U.S. Government Fund
is expected to be zero percent for regulatory purposes.
NET ASSET VALUE
As indicated in the Prospectuses, the net asset value of each Fund is
determined and the Shares of each Fund are priced as of the Valuation Times
applicable to such Fund on each Business Day of the Company. A "Business Day"
constitutes any day on which the New York Stock Exchange (the "NYSE") is open
for trading, the Federal Reserve Bank of Chicago is open, and any other day
except days on which there are not sufficient changes in the value of the
Fund's portfolio securities that the Fund's net asset value might be materially
affected and days during which no Shares are tendered for redemption and no
orders to purchase Shares are received. Currently, either the NYSE or Federal
Reserve Bank of Chicago are closed on New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day.
- 17 -
<PAGE> 65
Valuation of the U.S. Government Fund
- -------------------------------------
The U.S. Government Fund has 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 discount or premium, 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 the U.S. Government Fund would receive
if it sold the instrument. The value of securities in the U.S. Government Fund
can be expected to vary inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, the U.S. Government Fund will maintain a
dollar-weighted average portfolio maturity appropriate to the Fund's objective
of maintaining a stable net asset value per share, provided that the Fund will
not purchase securities with a remaining maturity of more than 397 days
(thirteen months) (securities subject to repurchase agreements may bear longer
maturities) nor maintain a dollar-weighted average portfolio maturity which
exceeds 90 days. The Group's Board of Trustees has also undertaken to
establish procedures reasonably designed, taking into account current market
conditions and the investment objective of the Fund, to stabilize the net asset
value per share of the Fund 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 the Fund calculated by using available market quotations deviates from
$1.00 per Share. In the event such deviation exceeds one-half of one percent,
Rule 2a-7 requires that the Board of Trustees promptly consider what action, if
any, should be initiated. If the Trustees believe that the extent of any
deviation from the 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 average portfolio maturity, withholding or reducing dividends, reducing the
number of the U.S. Government Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per share determined by using
available market quotations.
Valuation of the Variable NAV Funds
- -----------------------------------
Portfolio securities for which market quotations are readily available
are valued based upon their current available bid prices in the principal
market (closing sales prices if the
- 18 -
<PAGE> 66
principal market is an exchange) in which such securities are normally traded.
Unlisted securities for which market quotations are readily available will be
valued at the current quoted bid prices. Other securities and assets for which
quotations are not readily available, including restricted securities and
securities purchased in private transactions, are valued at their fair value in
AMCORE's best judgement under the supervision of the Group's Board of Trustees.
Among the factors that will be considered, if they apply, in valuing
portfolio securities held by the Variable NAV Funds are the existence of
restrictions upon the sale of the security by the Fund, the absence of a market
for the security, the extent of any discount in acquiring the security, the
estimated time during which the security will not be freely marketable, the
expenses of registering or otherwise qualifying the security for public sale,
underwriting commissions if underwriting would be required to effect a sale,
the current yields on comparable securities for debt obligations traded
independently of any equity equivalent, changes in the financial condition and
prospects of the issuer, and any other factors affecting fair value. In making
valuations, opinions of counsel may be relied upon as to whether or not
securities are restricted securities and as to the legal requirements for
public sale.
The Group may use a pricing service to value certain portfolio
securities where the prices provided are believed to reflect the fair market
value of such securities. A pricing service would normally consider such
factors as yield, risk, quality, maturity, type of issue, trading
characteristics, special circumstances and other factors it deems relevant in
determining valuations of normal institutional trading units of debt securities
and would not rely exclusively on quoted prices. The methods used by the
pricing service and the valuations so established will be reviewed by the Group
under the general supervision of the Group's Board of Trustees. Several
pricing services are available, one or more of which may be used by the Adviser
from time to time.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Matters Affecting Redemption
- ----------------------------
Shares in each of the Group's Funds are sold on a continuous basis by
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services (the
"Distributor") and BISYS Fund Services has agreed to use appropriate efforts to
solicit all purchase orders. In addition to purchasing Shares directly from
the Distributor, Shares may be purchased through procedures established by
BISYS Fund Services in connection with the requirements of accounts at
- 19 -
<PAGE> 67
AMCORE Bank, N.A., ("AMCORE Bank") or AMCORE Bank's affiliated entities
(collectively, "Banks"). Customers purchasing Shares of the Funds may include
officers, directors, or employees of the Banks.
The Group may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Commission, (b) the Exchange is closed for other than customary weekend and
holiday closings, (c) the Commission has by order permitted such suspension for
the protection of security holders of the Group, or (d) the Commission has
determined that an emergency exists as a result of which (i) disposal by the
Group of securities owned by it is not reasonably practical, or (ii) it is not
reasonably practical for the Group to determine the fair value of its net
assets.
The Group may redeem Shares of each of the Funds involuntarily if
redemption appears appropriate in light of the Group's responsibilities under
the 1940 Act. See "NET ASSET VALUE" in this Statement of Additional
Information.
MANAGEMENT OF THE GROUP
Trustees and Officers
- ---------------------
Overall responsibility for management of the Group rests with its
Board of Trustees, which is elected by the Shareholders of the Group. The
Trustees elect the officers of the Group to supervise actively its day-to-day
operations.
The names of the Trustees and officers of the Group, their addresses,
ages and principal occupations during the past five years are as follows:
- 20 -
<PAGE> 68
<TABLE>
<CAPTION>
Position(s)
Held With Principal Occupation
Name, Address and Age the Group During Past 5 Years
--------------------- ----------- -------------------
<S> <C> <C>
Walter B. Grimm* Chairman, President and From June 1992 to present,
3435 Stelzer Road Trustee employee of BISYS Fund Services,
Columbus, Ohio 43219 from 1987 to June 1992, President
Age: 50 of Leigh Investments (investment
firm).
Maurice G. Stark Trustee Retired. Until December 31,
505 King Avenue 1994, Vice President-Finance and
Columbus, Ohio 43201 Treasurer, Battelle Memorial
Age: 60 Institute (scientific research
and development service
corporation).
Michael M. Van Buskirk Trustee From June 1991 to present,
37 West Broad Street Executive Vice President of The
Suite 1001 Ohio Bankers' Association (trade
Columbus, Ohio 43215 association); from September 1987
Age: 48 to June 1991, Vice President -
Communications, TRW Information
Systems Group (electronic and
space engineering).
</TABLE>
- 21 -
<PAGE> 69
<TABLE>
<CAPTION>
Position(s)
Held With Principal Occupation
Name, Address and Age the Group During Past 5 Years
--------------------- ----------- -------------------
<S> <C> <C>
Chalmers P. Wylie Trustee From April 1993 to present, Of
754 Stonewood Court Counsel, Kegler Brown Hill &
Columbus, Ohio 43235 Ritter; from January 1993 to
Age: 75 present, Adjunct Professor, Ohio
State University; from January
1967 to January 1993, member of
the United States House of
Representatives for the 15th
District of Ohio.
Nancy E. Converse* Trustee and Secretary From July 1990 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 46
J. David Huber Vice President From June, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 49
William J. Tomko Treasurer From April 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 36
R. Jeffrey Young Assistant Secretary From October 1993 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, Ohio 43219 from April 1989 to October 1993,
Age: 33 employee of The Heebink Group.
</TABLE>
- 22 -
<PAGE> 70
<TABLE>
<CAPTION>
Position(s)
Held With Principal Occupation
Name, Address and Age the Group During Past 5 Years
--------------------- ----------- -------------------
<S> <C> <C>
Alaina V. Metz Assistant Secretary From 1995 to present, employee of
3435 Stelzer Road BISYS Fund Services; from May
Columbus, Ohio 43219 1989 to June 1995, employee of
Age: 28 Alliance Capital Management.
Stephen G. Mintos Assistant Secretary From January 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 41
Richard B. Ille Assistant Secretary From July 1990 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 31
James E. White Assistant Secretary From December 1995 to present,
3435 Stelzer Road employee of BISYS Fund Services;
Columbus, Ohio 43219 from 1991 to 1995, employee of
Age: 41 Financial Horizons; from 1988 to
1991, employee of INVEST
Corporation.
</TABLE>
_____________________________
*Mr. Grimm and Ms. Converse are each considered to be an "interested
person" of the Group as defined in the 1940 Act.
As of the date of this Statement of Additional Information, the
Group's officers and Trustees, as a group, own less than 1% of the Funds'
outstanding Shares.
The officers of the Group receive no compensation directly from the
Group for performing the duties of their offices. BISYS Fund Services receives
fees from the Funds for acting as Administrator. BISYS Fund Services Ohio,
Inc. receives fees from the Funds for acting as transfer agent and for
providing certain
- 23 -
<PAGE> 71
fund accounting services. Messrs. Huber, Mintos, Grimm, Ille, White, Tomko and
Young and Ms. Converse and Ms. Metz are employees of BISYS Fund Services.
Trustees of the Group not affiliated with BISYS Fund Services receive
from the Group an annual retainer of $1,250 and a fee of $250 for each Board of
Trustees meeting attended and are reimbursed for all out-of-pocket expenses
relating to attendance at such meetings. Trustees who are affiliated with
BISYS Fund Services do not receive compensation from the Group.
For the fiscal year ended March 31, 1996, the Trustees received the
following compensation from the Group and from certain other investment
companies (if applicable) that have the same investment adviser as the Funds or
an investment adviser that is an affiliated person of the Group's investment
adviser:
<TABLE>
<CAPTION>
Pension or
Retirement Total Compensation
Aggregate Benefits Accrued Est. Annual From Registrant
Name of Compensation As Part of Fund Benefits Upon and Fund Complex
Trustee from the Funds Expenses Retirement Paid to Trustees
- ------- -------------- ---------------- ------------- --------------------
<S> <C> <C> <C> <C>
Roy E. Rogers* $0 $0 $0 $0
Walter B. Grimm $0 $0 $0 $0
Nancy E. Converse** $0 $0 $0 $0
Maurice G. Stark $4,428 $0 $0 $6,000
Michael Van Buskirk $4,428 $0 $0 $6,000
Chalmers P. Wylie $4,428 $0 $0 $6,000
________________________
<FN>
* Mr. Rogers resigned his position as an officer and Trustee of the
Group effective February 26, 1996.
** Ms. Converse became a Trustee effective April 22, 1996.
</TABLE>
Investment Adviser
- ------------------
Investment advisory services are provided by AMCORE Capital
Management, Inc., Rockford, Illinois, pursuant to an Investment Advisory
Agreement dated as of December 1, 1992 (the "Investment Advisory Agreement").
Under the Investment Advisory Agreement, the Adviser has agreed to
provide investment advisory services as described in the Prospectus of the
Funds. For the services provided pursuant to the Investment Advisory
Agreement, each of the Funds pays AMCORE a fee computed daily and paid monthly,
at an annual rate, calculated as a percentage of the average daily net assets
of that Fund, of sixty one-hundredths of one percent (.60%) for both
- 24 -
<PAGE> 72
the Fixed Income Fund and the Tax-Free Fund, of forty one-hundredths of one
percent (.40%) for the U.S. Government Fund, of seventy-five one-hundredths of
one percent (.75%) for the Equity Fund, the Balanced Fund and the Fixed Total
Return Fund and ninety-five one-hundredths of one percent (.95%) for the
Aggressive Growth Fund. AMCORE may periodically waive all or a portion of its
advisory fee with respect to any Fund to increase the net income of the Fund
available for distribution as dividends.
The total investment advisory fees paid to AMCORE for the last three
fiscal years is as follows:
U.S. Government Fund - for the fiscal year ended March 31, 1994 AMCORE
earned investment advisory fees of $205,668 and AMCORE waived or assumed
advisory fees in the amount of $205,668; for the fiscal year ended March 31,
1995 AMCORE earned investment advisory fees of $228,531 and AMCORE waived or
assumed advisory fees in the amount of $228,530; and for the fiscal year ended
March 31, 1996 AMCORE earned investment advisory fees of $307,937 and AMCORE
waived or assumed advisory fees in the amount of $253,524.
Fixed Income Fund - for the fiscal year ended March 31, 1994 AMCORE
earned investment advisory fees of $168,316 and AMCORE waived or assumed
advisory fees in the amount of $290,223; for the fiscal year ended March 31,
1995 AMCORE earned investment advisory fees of $519,120 and AMCORE neither
waived nor assumed any advisory fees; and for the fiscal year ended March 31,
1996 AMCORE earned investment advisory fees of $471,823 and AMCORE neither
waived nor assumed any advisory fees.
Tax-Free Fund - for the fiscal year ended March 31, 1994 AMCORE earned
investment advisory fees of $30,914 and AMCORE waived or assumed advisory fees
in the amount of $121,009; for the fiscal year ended March 31, 1995 AMCORE
earned investment advisory fees of $93,944 and AMCORE waived or assumed
advisory fees in the amount of $93,908; and for the fiscal year ended March 31,
1996 AMCORE earned investment advisory fees of $116,481 and AMCORE waived or
assumed advisory fees in the amount of $95,510.
Equity Fund - for the fiscal year ended March 31, 1994 AMCORE earned
investment advisory fees of $289,264 and AMCORE waived or assumed advisory fees
in the amount of $495,945; for the fiscal year ended March 31, 1995 AMCORE
earned investment advisory fees of $1,023,315 and AMCORE waived or assumed
advisory fees in the amount of $501; and for the fiscal year ended March 31,
1996 AMCORE earned investment advisory fees of $1,328,833 and AMCORE neither
waived nor assumed any advisory fees.
- 25 -
<PAGE> 73
Balanced Fund - for the fiscal year ended March 31, 1996 (covering the
period from commencement of operations on June 1, 1995 through March 31, 1996),
AMCORE earned investment advisory fees of $101,842 and AMCORE neither waived
nor assumed any advisory fees.
Aggressive Growth Fund - for the fiscal year ended March 31, 1996
(covering the period from commencement of operations on October 3, 1995 through
March 31, 1996), AMCORE earned investment advisory fees of $81,829 and AMCORE
neither waived nor assumed any advisory fees.
Fixed Total Return Fund - for the fiscal year ended March 31, 1996
(covering the period from commencement of operations on June 15, 1995 through
March 31, 1996), AMCORE earned investment advisory fees of $243,794 and AMCORE
neither waived nor assumed any advisory fees.
Unless sooner terminated, the Investment Advisory Agreement will
continue in effect as to each Fund until January 31, 1997 and from year to year
thereafter, if such continuance is approved at least annually by the Group's
Board of Trustees or by vote of a majority of the outstanding Shares of the
relevant Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Funds' Prospectus), and a majority of the Trustees who are not parties to the
Investment Advisory Agreement or interested persons (as defined in the 1940
Act) of any party to the Investment Advisory Agreement by votes cast in person
at a meeting called for such purpose. The Investment Advisory Agreement is
terminable as to a Fund at any time on 60 days' written notice without penalty
by the Trustees, by vote of a majority of the outstanding Shares of that Fund,
or by AMCORE. The Investment Advisory Agreement also terminates automatically
in the event of any assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that AMCORE shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
a Fund in connection with the performance of the Investment Advisory 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 AMCORE in the
performance of its duties, or from reckless disregard by AMCORE of its duties
and obligations thereunder.
Portfolio Transactions
- ----------------------
Pursuant to the Investment Advisory Agreement, AMCORE determines,
subject to the general supervision of the Board of Trustees of the Group and in
accordance with each Fund's
- 26 -
<PAGE> 74
investment objective and restrictions, which securities are to be purchased and
sold by a Fund, and which brokers are to be eligible to execute such Fund's
portfolio transactions. Purchases and sales of portfolio securities with
respect to the Funds usually are principal transactions in which portfolio
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. Purchases from underwriters of
portfolio securities generally 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 on 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,
AMCORE, where possible, will deal directly with dealers who make a market in
the securities involved except in those circumstances where better price and
execution are available elsewhere.
The Group, on behalf of 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
AMCORE, AMCORE Bank, the Distributor, or their affiliates, and will not give
preference to AMCORE's correspondents 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
AMCORE. Any such other Fund, investment company or account may also invest in
the same securities as the Group on behalf of the Funds. When a purchase or
sale of the same security is made at substantially the same time on behalf of
more than one Fund or a Fund and another investment company or account, the
transaction will be averaged as to price, and available investments will be
allocated as to amount in a manner which AMCORE 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, AMCORE may aggregate the securities to be sold or purchased for a Fund
with those to be sold or purchased for the other Funds or for other investment
companies or accounts in order to obtain best execution. As provided by the
Investment Advisory Agreement, in making investment recommendations for the
Funds, AMCORE will not inquire or take into consideration whether an issuer of
securities proposed for purchase or sale by the Funds is a customer of AMCORE
its parent or its subsidiaries or affiliates and, in dealing with its
- 27 -
<PAGE> 75
customers, AMCORE, its parent, subsidiaries, and affiliates will not inquire or
take into consideration whether securities of such customers are held by the
Funds.
For the fiscal years ended March 31, 1994, 1995 and 1996, the Equity
Fund paid brokerage commissions which amounted to $126,766, $132,486 and
$214,078, respectively. For the fiscal year ended March 31, 1996, the Balanced
Fund and the Aggressive Growth Fund paid brokerage commissions which amounted
to $9,625 and $28,295, respectively. None of such commissions were paid to any
affiliate of the Funds, AMCORE or AMCORE Bank.
Banking Laws
- ------------
AMCORE and AMCORE Bank believe that it possesses the legal authority
to perform the services for the Funds contemplated by the Prospectus, this
Statement of Additional Information, the Investment Advisory Agreement, and
Rule 12b-1 Agreement described below without violation of applicable statutes
and regulations. AMCORE and AMCORE Bank have been advised by its counsel that,
while the question is not free from doubt, such laws should not prevent AMCORE
and AMCORE Bank from providing the services required of it under the Investment
Advisory Agreement and Rule 12b-1 Agreement. 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 AMCORE or AMCORE Bank from continuing to perform such services for
the Funds. Depending upon the nature of any changes in the services which
could be provided by AMCORE or AMCORE Bank the Board of Trustees of the Group
would review the Funds' relationship with AMCORE or AMCORE Bank and consider
taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of AMCORE and AMCORE Bank and/or its
affiliated and correspondent banks in connection with Customer purchases of
Shares of the Funds, those banks might be required to alter materially or
discontinue the services offered by them to Customers. It is not anticipated,
however, that any change in the Group's method of operations would affect its
net asset value per share or result in financial losses to any Customer.
Administrator
- -------------
BISYS Fund Services serves as administrator (the "Administrator") to
the Funds pursuant to a Management and
- 28 -
<PAGE> 76
Administration Agreement dated November 10, 1992 (the "Administration
Agreement"). The Administrator assists in supervising all operations of each
Fund (other than those performed by the Adviser under the Investment Advisory
Agreement, the Custodian under the Custodian Agreement and by BISYS Fund
Services Ohio under the Transfer Agency Agreement and Fund Accounting
Agreement). The Administrator is a broker-dealer registered with the
Commission, and is a member of the National Association of Securities Dealers,
Inc. The Administrator provides financial services to institutional clients.
Under the Administration Agreement, the Administrator has agreed to
maintain office facilities; furnish statistical and research data, clerical,
certain bookkeeping services and stationery and office supplies; prepare the
periodic reports to the Commission on Form N-SAR or any replacement forms
therefor; compile data for, prepare for execution by the Funds and file all of
the Funds' federal and state tax returns and required tax filings other than
those required to be made by the Funds' Custodian and Transfer Agent; prepare
compliance filings pursuant to state securities laws with the advice of the
Group's counsel; assist to the extent requested by the Funds with the Fund's
preparation of its Annual and Semi-Annual Reports to Shareholders and its
Registration Statement; compile data for, prepare and file timely Notices to
the Commission required pursuant to Rule 24f-2 under the 1940 Act; keep and
maintain the financial accounts and records of each Fund, including calculation
of daily expense accruals; and generally assists in all aspects of the Funds'
operations other than those performed by AMCORE under the Investment Advisory
Agreement, by the Custodian under the Custodian Agreement and by BISYS Fund
Services Ohio, Inc. under the Transfer Agency Agreement and Fund Accounting
Agreement. 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 as
Administrator and expenses assumed pursuant to the Administration Agreement,
equal to the lesser of (1) a fee calculated daily and paid periodically, at the
annual rate equal to twenty one-hundredths of one percent (.20%) of that Fund's
average daily net assets or (2) such other fee as may be agreed upon in writing
by the Group and the Administrator. The Administrator may periodically waive
all or a portion of its fee with respect to any Fund in order to increase the
net income of one or more of the Funds available for distribution as dividends.
The total administrative fees paid to the Administrator for the last
three fiscal years is as follows:
- 29 -
<PAGE> 77
U.S. Government Fund - for the fiscal year ended March 31, 1994 the
Administrator earned administrative fees of $189,109 and the Administrator
waived or assumed administrative fees in the amount of $16,559; for the fiscal
year ended March 31, 1995 the Administrator earned administrative fees of
$194,251 and the Administrator waived or assumed administrative fees in the
amount of $34,280; and for the fiscal year ended March 31, 1996 the
Administrator earned administrative fees of $280,842 and the Administrator
neither waived nor assumed any administrative fees.
Fixed Income Fund - for the fiscal year ended March 31, 1994 the
Administrator earned administrative fees of $79,075 and the Administrator
waived or assumed administrative fees in the amount of $73,771; for the fiscal
year ended March 31, 1995 the Administrator earned administrative fees of
$149,164 and the Administrator waived or assumed administrative fees in the
amount of $23,832; and for the fiscal year ended March 31, 1996 the
Administrator earned administrative fees of $157,275 and the Administrator
neither waived nor assumed any administrative fees.
Tax-Free Fund - for the fiscal year ended March 31, 1994 the
Administrator earned administrative fees of $28,025 and the Administrator
waived or assumed administrative fees in the amount of $22,616; for the fiscal
year ended March 31, 1995 the Administrator earned administrative fees of
$54,011 and the Administrator waived or assumed administrative fees in the
amount of $8,606; and for the fiscal year ended March 31, 1996 the
Administrator earned administrative fees of $70,638 and the Administrator
neither waived nor assumed any administrative fees.
Equity Fund - for the fiscal year ended March 31, 1994 the
Administrator earned administrative fees of $107,409 and the Administrator
waived or assumed administrative fees in the amount of $101,980; for the fiscal
year ended March 31, 1995 the Administrator earned administrative fees of
$235,677 and the Administrator waived or assumed administrative fees in the
amount of $37,341; and for the fiscal year ended March 31, 1996 the
Administrator earned administrative fees of $354,359 and the Administrator
neither waived nor assumed any administrative fees.
Balanced Fund - for the fiscal year ended March 31, 1996 (covering the
period from commencement of operations on June 1, 1995 through March 31, 1996),
the Administrator earned administrative fees of $27,159 and the Administrator
neither waived nor assumed any administrative fees.
- 30 -
<PAGE> 78
Aggressive Growth Fund - for the fiscal year ended March 31, 1996
(covering the period from commencement of operations on October 3, 1995 through
March 31, 1996), the Administrator earned administrative fees of $17,227 and
the Administrator neither waived nor assumed any administrative fees.
Fixed Total Return Fund - for the fiscal year ended March 31, 1996
(covering the period from commencement of operations on June 15, 1995 through
March 31, 1996), the Administrator earned administrative fees of $65,678 and
the Administrator neither waived nor assumed any administrative fees.
Unless sooner terminated as provided therein, the Administration
Agreement will continue in effect until January 31, 1998. The Administration
Agreement thereafter shall be renewed automatically for successive five-year
terms, unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term. The Administration Agreement is terminable with respect to a particular
Fund only upon mutual agreement of the parties to the Administration Agreement
and for cause (as defined in the Administration Agreement) by the party
alleging cause, on not less than 60 days' notice by the Group's Board of
Trustees or by the Administrator.
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
any of the Funds in connection with the matters to which the Administration
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 the Administrator of its obligations and duties thereunder.
Expenses
- --------
If total expenses borne by any of the Funds in any fiscal year exceed
expense limitations imposed by applicable state securities regulations, AMCORE
and the Administrator will reimburse that Fund by the amount of such excess in
proportion to their respective fees. As of the date of this Statement of
Additional Information, the only expense limitation applicable to each of the
Funds limits its aggregate annual expenses, including management and advisory
fees but excluding interest, taxes, distribution fees, brokerage commissions,
and certain other expenses, to 2 1/2% of the first $30 million of that Fund's
average net assets, 2% of the next $70 million of that Fund's average net
assets, and 1/2% of that Fund's remaining average net assets. Any expense
exceeding applicable limitations will be estimated daily and reconciled and
waived or returned on a
- 31 -
<PAGE> 79
monthly basis. Fees imposed upon customer accounts by AMCORE or its affiliated
or correspondent banks for cash management services are not included within
Fund expenses for purposes of any such expense limitation.
Distributor
- -----------
BISYS Fund Services serves as distributor to the Funds pursuant to the
Distribution Agreement dated April 3, 1992, (the "Distribution Agreement").
Unless otherwise terminated, the Distribution Agreement will continue in effect
until January 31, 1997, and from year to year thereafter if such continuance is
approved at least annually (i) by the Group's Board of Trustees or by the vote
of a majority of the outstanding Shares of the Funds and (ii) by the vote of a
majority of the Trustees of the Group who are not parties to the Distribution
Agreement or interested persons (as defined in the 1940 Act) of any party to
the Distribution Agreement, cast in person at a meeting called for the purpose
of voting on such approval. The Distribution Agreement may be terminated in
the event of any assignment, as defined in the 1940 Act.
In its capacity as Distributor, BISYS Fund Services solicits orders
for the sale of Shares, advertises and pays the costs of advertising, office
space and the personnel involved in such activities. The Distributor receives
no compensation under the Distribution Agreement with the Group, but may
receive compensation under the Distribution and Shareholder Service Plan
described below.
The Distributor received $23,750 in commissions on the Equity Fund for
the fiscal year ended March 31, 1994, of which it retained $4,541 after dealer
reallowances. The Distributor received no commissions on sales of the Fixed
Income or Tax-Free Fund for the fiscal year ended March 31, 1994. The
Distributor received $30,080 in commissions on the Equity Fund for the fiscal
year ended March 31, 1995, of which it retained $5,751 after dealer
reallowances. The distributor received no commissions on sales of the Fixed
Income or Tax-Free Fund for the fiscal year ended March 31, 1995. The Funds
are no longer sold subject to commissions and no commissions were received by
the Distributor for the fiscal year ended March 31, 1996.
As described in the Prospectus, the Group has adopted a Distribution
and Shareholder Service Plan (the "Plan") pursuant to Rule 12b-1 under the 1940
Act under which the Funds are authorized to pay the Distributor for payments it
makes to banks, including AMCORE Bank, other institutions and broker-dealers,
and for expenses the Distributor and any of its affiliates or subsidiaries
incur (with all of the foregoing organizations being
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referred to as "Participating Organizations") for providing administration,
distribution or shareholder service assistance. Payments to such Participating
Organizations may be made pursuant to agreements entered into with the
Distributor. The Plan authorizes the Funds to make payments to the Distributor
in an amount not to exceed, on an annual basis, 0.25% of the average daily net
assets of a Fund. As required by Rule 12b-1, the Plan was approved by the sole
Shareholder of each Fund and by the Board of Trustees, including a majority of
the Trustees who are not interested persons of the Funds and who have no direct
or indirect financial interest in the operation of the Plan (the "Independent
Trustees"). The Plan may be terminated with respect to a Fund by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding Shares of the Fund. The Trustees review quarterly a written report
of such costs and the purposes for which such costs have been incurred. The
Plan may be amended by vote of the Trustees including a majority of the
Independent Trustees, cast in person at a meeting called for that purpose.
However, any change in the Plan that would materially increase the distribution
cost to a Fund requires Shareholder approval. For so long as the Plan is in
effect, selection and nomination of the Independent Trustees shall be committed
to the discretion of such disinterested persons. All agreements with any
person relating to the implementation of the Plan may be terminated, with
respect to a Fund, at any time on 60 days' written notice without payment of
any penalty, by vote of a majority of the Independent Trustees or by vote of a
majority of the outstanding Shares of the Fund. The Plan will continue in
effect for successive one-year periods, provided that each such continuance is
specifically approved (i) by the vote of a majority of the Independent
Trustees, and (ii) by the vote of a majority of the entire Board of Trustees
cast in person at a meeting called for that purpose. The Board of Trustees has
a duty to request and evaluate such information as may be reasonably necessary
for it to make an informed determination of whether the Plan should be
implemented or continued. In addition the Trustees in approving the Plan must
determine that there is a reasonable likelihood that the Plan will benefit each
Fund and its Shareholders.
The Board of Trustees of the Group believes that the Plan is in the
best interests of each of the Funds since it encourages Fund growth. As a Fund
grows in size, certain expenses, and therefore total expenses per Share, may be
reduced and overall performance per Share may be improved.
As authorized by the Plan, the Distributor has entered into a Rule
12b-1 Agreement with AMCORE Bank pursuant to which AMCORE Bank has agreed to
provide certain administrative and shareholder support services in connection
with Shares of the Funds purchased
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<PAGE> 81
and held by AMCORE Bank for the accounts of its Customers and Shares of the
Fund purchased and held by Customers of AMCORE Bank directly, including, but
not limited to, processing automatic investments of AMCORE Bank's Customer
account cash balances in Shares of a Fund and establishing and maintaining the
systems, accounts and records necessary to accomplish this service,
establishing and maintaining Customer accounts and records, processing purchase
and redemption transactions for Customers, answering routine Customer questions
concerning the Funds and providing such office space, equipment, telephone and
personnel as is necessary and appropriate to accomplish such matters. In
consideration of such services the Distributor has agreed to pay AMCORE Bank a
monthly fee, computed at the annual rate of .25% of the average aggregate net
asset value of Shares of the Funds held during the period in Customer accounts
for which AMCORE Bank has provided services under this Agreement. The
Distributor will be compensated by each Fund in an amount equal to its payments
to AMCORE Bank with respect to each Fund's Shares under the Rule 12b-1
Agreement.
For the fiscal year ended March 31, 1996, no distribution fees were
paid by the Funds.
Administrative Services Plan
- ----------------------------
The Group has adopted an Administrative Services Plan (the "Services
Plan") pursuant to which each Fund is authorized to pay compensation to banks
and other financial institutions (each a "Service Organization"), which may
include the Adviser, its correspondent and affiliated banks, and the
Distributor, which agree to provide certain ministerial, recordkeeping and/or
administrative support services for their customers or account holders
(collectively, "customers") who are the beneficial or record owner of Shares of
that Fund. In consideration for such services, a Service Organization receives
a fee from a Fund, computed daily and paid monthly, at an annual rate of up to
.25% of the average daily net asset value of Shares of that Fund owned
beneficially or of record by such Service Organization's customers for whom the
Service Organization provides such services.
The servicing agreements adopted under the Services Plan (the
"Servicing Agreements") require the Service Organizations receiving such
compensation to perform certain ministerial, recordkeeping and/or
administrative support services with respect to the beneficial or record owners
of Shares of the Funds, such as processing dividend and distribution payments
from the Fund on behalf of customers, providing periodic statements to
customers showing their positions in the Shares of the Fund, providing
sub-accounting with respect to Shares beneficially owned by such
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<PAGE> 82
customers and providing customers with a service that invests the assets of
their accounts in Shares of the Fund pursuant to specific or pre-authorized
instructions.
As authorized by the Services Plan, the Group has entered into
Servicing Agreements with the Adviser pursuant to which the Adviser has agreed
to provide certain administrative support services in connection with Shares of
the Funds owned of record or beneficially by its customers. Such
administrative support services may include, but are not limited to, (i)
processing dividend and distribution payments from a Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the Adviser; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Adviser's customers or the information necessary for sub-accounting; (vi) if
required by law, forwarding shareholder communications from a Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to its customers; (vii) aggregating and
processing purchase, exchange, and redemption requests from customers and
placing net purchase, exchange, and redemption orders for customers; and (viii)
providing customers with a service that invests the assets of their account in
the Shares pursuant to specific or pre-authorized instructions. In
consideration of such services, the Group, on behalf of each Fund, has agreed
to pay the Adviser a monthly fee, computed at an annual rate of twenty-five
one-hundredths of one percent (.25%) of the average aggregate net asset value
of Shares of that Fund held during the period by customers for whom the Adviser
has provided services under the Servicing Agreement.
Custodian
- ---------
The First National Bank of Chicago serves as custodian (the
"Custodian") to the Funds pursuant to the Custodian Agreement dated as of July
15, 1994, between the Group and the Custodian (the "Custodian Agreement"). The
Custodian's responsibilities include safeguarding and controlling each Fund's
cash and securities, handling the receipt and delivery of securities, and
collecting interest on each Fund's investments. In consideration of such
services, each of the Funds pays the Custodian an annual fee plus fixed fees
charged for certain portfolio transactions and out-of-pocket expenses.
Unless sooner terminated, the Custodian Agreement will continue in
effect until terminated by either party upon 60 days' advance written notice to
the other party. Notwithstanding the foregoing, the Custodian Agreement, with
respect to a Fund, must
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<PAGE> 83
be approved at least annually by the Group's Board of Trustees or by vote of a
majority of the outstanding Shares of that Fund (as defined under "GENERAL
INFORMATION - Miscellaneous" in the Prospectus), and a majority of the Trustees
who are not parties to the Custodian Agreement or interested persons (as
defined in the 1940 Act) of any party to the Custodian Agreement
("Disinterested Persons") by votes cast in person at a meeting called for such
purpose.
Transfer Agency and Fund Accounting Services
- --------------------------------------------
BISYS Fund Services Ohio, Inc. serves as transfer agent and dividend
disbursing agent ("BISYS Fund Services Ohio" or the "Transfer Agent") for the
Funds, pursuant to the Transfer Agency Agreement dated November 10, 1992.
Pursuant to such Agreement, the Transfer Agent, among other things, performs
the following services in connection with each of the Funds' Shareholders of
record: maintenance of shareholder records for each of the Fund's Shareholders
of record; processing shareholder purchase and redemption orders; processing
transfers and exchanges of Shares of the Funds on the shareholder files and
records; processing dividend payments and reinvestments; and assistance in the
mailing of shareholder reports and proxy solicitation materials. For such
services the Transfer Agent receives a fee based on the number of shareholders
of record.
In addition, BISYS Fund Services Ohio provides certain fund accounting
services to the Funds pursuant to a Fund Accounting Agreement dated November
10, 1992. BISYS Fund Services Ohio receives a fee from each Fund for such
services equal to a fee computed daily and paid periodically at an annual rate
of three one-hundredths of one percent (.03%) of that Fund's average daily net
assets. Under such Agreement, BISYS Fund Services Ohio maintains the
accounting books and records for each Fund, including journals containing an
itemized daily record of all purchases and sales of portfolio securities, all
receipts and disbursements of cash and all other debits and credits, general
and auxiliary ledgers reflecting all asset, liability, reserve, capital, income
and expense accounts, including interest accrued and interest received, and
other required separate ledger accounts; maintains a monthly trial balance of
all ledger accounts; performs certain accounting services for the Fund,
including calculation of the net asset value per Share, calculation of the
dividend and capital gain distributions, if any, and of yield, reconciliation
of cash movements with the Custodian, affirmation to the Custodian of all
portfolio trades and cash settlements, verification and reconciliation with the
Custodian of all daily trade activity; provides certain reports; obtains dealer
quotations, prices from a pricing service or matrix prices on all portfolio
securities in order to mark the
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<PAGE> 84
portfolio to the market; and prepares an interim balance sheet, statement of
income and expense, and statement of changes in net assets for each Fund.
Independent Auditors
- --------------------
Ernst & Young LLP, 10 West Broad Street, Suite 2300, Columbus, Ohio
43215, has been selected as independent auditors for the Funds for the fiscal
year ended March 31, 1997. Ernst & Young LLP will perform an annual audit of
the Funds' financial statements and provide other services related to filings
with respect to securities regulations. Reports of their activities will be
provided to the Group's Board of Trustees.
Legal Counsel
- -------------
Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C. 20005,
is counsel to the Group.
ADDITIONAL INFORMATION
Description of Shares
- ---------------------
The Group is a Massachusetts business trust, organized on January 8,
1992. The Group's Declaration of Trust is on file with the Secretary of State
of Massachusetts. The Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of shares, which are shares of beneficial interest,
with a par value of $0.01 per share. The Group consists of several funds
organized as separate series of shares. The Group's Declaration of Trust
authorizes the Board of Trustees to divide or redivide any unissued shares of
the Group 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 of Trustees may grant in its
discretion. When issued for payment as described in the Prospectuses and this
Statement of Additional Information, the shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Group,
shareholders of a fund are entitled to receive the assets available for
distribution belonging to that 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.
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<PAGE> 85
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 Group 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,
or that the matter does not affect any interest of the Fund. 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 Group voting without regard to
series.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Group.
However, the Declaration of Trust disclaims liability of the Shareholders,
Trustees or officers of the Group for acts or obligations of the Group, which
are binding only on the assets and property of the Group, and requires that
notice of the disclaimer be given in each contract or obligation entered into
or executed by the Group or the Trustees. The Declaration of Trust provides
for indemnification out of Group property for all loss and expense of any
shareholder held personally liable for the obligations of the Group. The risk
of a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the Group itself would be unable to meet
its obligations, and thus should be considered remote.
Vote of a Majority of the Outstanding Shares
- --------------------------------------------
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of a Fund means
the affirmative vote, at a meeting of Shareholders duly called, of the lesser
of (a) 67% or more of the votes of Shareholders of that Fund present at a
meeting at which the holders of more than 50% of the votes attributable to
Shareholders of record of that Fund are represented in person or by proxy, or
(b) the holders of more than 50% of the outstanding votes of Shareholders of
that Fund.
Additional Tax Information
- --------------------------
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<PAGE> 86
TAXATION OF THE FUNDS. Each Fund intends to qualify annually and to
elect to be treated as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code").
To qualify as a regulated investment company, each Fund must, among
other things, (a) derive in each taxable year 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, securities or foreign currencies
or other income derived with respect to its business of investing in such
stock, securities or currencies; (b) derive less than 30% of its gross income
from the sale or other disposition of certain assets (namely, in the case of a
Fund, (i) stock or securities, (ii) options, futures, and forward contracts
(other than those on foreign currencies), and (iii) foreign currencies
(including options, futures, and forward contracts on such currencies) not
directly related to the Fund's principal business of investing in stock or
securities (or options and futures with respect to stocks or securities)) held
less than 3 months (the "30% Limitation"); (c) diversify its holdings so that,
at the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash and cash items (including
receivables), U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of any
one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of the Fund's total assets and not greater than
10% of the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its total assets is invested in the securities (other than
U.S. Government securities or the securities of other regulated investment
companies) of any one issuer, or of two or more issuers which a Fund controls
and which are determined to be engaged in the same or similar trades or
businesses or related trades or businesses; and (d) distribute at least 90% of
its investment company taxable income (which includes, among other items,
dividends, interest and net short-term capital gains in excess of net long-term
capital losses) and its net tax-exempt interest income each taxable year.
As a regulated investment company, each Fund generally will not be
subject to U.S. federal income tax on its investment company taxable income and
net capital gains (the excess of net long-term capital gains over net
short-term capital losses), if any, that it distributes to Shareholders. Each
Fund intends to distribute to its Shareholders, at least annually,
substantially all of its investment company taxable income and net capital
gains. Amounts, other than tax-exempt interest, not distributed on a timely
basis in accordance with a calendar year distribution requirement are subject
to a nondeductible 4% excise tax. To
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<PAGE> 87
prevent imposition of the excise tax, each Fund must distribute during each
calendar year an amount equal to the sum of (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (2) at least 98% of its capital gains in excess of its capital losses
(adjusted for certain ordinary losses, as prescribed by the Code) for the
one-year period ending on October 31 of the calendar year, and (3) any ordinary
income and capital gains for previous years that were not distributed during
those years. A distribution, including an "exempt-interest dividend," will be
treated as paid on December 31 of the current calendar year if it is declared
by a Fund in October, November or December to shareholders of record on a 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. To prevent application of the
excise tax, each Fund intends to make its distributions in accordance with the
calendar year distribution requirement.
DISTRIBUTIONS. Dividends paid out of a Fund's investment company
taxable income generally will be taxable to a U.S. Shareholder as ordinary
income. Because no portion of the income derived by the U.S. Government Fund,
the Fixed Income Fund and the Tax-Free Fund is expected to consist of dividends
paid by U.S. corporations, no portion of the dividends paid by those Funds is
expected to be eligible for the corporate dividends-received deduction. A
portion of the income of the Equity Fund, Balanced Fund and Aggressive Growth
Fund may, however, consist of dividends paid by U.S. corporations and,
accordingly, a portion of the dividends paid by that Fund may be eligible for
the corporate dividends-received deduction. Distributions of net capital
gains, 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, and are not eligible for the dividends-received deduction. The U.S.
Government Fund is not expected to realize any long-term capital gains or
losses. Shareholders receiving distributions in the form of additional Shares,
rather than cash, generally will have a cost basis in each such Share equal to
the net asset value of a Share of the Fund on the reinvestment date.
Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and Shareholders receiving distributions in the form of
additional Shares will receive a report as to the net asset value of those
Shares.
Distributions by a Fund reduce the net asset value of Fund shares.
Should a taxable distribution reduce the net asset value below a Shareholder's
cost basis, the distribution nevertheless would be taxable to the Shareholder
as ordinary income or capital
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<PAGE> 88
gain as described above, even though, from an investment standpoint, it may
constitute a partial return of capital. In particular, investors should be
careful to consider the tax implications of buying shares just prior to a
distribution by a Fund. The price of shares purchased at that time includes
the amount of the forthcoming distribution, but the distribution will generally
be taxable to them.
DISCOUNT SECURITIES. Investments by a Fund in securities that are
issued at a discount will result in income to the Fund equal to a portion of
the excess of the face value of the securities over their issue price (the
"original issue discount") each year that the securities are held, even though
the Fund receives no cash interest payments. This income is included in
determining the amount of income which the Fund must distribute to maintain its
status as a regulated investment company and to avoid the payment of federal
income tax and the 4% excise tax.
Some of the debt securities may be purchased by a Fund at a discount
which exceeds the original issue discount on such debt securities, if any.
This additional discount represents market discount for federal income tax
purposes. Generally, the gain realized on the disposition of any debt security
acquired after April 30, 1993 or any taxable debt security acquired prior to
May 1, 1993 having market discount will be treated as ordinary income to the
extent it does not exceed the accrued market discount on such debt security.
OPTIONS AND HEDGING TRANSACTIONS. The taxation of equity options and
over-the-counter options on debt securities is governed by Code section 1234.
Pursuant to Code section 1234, the premium received by a Fund for selling a put
or call option is not included in income at the time of receipt. If the option
expires, the premium is short-term capital gain to the Fund. If the Fund
enters into a closing transaction, the difference between the amount paid to
close out its position and the premium received is short-term capital gain or
loss. If a call option written by a Fund is exercised, thereby requiring the
Fund to sell the underlying security, the premium will increase the amount
realized upon the sale of such security and any resulting gain or loss will be
a capital gain or loss, and will be long-term or short-term depending upon the
holding period of the security. With respect to a put or call option that is
purchased by a Fund, if the option is sold, any resulting gain or loss will be
a capital gain or loss, and will be long-term or short-term, depending upon the
holding period of the option. If the option expires, the resulting loss is a
capital loss and is long-term or short-term, depending upon the holding period
of the option. If the option is exercised, the cost of the option, in the case
of a call option, is added to the basis of the purchased security and,
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<PAGE> 89
in the case of a put option, reduces the amount realized on the underlying
security in determining gain or loss.
Certain options in which a Fund may invest are "section 1256
contracts." Gains or losses on section 1256 contracts generally are considered
60% long-term and 40% short-term capital gains or losses ("60/40"). Also,
section 1256 contracts held by a Fund at the end of each taxable year (and,
generally, for purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" (that is, treated as sold at fair market value), resulting
in unrealized gains or losses being treated as though they were realized.
Generally, the hedging transactions undertaken by a Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by a Fund. In addition,
losses realized by a Fund on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences to the Funds of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Funds which is taxed as
ordinary income when distributed to Shareholders.
Each Fund may make one or more of the elections available under the
Code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle positions, the amount which may be distributed to
Shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
The 30% Limitation and the diversification requirements applicable to
each Fund's assets may limit the extent to which each Fund will be able to
engage in transactions in options.
The Equity Fund may invest in shares of foreign corporations (through
ADRs) which may be classified under the Code as passive
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<PAGE> 90
foreign investment companies ("PFICs"). In general, a foreign corporation is
classified as a PFIC if at least one-half of its assets constitute
investment-type assets, or 75% or more of its gross income is investment-type
income. If the Fund receives a so-called "excess distribution" with respect to
PFIC stock, the Fund itself may be subject to a tax on a portion of the excess
distribution, whether or not the corresponding income is distributed by the
Fund to Shareholders. In general, under the PFIC rules, an excess distribution
is treated as having been realized ratably over the period during which the
Fund held the PFIC shares. The Fund itself will be subject to tax on the
portion, if any, of an excess distribution that is so allocated to prior Fund
taxable years and an interest factor will be added to the tax, as if the tax
had been payable in such prior taxable years. Certain distributions from a
PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions
might have been classified as capital gain.
The Equity Fund may be eligible to elect alternative tax treatment
with respect to PFIC shares. Under an election that currently is available in
some circumstances, the Fund generally would be required to include in its
gross income its share of the earnings of a PFIC on a current basis, regardless
of whether distributions are received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the
taxation of excess distributions, would not apply. In addition, another
election may be available that would involve marking to market the Fund's PFIC
shares at the end of each taxable year (and on certain other dates prescribed
in the Code), with the result that unrealized gains are treated as though they
were realized. If this election were made, tax at the Fund level under the
PFIC rules would generally be eliminated, but the Fund could, in limited
circumstances, incur nondeductible interest charges. The Fund's intention to
qualify annually as a regulated investment company may limit its elections with
respect to PFIC shares.
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, as well as subject the
Fund itself to tax on certain income from PFIC shares, the amount that must be
distributed to Shareholders, and which will be taxed to Shareholders as
ordinary income or long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC shares.
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<PAGE> 91
SALE OF SHARES. Upon the sale or other disposition of Shares of a
Fund, or upon receipt of a distribution in complete liquidation of a Fund, a
Shareholder generally will realize a taxable capital gain or loss which will be
long-term or short-term, generally depending upon the Shareholder's holding
period for the Shares. Any loss realized on a sale or exchange will be
disallowed to the extent the Shares disposed of are replaced (including Shares
acquired pursuant to a dividend reinvestment plan) within a period of 61 days
beginning 30 days before and ending 30 days after disposition of the Shares.
In such a case, the basis of the Shares acquired will be adjusted to reflect
the disallowed loss. Any loss realized by a Shareholder on a disposition of
Fund Shares held by the Shareholder for six months or less will be treated as a
long-term capital loss to the extent of any distributions of net capital gains
received by the Shareholder with respect to such Shares. Furthermore, a loss
realized by a Shareholder on the redemption, sale or exchange of Shares of a
Fund with respect to which exempt-interest dividends have been paid will, to
the extent of such exempt-interest dividends, be disallowed if such Shares have
been held by the Shareholder for less than six months.
In some cases, Shareholders will not be permitted to take sales
charges into account for purposes of determining the amount of gain or loss
realized on the disposition of their Shares. This prohibition generally
applies where (1) the Shareholder incurs a sales charge in acquiring the stock
of a regulated investment company, (2) the stock is disposed of before the 91st
day after the date on which it was acquired, and (3) the Shareholder
subsequently acquires Shares of the same or another regulated investment
company and the otherwise applicable sales charge is reduced or eliminated
under a "reinvestment right" received upon the initial purchase of Shares of
stock. In that case, the gain or loss recognized will be determined by
excluding from the tax basis of the Shares exchanged all or a portion of the
sales charge incurred in acquiring those Shares. This exclusion applies to the
extent that the otherwise applicable sales charge with respect to the newly
acquired Shares is reduced as a result of having incurred a sales charge
initially. Sales charges affected by this rule are treated as if they were
incurred with respect to the stock acquired under the reinvestment right. This
provision may be applied to successive acquisitions of stock.
FOREIGN WITHHOLDING TAXES. Income received by a Fund from sources
within foreign countries may be subject to withholding and other taxes imposed
by such countries.
BACKUP WITHHOLDING. Each Fund may be required to withhold U.S.
federal income tax at the rate of 31% of all reportable
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<PAGE> 92
dividends (which does not include exempt-interest dividends) and capital gain
distributions (as well as redemptions for all Funds except the U.S. Government
Fund) 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.
Corporate Shareholders and certain other Shareholders specified in the Code
generally are exempt from such 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.
FOREIGN SHAREHOLDERS. The tax consequences to a foreign Shareholder
of an investment in a Fund may be different from those described herein.
Foreign Shareholders are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in a Fund.
OTHER TAXATION. The Group is organized as a Massachusetts business
trust and, under current law, neither the Group nor any Fund is liable for any
income or franchise tax in the Commonwealth of Massachusetts, provided that
each Fund continues to qualify as a regulated investment company under
Subchapter M of the Code.
Fund Shareholders may be subject to state and local taxes on their
Fund distributions. In certain states, Fund distributions which are derived
from interest on obligations of that state or any municipality or political
subdivision thereof may be exempt from taxation. Also, in many states, Fund
distributions which are derived from interest on certain U.S. Government
obligations may be exempt from taxation.
Additional Tax Information Concerning the Tax-Free Fund
- -------------------------------------------------------
The Tax-Free Fund intends to qualify under the Code to pay
"exempt-interest dividends" to its Shareholders. The Tax-Free Fund will be so
qualified if, at the close of each quarter of its taxable year, at least 50% of
the value of its total assets consists of securities on which the interest
payments are exempt from the regular federal income tax. To the extent that
dividends distributed by the Tax-Free Fund to its Shareholders are derived from
interest income exempt from federal income tax and are designated as
"exempt-interest dividends" by the Fund, they will be excludable from the gross
incomes of the Shareholders for regular federal income tax purposes.
"Exempt-interest dividends," however, must be taken into account by
Shareholders in determining whether their total incomes are large enough to
result in taxation of up to eighty-five percent of their social security
benefits and certain railroad retirement
- 45 -
<PAGE> 93
benefits. It should also be noted that tax-exempt interest on private activity
bonds in which the Tax-Free Fund may invest generally is treated as a tax
preference item for purposes of the alternative minimum tax for corporate and
individual Shareholders. Exempt interest dividends also may be part of an
adjustment to alternative minimum taxable income of corporations and are
included in the base of the environmental tax on corporations imposed under
Code section 59A. The Tax-Free Fund will inform Shareholders annually as to
the portion of the distributions from the Fund which constituted
"exempt-interest dividends."
The Fund will determine periodically which distributions will be
designated as exempt-interest dividends. If the Fund earns income which is not
eligible to be so designated, the Fund, nonetheless, intends to distribute such
income. Such distributions will be subject to federal, state, and local taxes,
as applicable, in the hands of shareholders.
Under the Code, a Shareholder may not deduct that portion of interest
on indebtedness incurred or continued to purchase or carry shares of an
investment company paying exempt-interest dividends (such as those of the
Tax-Free Fund) which bears the same ratio to the total of such interest as the
exempt-interest dividends bear to the total dividends (excluding net capital
gain dividends) received by the Shareholder. In addition, under rules issued
by the Internal Revenue Service for determining when borrowed funds are
considered to be used to purchase or carry particular assets, the purchase of
Shares may be considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to such purchase.
Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund.
Persons who may be "substantial users" (or "related persons" of substantial
users) of facilities financed by industrial development bonds or private
activity bonds should consult their tax advisers before purchasing shares of
the Tax-Free Fund. The term "substantial user" generally includes any
"non-exempt person" who regularly uses in his or her trade or business a part
of a facility financed by industrial development bonds or private activity
bonds. Generally, an individual will not be a "related person" of a
substantial user under the Code unless the person or his or her immediate
family owns directly or indirectly in the aggregate more than a 50% equity
interest in the substantial user.
The Tax-Free Fund may acquire rights regarding specified portfolio
securities under puts. See "Put Options." The policy of the Tax-Free Fund is
to limit its acquisition of puts to those
- 46 -
<PAGE> 94
under which the Fund will be treated for federal income tax purposes as the
owner of the Municipal Securities acquired subject to the put and the interest
on the Municipal Securities will be tax-exempt to the Fund. Although the
Internal Revenue Service has issued a published ruling that provides some
guidance regarding the tax consequences of the purchase of puts, there is
currently no guidance available from the Internal Revenue Service that
definitively establishes the tax consequences of many of the types of puts that
the Fund could acquire under the Investment Company Act of 1940. Therefore,
although the Tax-Free Fund will only acquire a put after concluding that it
will have the tax consequences described above, the Internal Revenue Service
could reach a different conclusion from that of the Fund.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of the Tax-Free 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 Tax-Free Fund or its Shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential purchasers of
shares of the Tax-Free Fund are urged to consult their tax advisers with
specific reference to their own tax situation.
Yields and Total Returns of the U.S. Government Fund
- ----------------------------------------------------
As summarized in the Prospectus of the U.S. Government Fund under the
heading "Performance Information," the yield of the U.S. Government Fund for a
seven-day period (the "base period") will be computed by determining the net
change in value (calculated as set forth below) of a hypothetical account
having a balance of one share at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the
base period to obtain the base period return, and multiplying the base period
return by 365/7 with the resulting yield figure carried to the nearest
hundredth of one percent. Net changes in value of a hypothetical account will
include the value of additional Shares purchased with dividends from the
original Share and dividends declared on both the original Share and any such
additional Shares, but will not include realized gains or losses or unrealized
appreciation or depreciation on portfolio investments. Yield may also be
calculated on a compound basis (the "effective yield") which assumes that net
income is reinvested in Fund Shares at the same rate as net income is earned
for the base period.
The yield and effective yield of the U.S. Government Fund will vary in
response to fluctuations in interest rates and in
- 47 -
<PAGE> 95
the expenses of the Fund. For comparative purposes the current and effective
yields should be compared to current and effective yields offered by competing
financial institutions for the same base period and calculated by the methods
described below.
The current and effective seven-day average yields as of March 31,
1996 for the U.S. Government Fund were 4.47% and 4.57%, respectively.
The U.S. Government Fund may wish to publish total return figures in
its sales literature and other advertising materials. For a discussion of the
manner in which such total return figures are calculated, see "Yields and Total
Returns of the Variable NAV Funds--Total Return Calculations" below.
Yields and Total Returns of the Variable NAV Funds
- --------------------------------------------------
YIELD CALCULATIONS. As summarized in the Prospectuses of the Funds
under the heading "PERFORMANCE INFORMATION", yields of each of the Funds except
the U.S. Government Fund will be computed by dividing the net investment income
per share (as described below) earned by the Fund during a 30-day (or one
month) period by the maximum offering price per share on the last day of the
period and annualizing the result on a semi-annual basis by adding one to the
quotient, raising the sum to the power of six, subtracting one from the result
and then doubling the difference. A Fund's net investment income per share
earned during the period is based on the average daily number of Shares
outstanding during the period entitled to receive dividends and includes
dividends and interest earned during the period minus expenses accrued for the
period, net of reimbursements. This calculation can be expressed as follows:
a - b
Yield = 2 [(------- + 1)exp(6) - 1]
cd
Where: a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of Shares
outstanding during the period that were
entitled to receive dividends.
d = maximum offering price per Share on the last
day of the period.
- 48 -
<PAGE> 96
For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in that Fund. Interest earned on any
debt obligations held by a Fund is calculated by computing the yield to
maturity of each obligation held by that Fund based on the market value of the
obligation (including actual accrued interest) at the close of business on the
last Business Day of each month, or, with respect to obligations purchased
during the month, the purchase price (plus actual accrued interest) and
dividing the result by 360 and multiplying the quotient by the market value of
the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that the
obligation is held by that Fund. For purposes of this calculation, it is
assumed that each month contains 30 days. The maturity of an obligation with a
call provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date. With respect to debt
obligations purchased at a discount or premium, the formula generally calls for
amortization of the discount or premium. The amortization schedule will be
adjusted monthly to reflect changes in the market values of such debt
obligations.
Undeclared earned income will be subtracted from the net asset value
per share (variable "d" in the formula). Undeclared earned income is the net
investment income which, at the end of the base period, has not been declared
as a dividend, but is reasonably expected to be and is declared as a dividend
shortly thereafter.
For the 30-day period ended March 31, 1996, the yield for the Funds
was as follows: the Fixed Income Fund - 5.28%; the Tax-Free Fund - 3.66%; the
Equity Fund - 0.73%; the Balanced Fund - 2.30%; the Fixed Total Return Fund -
4.96%; and the Aggressive Growth Fund - 0.00%.
During any given 30-day period, AMCORE or the Administrator may
voluntarily waive all or a portion of their fees with respect to a Fund. Such
waiver would cause the yield of that Fund to be higher than it would otherwise
be in the absence of such a waiver.
From time to time, the tax equivalent 30-day yield of the Tax-Free
Fund may be presented in advertising and sales literature. The tax equivalent
30-day yield will be computed by dividing that portion of the Fund's yield
which is tax-exempt by one minus a stated tax rate and adding the product to
that portion, if any, of the yield of the Fund that is not tax-exempt.
- 49 -
<PAGE> 97
For the 30-day period ended March 31, 1996, the 30-day tax-equivalent yield for
the Tax-Free Fund was 5.80%.
TOTAL RETURN CALCULATIONS. As summarized in the Prospectuses of the
Funds under the heading "PERFORMANCE INFORMATION", average annual total return
is a measure of the change in value of an investment in a Fund over the period
covered, which assumes any dividends or capital gains distributions are
reinvested in the Fund immediately rather than paid to the investor in cash.
The Funds compute their average annual total returns by determining the average
annual compounded rates of return during specified periods that equate the
initial amount invested to the ending redeemable value of such investment.
This is done by dividing the ending redeemable value of a hypothetical $1,000
initial payment by $1,000 and raising the quotient to a power equal to one
divided by the number of years (or fractional portion thereof) covered by the
computation and subtracting one from the result. This calculation can be
expressed as follows:
Average Annual ERV
Total Return = [(------)exp (1/n) - 1]
P
Where: ERV = ending redeemable value at the end
of the period covered by the
computation of a hypothetical $1,000
payment made at the beginning of the
period.
P = hypothetical initial payment of
$1,000.
n = period covered by the computation,
expressed in terms of years.
The Funds compute their aggregate total returns by determining the
aggregate compounded rates of return during specified periods that likewise
equate the initial amount invested to the ending redeemable value of such
investment. The formula for calculating aggregate total return is as follows:
Aggregate Total ERV
Return = [(------] - 1]
P
ERV = ending redeemable value at the end of the
period covered by the computation of a
hypothetical $1,000 payment made at the
beginning of the period.
- 50 -
<PAGE> 98
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment dates during the period. The ending redeemable value
(variable "ERV" in each formula) is determined by assuming complete redemption
of the hypothetical investment and the deduction of all nonrecurring charges at
the end of the period covered by the computations.
In the case of the Fixed Income Fund, the Tax-Free Fund and the Equity
Fund, the average annual total return for each such Fund for the fiscal year
ended March 31, 1996 was 8.74%, 7.43% and 29.96%, respectively.
In the case of the Fixed Income Fund, the Tax-Free Fund and the Equity
Fund, based upon the period beginning with each such Fund's commencement of
operations (December 21, 1992) through March 31, 1996, the average annual total
return for each Fund was as follows: 5.82% for the Fixed Income Fund, 5.25%
for the Tax-Free Fund, and 14.19% for the Equity Fund. These performance
results assume that no sales charges were imposed. For part of the period
represented, the Funds were sold subject to the imposition of a sales charge;
however, the Funds no longer impose sales charges upon their purchase.
In the case of the Fixed Income Fund, the Tax-Free Fund and the Equity
Fund, based upon the period beginning with each such Fund's commencement of
operations (December 21, 1992) through March 31, 1996, the aggregate total
return for each Fund was as follows: 20.47% for the Fixed Income Fund, 17.31%
for the Tax-Free Fund, and 54.80% for the Equity Fund.
In the case of the Balanced Fund, based upon the Fund's commencement
of operations (June 1, 1995) through March 31, 1996, the aggregate total return
for the Fund was 13.29%. In the case of the Fixed Total Return Fund, based upon
the Fund's commencement of operations (June 15, 1995) through March 31, 1996,
the aggregate total return for the Fund was 3.40%. In the case of the
Aggressive Growth Fund, based upon the Fund's commencement of operations
(September 29, 1995) through March 31, 1996, the aggregate total return for the
Fund was 7.10%.
Performance Comparisons
- -----------------------
Investors may judge the performance of the Funds by comparing them 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
- 51 -
<PAGE> 99
those prepared by Dow Jones & Co., Inc. and Standard & Poor's Corporation and
to data prepared by Lipper Analytical Services, Inc., a widely recognized
independent service which monitors the performance of mutual funds or Ibbotson
Associates, Inc. Comparisons may also be made to indices or data published in
IBC/Donaghue's MONEY FUND REPORT, a nationally recognized money market fund
reporting service, Money Magazine, Forbes, Barron's, The Wall Street Journal,
The New York Times, Business Week, and U.S.A. Today. In addition to
performance information, general information about the Funds that appears in a
publication such as those mentioned above may be included in advertisements and
in reports to Shareholders. The Funds may also include in advertisements and
reports to Shareholders information comparing the performance of AMCORE or its
predecessors to other investment advisers; such comparisons may be published by
or included in Nelsons Directory of Investment Managers, Roger's, Casey/PIPER
Manager Database or CDA/Cadence.
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 upon Customer accounts by
the Adviser or its affiliated or correspondent banks for cash management
services will reduce a Fund's effective yield to Customers.
From time to time, the Fund may include general comparative
information, such as statistical data regarding inflation, securities indices
or the features or performance of alternative investments, in advertisements,
sales literature and reports to shareholders. 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 Fund.
Principal Shareholders
- ----------------------
As of April 16, 1996, AMCORE Trust Company, P.O. Box 4599, Rockford,
Illinois 61110-4599, owned beneficially or of record: (i) 81.80% of the U.S.
Government Fund; (ii) 96.29% of the Fixed Income Fund; (iii) 86.99% of the
Tax-Free Fund; (iv) 92.29% of the Equity Fund; (v) 87.58% of the Balanced Fund;
(vi) 94.54% of the Aggressive Growth Fund and (vii) 98.41% of the Fixed Total
Return Fund.
- 52 -
<PAGE> 100
Miscellaneous
- -------------
The Funds may include information in their Annual Reports and
Semi-Annual Reports to Shareholders that (1) describes general economic trends,
(2) describes general trends within the financial services industry or the
mutual fund industry, (3) describes past or anticipated portfolio holdings for
a fund within the Group or (4) describes investment management strategies for
such funds. Such information is provided to inform Shareholders of the
activities of the Funds for the most recent fiscal year or half-year and to
provide the views of AMCORE and/or Group officers regarding expected trends and
strategies.
Individual Trustees are elected by the Shareholders and, subject to
removal by the vote of two-thirds of the Board of Trustees, serve for a term
lasting until the next meeting of Shareholders at which Trustees are elected.
Such meetings are not required to be held at any specific intervals.
Shareholders owning not less than 10% of the outstanding Shares of the Group
entitled to vote may cause the Trustees to call a special meeting, including
for the purpose of considering the removal of one or more Trustees. Any
Trustee may be removed at any meeting of Shareholders by vote of two-thirds of
the Group's outstanding shares. The Declaration of Trust provides that the
Trustees will assist shareholder communications to the extent required by
Section 16(c) of the 1940 Act in the event that a shareholder request to hold a
special meeting is made.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. 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 Prospectuses and this Statement of Additional Information.
FINANCIAL STATEMENTS
The financial statements of the Funds for the year ended March 31, 1996
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included herein. Such financial statements are
- 53 -
<PAGE> 101
included herein in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
- 54 -
<PAGE> 102
APPENDIX
The nationally recognized statistical rating organizations
(individually, an "NRSRO") that may be utilized by the Adviser with regard to
portfolio investments for the Funds include Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P") and Duff & Phelps, Inc.
("D&F"). Set forth below is a description of the relevant ratings of each such
NRSRO. The NRSROs that may be utilized by the Adviser 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 three 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.
Description of the three 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):
<PAGE> 103
AAA Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only
in small degree.
A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
Description of the three highest long-term debt ratings by D&P;
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 time
AA- because of economic conditions.
A+ Protection factors are average but adequate. However,
A risk factors are more variable and greater in periods of
A- economic stress.
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 capacity for repayment of senior short-term
promissory obligations. Prime-1 repayment capacity will
normally 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.
A-2
<PAGE> 104
- 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 capacity for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayments of senior short-term
obligations. The effect of industry characteristics and
market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level
of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is
maintained.
S&P's description of its three highest short-term debt ratings:
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to have
extremely strong safety characteristics are denoted with a
plus sign (+).
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not
as high as for issues designated "A-1".
A-3 Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
D&P's description of the short-term debt ratings (D&P incorporates
gradations of "1+" (one plus) and "1-" (one minus) to assist investors in
recognizing quality differences within the highest rating category);
A-3
<PAGE> 105
Duff 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.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection
factors. Risk factors are minor.
Duff 1- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors.
Risk factors are very small.
Duff 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.
Short-Term Loan/Municipal Note Ratings
- --------------------------------------
Moody's description of its two highest short-term loan/municipal note ratings:
MIG-1/VMIG-1 This designation denotes best quality. There is present
strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG-2/VMIG-2 This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
Definitions of Certain Money Market Instruments
- -----------------------------------------------
Commercial Paper
A-4
<PAGE> 106
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally 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.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations of the U.S. Government include Treasury bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association, the Export-Import Bank of the United States, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as
those of 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
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
A-5
<PAGE> 107
Credit Banks, 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 instrumentalities if it is not obligated to do so
by law.
A-6
<PAGE> 108
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statement of Assets and Liabilities
March 31, 1996
<TABLE>
<CAPTION>
U.S.
Government Fixed Intermediate
Obligations Equity Income Tax-Free
Fund Fund Fund Fund
------------ ------------ ----------- -----------
ASSETS:
<S> <C> <C> <C> <C>
Investments, at value $ 91,206,720 $211,263,976 $88,485,027 $41,809,931
Repurchase agreements 63,204,500 ----- ----- -----
------------ ------------ ----------- -----------
Total Investments (amortized cost $154,411,220;
cost $157,064,943; $89,017,650 and
$41,739,167, respectively) 154,411,220 211,263,976 88,485,027 41,809,931
Cash ----- 192,655 46,255 23,050
Interest and dividends receivable 118,976 322,340 1,248,852 649,603
Receivable from brokers for investments sold ----- 445,520 ----- -----
Receivable for capital shares issued ----- 44,756 1,500 -----
Prepaid expenses 10,284 11,712 5,539 3,289
------------ ------------ ----------- -----------
Total Assets 154,540,480 212,280,959 89,787,173 42,485,873
------------ ------------ ----------- -----------
LIABILITIES:
Dividends payable 601,712 ----- ----- -----
Payable to brokers for investments purchased ----- 1,096,490 4,923,125 -----
Accrued expenses and other payables:
Investment advisory fees 54,286 133,360 43,174 20,987
Administration fees 7,634 10,419 4,176 2,093
Administrative services fees ----- 44,453 17,989 8,745
Accounting and transfer agent fees 10,859 9,919 12,977 10,356
Legal and audit fees 23,596 28,011 12,825 5,826
Custodian fees 3,680 5,275 2,808 1,211
Other 3,044 3,296 18,531 699
------------ ------------ ----------- -----------
Total Liabilities 704,811 1,331,223 5,035,605 49,917
------------ ------------ ----------- -----------
NET ASSETS:
Capital 153,853,494 153,592,918 87,290,632 42,483,364
Undistributed net investment income ----- 24,496 10,626 20,540
Net unrealized appreciation (depreciation) on investments ----- 54,199,033 (532,623) 70,764
Accumulated undistributed net
realized gains (losses) on investment transactions (17,704) 3,133,289 (2,017,067) (138,712)
------------ ------------ ----------- -----------
Net Assets $153,835,790 $210,949,736 $84,751,568 $42,435,956
============ ============ =========== ===========
Outstanding units of beneficial interest (shares) 153,853,494 14,564,208 8,535,610 4,133,363
============ ============ =========== ===========
Net asset value - offering and redemption price per share $ 1.00 $ 14.48 $ 9.93 $ 10.27
============ ============ =========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 109
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statements of Assets and Liabilities
March 31, 1996
<TABLE>
<CAPTION>
Balanced Fixed Total Aggressive Growth
Fund Return Fund Fund
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $12,586,010; $42,570,981;
and $21,756,961, respectively) $13,856,645 $42,131,801 $23,308,194
Cash 85,501 512,897 -----
Interest and dividends receivable 77,240 542,530 32,288
Receivable for capital shares issued 3,972 300 5,634
Unamortized organization costs 3,411 3,613 5,136
Prepaid expenses 689 1,785 715
----------- ----------- -----------
Total Assets 14,027,458 43,192,926 23,351,967
----------- ----------- -----------
LIABILITIES:
Payable to brokers for investments purchased 487,187 1,948,750 -----
Accrued expenses and other payables:
Investment advisory fees 8,562 26,119 18,425
Administration fees 666 2,016 1,149
Administrative services fees 2,854 8,706 4,849
Accounting and transfer agent fees 2,591 4,105 2,750
Legal and audit fees 4,270 6,811 4,007
Custodian fees 1,488 2,014 1,221
Other 3,827 16,011 836
----------- ----------- -----------
Total Liabilities 511,445 2,014,532 33,237
----------- ----------- -----------
NET ASSETS:
Capital 11,719,553 41,617,215 21,793,756
Undistributed net investment income (loss) 3,947 31,047 (743)
Net unrealized appreciation (depreciation) on investments 1,270,635 (439,180) 1,551,233
Accumulated undistributed net
realized gains (losses) on investment transactions 521,878 (30,688) (25,516)
----------- ----------- -----------
Net Assets $13,516,013 $41,178,394 $23,318,730
=========== =========== ===========
Outstanding units of beneficial interest (shares) 1,219,332 4,161,918 2,144,028
=========== =========== ===========
Net asset value - offering and redemption price per share $ 11.08 $ 9.89 $ 10.88
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 110
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statements of Operations
For the year ended March 31, 1996
<TABLE>
<CAPTION>
U.S.
Government Fixed Intermediate
Obligations Equity Income Tax-Free
Fund Fund Fund Fund
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $7,897,040 $ 148,192 $5,296,596 $1,753,394
Dividend income ---- 3,487,500 ---- ----
---------- ----------- ---------- ----------
Total Income 7,897,040 3,635,692 5,296,596 1,753,394
---------- ----------- ---------- ----------
EXPENSES:
Investment advisory fees 561,461 1,328,833 471,823 211,991
Administration fees 280,842 354,359 157,275 70,638
Administrative services fees ----- 44,453 17,989 8,745
Accounting fees 43,388 57,104 32,378 23,797
Custodian fees 14,991 20,884 9,935 4,836
Legal and audit fees 28,834 34,432 14,949 6,523
Trustees' fees and expenses 6,443 7,676 3,463 1,578
Transfer agent fees 49,333 59,625 38,178 26,543
Registration and filing fees 12,482 5,073 2,503 1,403
Printing costs 13,059 16,741 7,222 3,434
Other 6,588 8,222 5,101 1,748
Expenses voluntarily reduced (253,524) ---- ---- (95,510)
---------- ----------- ---------- ----------
Total Expenses 763,897 1,937,402 760,816 265,726
---------- ----------- ---------- ----------
Net Investment Income 7,133,143 1,698,290 4,535,780 1,487,668
---------- ----------- ---------- ----------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions 77,670 7,593,903 (462,154) (5,701)
Change in unrealized appreciation
from investments ---- 36,320,821 2,772,427 844,066
---------- ----------- ---------- ----------
Net realized/unrealized gains
from investments 77,670 43,914,724 2,310,273 838,365
---------- ----------- ---------- ----------
Change in net assets resulting
from operations $7,210,813 $45,613,014 $6,846,053 $2,326,033
========== =========== ========== ==========
</TABLE>
See notes to financial statements.
<PAGE> 111
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statements of Operations
<TABLE>
<CAPTION>
Fixed
Balanced Total Return Aggressive Growth
Fund Fund Fund
(a) (b) (c)
---------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 385,942 $ 2,204,009 $ 67,145
Dividend income 154,894 -- 76,108
---------- ----------- ----------
Total Income 540,836 2,204,009 143,253
---------- ----------- ----------
EXPENSES:
Investment advisory fees 101,842 243,794 81,829
Administration fees 27,159 65,678 17,227
Administrative services fees 2,854 8,706 4,849
Accounting fees 6,680 13,276 4,212
Custodian fees 4,158 7,011 3,476
Legal and audit fees 5,048 8,718 4,312
Organization costs 6,232 6,029 3,740
Trustees' fees and expenses 742 1,825 400
Transfer agent fees 16,560 18,425 9,816
Registration and filing fees 5,756 9,262 5,770
Printing costs 2,131 5,246 872
Other 159 273 --
---------- ----------- ----------
Total Expenses 179,321 388,243 136,503
---------- ----------- ----------
Net Investment Income 361,515 1,815,766 6,750
---------- ----------- ----------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains from
investment transactions 521,878 30,904 10,757
Change in unrealized appreciation
(depreciation) from investments 1,270,635 (439,180) 1,551,233
---------- ----------- ----------
Net realized/unrealized gains (losses)
from investments 1,792,513 (408,276) 1,561,990
---------- ----------- ----------
Change in net assets resulting
from operations $2,154,028 $ 1,407,490 $1,568,740
========== =========== ==========
</TABLE>
(a) For the period from June 1, 1995 (commencement of operations) through
March 31, 1996.
(b) For the period from June 15, 1995 (commencement of operations) through
March 31, 1996.
(c) For the period from September 29, 1995 (commencement of operations)
through March 31, 1996.
See notes to financial statements.
<PAGE> 112
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
U.S.
Government
Obligations Equity
Fund Fund
------------------------------ ------------------------------
Year Year Year Year
ended ended ended ended
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 7,133,143 $ 4,865,461 $ 1,698,290 $ 2,007,045
Net realized gains (losses)
from investment transactions 77,670 3,258 7,593,903 (916,864)
Net change in unrealized appreciation
from investments -- -- 36,320,821 18,869,138
------------- ------------- ------------- -------------
Change in net assets
resulting from operations 7,210,813 4,868,719 45,613,014 19,959,319
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (7,133,143) (4,865,461) (1,735,147) (1,999,364)
From net realized gains from investments transactions -- -- (3,191,515) (314,263)
------------- ------------- ------------- -------------
Change in net assets from shareholder
distributions (7,133,143) (4,865,461) (4,926,662) (2,313,627)
------------- ------------- ------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 473,468,676 352,737,311 60,312,936 35,801,655
Dividends reinvested 411,236 40,886 3,115,399 1,582,109
Cost of shares redeemed (458,009,749) (320,238,726) (42,397,835) (30,999,671)
------------- ------------- ------------- -------------
Change in net assets from
share transactions 15,870,163 32,539,471 21,030,500 6,384,093
------------- ------------- ------------- -------------
Change in net assets 15,947,833 32,542,729 61,716,852 24,029,785
NET ASSETS:
Beginning of period 137,887,957 105,345,228 149,232,884 125,203,099
------------- ------------- ------------- -------------
End of period $ 153,835,790 $ 137,887,957 $ 210,949,736 $ 149,232,884
============= ============= ============= =============
SHARE TRANSACTIONS:
Issued 473,468,676 352,737,311 4,484,471 3,407,334
Reinvested 411,236 40,886 229,751 150,261
Redeemed (458,009,749) (320,238,726) (3,200,256) (2,960,143)
------------- ------------- ------------- -------------
Change in shares 15,870,163 32,539,471 1,513,966 597,452
============= ============= ============= =============
</TABLE>
See notes to financial statements.
<PAGE> 113
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Fixed Intermediate
Income Tax-Free
Fund Fund
------------------------------------------------------------
Year Year Year Year
ended ended ended ended
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 4,535,780 $ 4,787,012 $ 1,487,668 $ 1,382,782
Net realized losses
from investment transactions (462,154) (1,431,225) (5,701) (133,011)
Net change in unrealized appreciation
(depreciation) from investments 2,772,427 (761,757) 844,066 283,619
------------ ------------ ------------ ------------
Change in net assets
resulting from operations 6,846,053 2,594,030 2,326,033 1,533,390
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (4,616,883) (4,787,657) (1,492,074) (1,383,792)
From net realized gains from investments transactions -- -- -- (33,054)
------------ ------------ ------------ ------------
Change in net assets from shareholder
distributions (4,616,883) (4,787,657) (1,492,074) (1,416,846)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 59,265,122 17,756,160 15,884,880 7,605,805
Dividends reinvested 880,889 2,508,246 203,508 165,861
Cost of shares redeemed (59,296,543) (26,699,222) (5,203,326) (10,153,994)
------------ ------------ ------------ ------------
Change in net assets from
share transactions 849,468 (6,434,816) 10,885,062 (2,382,328)
------------ ------------ ------------ ------------
Change in net assets 3,078,638 (8,628,443) 11,719,021 (2,265,784)
NET ASSETS:
Beginning of period 81,672,930 90,301,373 30,716,935 32,982,719
------------ ------------ ------------ ------------
End of period $ 84,751,568 $ 81,672,930 $ 42,435,956 $ 30,716,935
============ ============ ============ ============
SHARE TRANSACTIONS:
Issued 5,921,879 1,839,047 1,538,333 778,541
Reinvested 88,245 260,654 19,753 16,973
Redeemed (5,888,472) (2,789,367) (506,382) (1,042,386)
------------ ------------ ------------ ------------
Change in shares 121,652 (689,666) 1,051,704 (246,872)
============ ============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE> 114
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Fixed Aggressive
Balanced Total Return Growth
Fund (a) Fund (b) Fund (c)
------------ ------------ ------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 361,515 $ 1,815,766 $ 6,750
Net realized gains
from investment transactions 521,878 30,904 10,757
Net change in unrealized appreciation
(depreciation) from investments 1,270,635 (439,180) 1,551,233
------------ ------------ ------------
Change in net assets
resulting from operations 2,154,028 1,407,490 1,568,740
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (357,568) (1,784,719) (7,493)
From net realized gains from investments transactions -- (61,592) (36,273)
------------ ------------ ------------
Change in net assets from shareholder
distributions (357,568) (1,846,311) (43,766)
------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 19,462,841 51,163,546 22,338,076
Dividends reinvested 353,573 1,779,986 5,263
Cost of shares redeemed (8,096,861) (11,326,317) (549,583)
------------ ------------ ------------
Change in net assets from
share transactions 11,719,553 41,617,215 21,793,756
------------ ------------ ------------
Change in net assets 13,516,013 41,178,394 23,318,730
NET ASSETS:
Beginning of period -- -- --
------------ ------------ ------------
End of period $ 13,516,013 $ 41,178,394 $ 23,318,730
============ ============ ============
SHARE TRANSACTIONS:
Issued 1,918,288 5,099,717 2,196,534
Reinvested 32,858 177,723 515
Redeemed (731,814) (1,115,522) (53,021)
------------ ------------ ------------
Change in shares 1,219,332 4,161,918 2,144,028
============ ============ ============
</TABLE>
(a) For the period from June 1, 1995 (commencement of operations) through
March 31, 1996.
(b) For the period from June 15, 1995 (commencement of operations) through
March 31, 1996.
(c) For the period from September 29, 1995 (commencement of operations)
through March 31, 1996.
See notes to financial statements.
<PAGE> 115
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
U.S.
Government Obligations
Fund
--------------------------------------------------------------
Year Year Year December 21,
ended ended ended 1992 to
March 31, March 31, March 31, March 31,
1996 1995 1994 1993 (a)
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.051 0.042 0.027 0.007
--------- --------- --------- --------
DIVIDENDS AND DISTRIBUTIONS:
From net investment income (0.051) (0.042) (0.027) (0.007)
--------- --------- --------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========
Total Return 5.24% 4.32% 2.73% 0.75%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 153,836 $ 137,888 $ 105,345 $ 87,928
Ratio of expenses to average
net assets 0.54% 0.50% 0.56% 0.58%(c)
Ratio of net investment income to
average net assets 5.08% 4.26% 2.70% 2.68%(c)
Ratio of expenses to average
net assets* 0.72% 0.98% 1.02% 1.14%(c)
Ratio of net investment income to
average net assets* 4.90% 3.78% 2.23% 2.12%(c)
</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) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 116
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Equity
Fund
------------------------------------------------------------
Year Year Year December 15,
ended ended ended 1992 to
March 31, March 31, March 31, March 31,
1996 1995 1994 1993 (a)
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.44 $ 10.05 $ 10.20 $ 10.00
---------- ---------- ---------- ---------
INVESTMENT ACTIVITIES:
Net investment income 0.13 0.15 0.19 0.05
Net realized and unrealized
gains (losses) from investments 3.27 1.41 (0.14) 0.19
---------- ---------- ---------- ---------
Total from Investment Activities 3.40 1.56 0.05 0.24
---------- ---------- ---------- ---------
DIVIDENDS AND DISTRIBUTIONS:
From net investment income (0.13) (0.15) (0.20) (0.04)
From net realized gains on investment
transactions (0.23) (0.02) -- --
---------- ---------- ---------- ---------
Total Dividends and Distributions (0.36) (0.17) (0.20) (0.04)
---------- ---------- ---------- ---------
Net Asset Value, End of Period $ 14.48 $ 11.44 $ 10.05 $ 10.20
========== ========== ========== =========
Total Return 29.96% 15.74% 0.45% 2.45%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 210,950 $ 149,233 $ 125,203 $ 74,720
Ratio of expenses to average
net assets 1.09% 1.07% 0.54% 0.23%(c)
Ratio of net investment income to
average net assets 0.96% 1.47% 1.97% 2.40%(c)
Ratio of expenses to average
net assets* 1.09% 1.35% 1.37% 1.43%(c)
Ratio of net investment income to
average net assets* 0.96% 1.19% 1.15% 1.20%(c)
Portfolio Turnover 33.23% 20.54% 3.98% 0.00%
</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) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 117
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Fixed
Income
Fund
--------------------------------------------------------
Year Year Year December 15,
ended ended ended 1992 to
March 31, March 31, March 31, March 31,
1996 1995 1994 1993 (a)
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.71 9.92 $ 10.28 $ 10.00
---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES:
Net investment income 0.61 0.54 0.59 0.18
Net realized and unrealized
gains (losses) from investments 0.23 (0.22) (0.33) 0.27
---------- ---------- ---------- ----------
Total from Investment Activities 0.84 0.32 0.26 0.45
---------- ---------- ---------- ----------
DIVIDENDS AND DISTRIBUTIONS:
From net investment income (0.62) (0.53) (0.59) (0.17)
From net realized gains on investment
transactions -- -- (0.03) --
---------- ---------- ---------- ----------
Total Dividends and Distributions (0.62) (0.53) (0.62) (0.17)
---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 9.93 9.71 $ 9.92 $ 10.28
========== ========== ========== ==========
Total Return 8.74% 3.46% 2.43% 4.54%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 84,752 $ 81,673 $ 90,301 $ 50,127
Ratio of expenses to average
net assets 0.97% 0.94% 0.51% 0.29%(c)
Ratio of net investment income to
average net assets 5.77% 5.53% 5.74% 6.58%(c)
Ratio of expenses to average
net assets* 0.97% 1.22% 1.24% 1.34%(c)
Ratio of net investment income to
average net assets* 5.77% 5.26% 5.01% 5.53%(c)
Portfolio Turnover 113.25% 32.38% 32.03% 17.44%
</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) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 118
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Intermediate
Tax-Free
Fund
--------------------------------------------------------
Year Year Year February 15,
ended ended ended 1993 to
March 31, March 31, March 31, March 31,
1996 1995 1994 1993 (a)
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.97 9.91 $ 10.05 $ 10.00
---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES:
Net investment income 0.43 0.43 0.42 0.05
Net realized and unrealized
gains (losses) from investments 0.30 0.07 (0.13) 0.04
---------- ---------- ---------- ----------
Total from Investment Activities 0.73 0.50 0.29 0.09
---------- ---------- ---------- ----------
DIVIDENDS AND DISTRIBUTIONS:
From net investment income (0.43) (0.43) (0.42) (0.04)
From net realized gains on investment
transactions -- (0.01) (0.01) --
---------- ---------- ---------- ----------
Total Dividends and Distributions (0.43) (0.44) (0.43) (0.04)
---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 10.27 9.97 $ 9.91 $ 10.05
========== ========== ========== ==========
Total Return 7.43% 5.29% 2.79% 0.90%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 42,436 $ 30,717 $ 32,983 $ 13,043
Ratio of expenses to average
net assets 0.75% 0.73% 0.57% 0.42%(c)
Ratio of net investment income to
average net assets 4.21% 4.42% 4.19% 4.31%(c)
Ratio of expenses to average
net assets* 1.02% 1.30% 1.38% 1.47%(c)
Ratio of net investment income to
average net assets* 3.94% 3.84% 3.37% 3.26%(c)
Portfolio Turnover 14.21% 5.77% 13.26% 0.00%
</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) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 119
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Balanced Fixed Total Aggressive
Fund Return Fund Growth Fund
--------------- ---------------- ------------------
June 1, 1995 to June 15, 1995 to September 29, 1995
March 31, March 31, to March 31,
1996 (a) 1996 (a) 1996 (a)
--------------- ---------------- ------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 10.00 $ 10.00
---------- ---------- ----------
INVESTMENT ACTIVITIES:
Net investment income 0.24 0.44 --
Net realized and unrealized
gains (losses) from investments 1.08 (0.11) 0.90
---------- ---------- ----------
Total from Investment Activities 1.32 0.33 0.90
---------- ---------- ----------
DIVIDENDS AND DISTRIBUTIONS:
From net investment income (0.24) (0.43) --
From net realized gains on investment
transactions -- (0.01) (0.02)
---------- ---------- ----------
Total Dividends and Distributions (0.24) (0.44) (0.02)
---------- ---------- ----------
Net Asset Value, End of Period $ 11.08 $ 9.89 $ 10.88
========== ========== ==========
Total Return 13.29%(b) 3.40%(b) 9.10%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) $ 13,516 $ 41,178 $ 23,319
Ratio of expenses to average
net assets 1.32%(c) 1.18%(c) 1.57%(c)
Ratio of net investment income to
average net assets 2.66%(c) 5.53%(c) 0.08%(c)
Ratio of expenses to average
net assets* 1.32%(c) 1.18%(c) 1.57%(c)
Ratio of net investment income to
average net assets* 2.66%(c) 5.53%(c) 0.08%(c)
Portfolio Turnover 61.72% 69.30% 4.31%
</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) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 120
THE COVENTRY GROUP
AMCORE VINTAGE U.S. GOVERNMENT OBLIGATIONS FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------- ------------
<S> <C>
U.S. Government Agencies (14.3%):
Federal Farm Credit Bank:
10,000,000 5.37%, 4/2/96 $ 9,998,533
2,000,000 4.95%*, 4/29/96 2,000,000
5,000,000 5.19%*, 6/1/96 5,000,000
Student Loan Marketing Assoc.:
5,000,000 5.27%*, 4/2/96 4,999,338
------------
Total U.S. Government Agencies 21,997,871
------------
U.S. Treasury Bills (45.0%):
15,000,000 4.99%, 4/11/96 14,979,583
15,000,000 5.15%, 5/30/96 14,879,665
15,000,000 5.02%, 6/13/96 14,852,479
15,000,000 4.96%, 8/1/96 14,758,033
10,000,000 4.93%, 10/17/96 9,739,089
Total U.S. Treasury Bills 69,208,849
------------
Total Investments, at value 91,206,720
------------
Repurchase Agreements (41.1%):
28,204,500 Bear Stearns, 5.33%, 4/1/96 (Collateralized
by 106,141,000 U.S. Treasury Notes, 0.00%-
7.83%, 2/15/99-11/15/22 market value-
$28,797,268) 28,204,500
35,000,000 Merrill Lynch, 5.30%*, 4/1/96 (Collateralized by
180,586,000 U.S. Treasury Notes, 5/15/18-
5/15/19 market value-$35,700,963) 35,000,000
------------
Total Repurchase Agreements 63,204,500
------------
Total (Cost - $154,411,220)(a) $154,411,220
============
</TABLE>
- ----------------
Percentages indicated are based on net assets of $153,835,790.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate security. Interest rate is as of March 31, 1996. Maturity date
reflects the next rate change date.
See notes to financial statements.
<PAGE> 121
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AMCORE VINTAGE EQUITY FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C>
Common Stocks (99.5%):
Automotive (1.7%):
50,000 Ford Motor Co. $ 1,718,750
35,000 General Motors Corp. 1,863,750
-----------
3,582,500
-----------
Banking (7.2%):
40,000 BankAmerica Corp. 3,100,000
35,000 Barnett Banks, Inc. 2,178,750
30,000 Fifth Third Bancorp 1,740,000
40,000 NationsBank Corp. 3,205,000
50,000 Norwest Corp. 1,837,500
30,000 Wachovia Corp. 1,342,500
7,000 Wells Fargo & Co. 1,827,000
-----------
15,230,750
-----------
Chemicals (4.1%):
45,000 Air Products & Chemical 2,458,125
45,000 Eastman Chemical Co. 3,110,625
20,000 Monsanto Co. 3,070,000
-----------
8,638,750
-----------
Computer Hardware (4.8%):
40,000 Cabletron Systems (b) 2,650,000
70,000 Cisco Systems, Inc. (b) 3,246,250
40,000 Intel Corp. 2,275,000
75,000 Silicon Graphics, Inc. (b) 1,875,000
-----------
10,046,250
-----------
Computer Software (1.5%):
20,000 Microsoft Corp. (b) 2,062,500
25,000 Oracle Corp. (b) 1,178,125
-----------
3,240,625
-----------
Consumer Goods & Services (5.4%):
30,000 Colgate Palmolive Co. 2,336,250
50,000 CUC International, Inc. (b) 1,462,500
60,000 Gillette Co. 3,105,000
20,000 Kimberly Clark 1,490,000
35,000 Procter & Gamble Co. 2,966,250
-----------
11,360,000
-----------
Containers & Packaging (0.8%):
30,000 Avery Dennison Corp. 1,620,000
-----------
Defense (1.8%):
41,000 Raytheon Co. 2,101,250
30,000 Rockwell International 1,766,250
-----------
3,867,500
-----------
Diversified (2.6%):
45,000 Allied Signal, Inc. 2,660,625
35,000 Textron, Inc. 2,800,000
-----------
5,460,625
-----------
</TABLE>
<PAGE> 122
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AMCORE VINTAGE EQUITY FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C>
Common Stocks, continued:
Electrical & Electronic (7.5%):
40,000 Amphenol Corp--Class A (b) $ 935,000
55,000 Avnet, Inc. 2,653,750
55,000 Compaq Computer Corp. (b) 2,124,375
36,000 Emerson Electric Co. 2,907,000
55,000 General Electric Co. 4,283,125
60,000 Varian Associates, Inc. 2,992,500
-----------
15,895,750
-----------
Entertainment (3.0%):
60,000 Viacom, Inc. - Class B (b) 2,527,500
60,000 Walt Disney Co. 3,832,500
-----------
6,360,000
-----------
Financial Services (3.9%):
34,000 Federal Home Loan Mortgage Corp. 2,898,500
80,000 Federal National Mortgage Assoc 2,550,000
40,000 Household International 2,690,000
-----------
8,138,500
-----------
Food Products & Services (3.7%):
15,000 Coca-Cola Co. 1,239,375
50,000 ConAgra, Inc. 2,031,250
50,000 McDonald's Corp. 2,400,000
35,000 PepsiCo, Inc. 2,213,750
-----------
7,884,375
-----------
Health Care (4.8%):
50,000 Abbott Labs 2,037,500
60,000 Baxter International, Inc. 2,715,000
25,000 Bristol-Myers Squibb Co. 2,140,625
35,000 Johnson & Johnson 3,228,750
-----------
10,121,875
-----------
Home Furnishings (0.8%):
60,000 Newell Companies, Inc. 1,605,000
-----------
Insurance (3.9%):
30,000 American International Group 2,808,750
18,000 Chubb Corp. 1,689,750
13,000 General Re Corp. 1,894,750
14,000 Marsh & McLennan 1,300,250
40,000 USF & G Corp. 620,000
-----------
8,313,500
-----------
Machinery & Equipment (1.0%):
52,000 Sundstrand Corp. 2,119,000
-----------
Manufacturing-Consumer Goods (0.7%):
50,000 U.S. Filter Corp. (b) 1,400,000
-----------
Medical Equipment & Supplies (3.8%):
35,000 Amgen, Inc. (b) 2,034,375
75,000 Caremark International, Inc. 1,884,375
70,000 Medtronic, Inc. 4,173,750
-----------
8,092,500
-----------
</TABLE>
<PAGE> 123
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AMCORE VINTAGE EQUITY FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C>
Common Stocks, continued:
Office Equipment & Services (4.0%):
50,000 Hewlett-Packard $ 4,700,000
31,000 Honeywell, Inc. 1,712,750
30,000 Reuters Holding PLC-ADR 1,953,750
-----------
8,366,500
-----------
Oil & Gas Exploration Products & Services (3.7%):
20,000 Amoco Corp. 1,445,000
25,000 Anadarko Petroleum Corp. 1,387,500
8,000 Atlantic Richfield Co. 952,000
15,000 Exxon Corp. 1,224,375
10,000 Mobil Corp. 1,158,750
20,000 Schlumberger Ltd. 1,582,500
-----------
7,750,125
-----------
Pharmaceuticals (6.9%):
28,000 American Home Products 3,034,500
40,000 Eli Lilly & Co. 2,600,000
40,000 Merck & Company, Inc. 2,490,000
50,000 Pfizer, Inc. 3,350,000
30,000 Warner Lambert Co. 3,097,500
-----------
14,572,000
-----------
Photography (1.9%):
55,000 Eastman Kodak Co. 3,905,000
-----------
Printing & Publishing (3.3%):
22,000 Gannett, Inc. 1,479,500
40,000 R.R. Donnelley Co. 1,380,000
60,000 Time Warner, Inc. 2,452,500
25,000 Tribune Co. 1,646,875
-----------
6,958,875
-----------
Retail Stores (5.1%):
60,000 Barnes & Noble (b) 2,085,000
48,000 Home Depot, Inc. 2,298,000
45,000 Lowe's Companies 1,608,750
35,000 May Department Stores 1,688,750
70,000 Office Depot, Inc. (b) 1,373,750
50,000 Walgreen Co. 1,631,250
-----------
10,685,500
-----------
Technology (5.3%):
14,000 International Business Machines 1,555,750
24,000 Minnesota Mining & Manufacturing Co. 1,557,000
70,000 Motorola, Inc. 3,710,000
50,000 Texas Instruments, Inc. 2,543,750
60,000 Xilinx, Inc. (b) 1,905,000
-----------
11,271,500
-----------
Telecommunications (5.5%):
30,000 Ameritech Corp. 1,635,000
60,000 AT&T Corp. 3,675,000
44,000 Bell South Corp. 1,628,000
60,000 GTE Corp. 2,632,500
40,000 SBC Communications, Inc. 2,105,000
-----------
11,675,500
-----------
</TABLE>
<PAGE> 124
THE COVENTRY GROUP
AMCORE VINTAGE EQUITY FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C>
Common Stocks, continued:
Tire & Rubber (0.8%):
32,000 Goodyear Tire & Rubber Co. $ 1,632,000
------------
Total Common Stocks 209,794,500
------------
Investment Company (0.7%):
1,469,476 AMCORE Vintage U.S. Government
Obligations Fund 1,469,476
------------
Total Investment Company 1,469,476
------------
Total (Cost--$157,064,943) (a) $211,263,976
============
</TABLE>
- ----------
Percentages indicated are based on net assets of $210,949,736.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $56,651,764
Unrealized depreciation (2,452,731)
-----------
Net unrealized appreciation $54,199,033
===========
</TABLE>
(b) Represents non-income producing securities.
ADR - American Depository Receipt.
PLC - Public Liabilities Company.
See notes to financial statements.
<PAGE> 125
THE COVENTRY GROUP
AMCORE VINTAGE FIXED INCOME FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------------------------------------------------------------------------
<S> <C>
Collateral Mortgage Obligations (17.6%):
Federal Home Loan Mortgage Corp.:
2,000,000 6.25%, 12/15/06 $ 1,923,125
3,000,456 6.50%, 10/15/21 2,962,013
Federal National Mortgage Assoc.:
287,512 7.00%, 1/25/04 286,802
3,500,000 7.00%, 8/25/06 3,506,720
1,000,000 6.60%, 4/25/17 994,920
2,000,000 6.50%, 3/25/20 1,940,200
G.E. Capital:
3,000,000 7.00% (b) 2,914,687
Resolution Trust Co.:
422,668 7.43%*, 4/25/96 424,650
-----------
Total Collateral Mortgage Obligations 14,953,117
-----------
Corporate Bonds (30.4%):
Banking (8.4%):
1,000,000 BankAmerica Corp.,
7.20%, 9/15/02 1,020,000
500,000 Bankers Trust,
8.13%, 5/15/02 530,000
1,000,000 Bank One, Dayton, N.A.,
6.63%, 4/15/03 991,250
500,000 Chase Manhattan Corp.,
8.80%, 2/1/00 511,875
500,000 Chase Manhattan Corp.,
9.05%, 2/1/02 510,000
1,500,000 Citicorp Senior Notes, 8.63%, 11/1/04,
callable 11/1/99 @ 100 1,593,750
1,000,000 NationsBank Corp.,
6.63%, 1/15/98 1,008,750
500,000 NationsBank Corp.,
6.50%, 8/15/03 485,625
500,000 Northern Trust Co.,
6.50%, 5/1/03 492,500
-----------
7,143,750
-----------
Beverages (0.6%):
500,000 PepsiCo, Inc.,
7.88%, 8/15/96 503,750
-----------
Electric Utilities (2.1%):
250,000 Central Power and Light Co.,
6.63%, 1/1/98 251,250
1,000,000 Florida Power & Light,
6.88%, 4/1/04, callable 4/1/98 @ 102 1,012,500
250,000 Houston Light & Power Co.,
6.75%, 4/1/98 250,625
250,000 Sierra Pacific Power Co.,
6.50%, 7/01/97 250,625
-----------
1,765,000
-----------
Financial Services (11.1%):
1,000,000 Associates Corp.,
7.50%, 4/15/02 1,040,000
1,000,000 Commercial Credit Corp.,
6.88%, 5/1/02 1,006,250
1,000,000 Ford Motor Credit Corp.,
6.85%, 8/15/00 1,010,000
500,000 Ford Motor Credit Corp.,
7.50%, 1/27/03 515,625
500,000 Household Finance Corp.,
7.63%, 12/15/96 506,410
1,000,000 Household Finance Corp.,
6.88%, 3/1/03 1,007,500
250,000 ITT Financial Corp.,
7.25%, 11/15/96 252,500
</TABLE>
<PAGE> 126
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AMCORE VINTAGE FIXED INCOME FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------------------------------------------------------------------------
<S> <C>
Corporate Bonds, continued:
Financial Services, continued:
1,000,000 Norwest Financial, Inc.,
7.50%, 4/15/05 $ 1,042,500
1,000,000 Smith Barney,
6.88%, 6/15/05 986,250
2,000,000 Standard Credit Card Master Trust,
95-8A, 6.70%, 9/7/00, callable 9/7/98 @ 100 2,032,800
-----------
9,399,835
-----------
Home Furnishings (1.2%):
1,000,000 Newell Co.,
6.40%, 6/10/02 983,750
-----------
Industrial Goods & Services (1.5%):
1,000,000 E.I. Dupont De Nemours & Co.,
6.42%, 11/20/97 1,005,000
250,000 E.I. Dupont De Nemours & Co.,
8.65%, 12/1/97 259,687
-----------
1,264,687
-----------
Manufacturing--Consumer Goods (0.2%):
150,000 Corning Glass Works,
8.38%, 11/1/96 152,250
-----------
Restaurants (0.3%):
233,333 Secured Restaurant Trust,
10.25%, 11/15/00 259,875
-----------
Retail Stores (1.8%):
1,000,000 Sears Roebuck & Co.,
7.60%, 3/05/97 1,013,750
500,000 Sears Roebuck & Co.,
8.02%, 12/28/98 523,125
-----------
1,536,875
-----------
Utilities-Telecommunications (3.2%):
250,000 AT&T Corp.,
8.20% 2/15/05, callable 2/15/00 @ 100 260,312
1,000,000 GTE Florida, Inc.,
6.25%, 11/15/05 952,500
500,000 Hawaiian Telephone,
8.00%, 9/1/01 508,125
1,000,000 United Telephone Co. of Florida,
7.25%, 12/15/04 1,023,750
-----------
2,744,687
-----------
Total Corporate Bonds 25,754,459
-----------
U.S. Government Agencies (17.2%):
Federal Home Loan Bank:
500,000 8.05%, 5/27/04 508,810
1,000,000 8.35%, 4/12/05, callable 4/12/96 @ 100 1,001,020
Federal Home Loan Mortgage Corp.:
1,250,000 6.59%, 6/4/03, callable 6/4/96 @ 100 1,250,150
1,250,000 7.05%, 3/24/04, callable 3/24/97 @ 100 1,251,237
500,000 8.05%, 5/19/04, callable 5/19/97 @ 100 508,540
Federal National Mortgage Corp.:
2,000,000 6.57%, 8/10/00, callable 8/10/98 @ 100 2,012,740
1,500,000 6.95%, 9/10/02, callable 9/10/97 @ 100 1,511,100
2,000,000 6.83%, 4/2/03, callable 4/2/99 @ 100 1,984,340
1,000,000 8.00%, 4/13/05, callable 4/13/98 @ 100 1,028,280
2,500,000 7.41%, 8/17/05, callable 8/17/98 @ 100 2,530,475
1,000,000 6.49%, 1/19/06, callable 1/19/01 @ 100 956,740
-----------
Total U.S. Government Agencies 14,543,432
-----------
</TABLE>
<PAGE> 127
THE COVENTRY GROUP
AMCORE VINTAGE FIXED INCOME FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------------------------------------------------------------------------
<S> <C>
U.S. Treasury Notes (30.3%):
2,000,000 7.25%, 11/30/96 $ 2,022,800
1,500,000 6.38%, 6/30/97 1,513,830
1,500,000 7.88%, 1/15/98 1,552,455
1,000,000 7.13%, 10/15/98 1,028,680
3,000,000 6.75%, 6/30/99 3,065,070
3,500,000 6.38%, 1/15/00 3,537,555
2,000,000 6.13%, 9/30/00 1,999,140
1,000,000 5.25%, 1/31/01 964,950
1,000,000 7.50%, 5/15/02 1,064,650
2,000,000 6.38%, 8/15/02 2,011,500
5,000,000 6.25%, 2/15/03 4,985,300
1,000,000 5.88%, 11/15/05 963,370
1,000,000 5.63%, 2/15/06 948,800
-----------
Total U.S. Treasury Notes 25,658,100
-----------
Investment Companies (8.9%):
2,635,877 AMCORE Vintage U.S. Government Fund 2,635,877
4,940,042 Prairie Cash Management Fund 4,940,042
-----------
Total Investment Companies 7,575,919
-----------
Total (Cost - $89,017,650)(a) $88,485,027
===========
</TABLE>
- ----------
Percentages indicated are based on net assets of $84,751,568.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 382,200
Unrealized depreciation (914,823)
---------
Net unrealized depreciation $(532,623)
=========
</TABLE>
(b) When - issued security.
* Variable rate security. Interest rate is as of March 31, 1996. Maturity date
reflects the next rate change date.
See notes to financial statements.
<PAGE> 128
THE COVENTRY GROUP
MACRO NAMES
AMCORE VINTAGE INTERMEDIATE TAX-FREE FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------------- --------------------------------------------------------------------------- ------------
<S> <C>
Municipal Bonds (96.6%):
Alabama (0.6%):
270,000 Montgomery, 5.10%, 11/1/07, callable 5/1/03 @102 $ 266,341
------------
Alaska (0.9%):
400,000 Alaska Student Loan Corp. Revenue Bonds,
5.13%, 7/1/02 399,440
------------
California (1.2%):
500,000 Sacramento City Financing Authority, Lease Revenue Refunding-Series A,
AMBAC Indemnity Corporation, 5.05%, 11/1/06 498,355
------------
Delaware (1.2%):
500,000 Sussex County, 4.90%, 10/15/01, callable 4/15/00 @ 101 507,010
------------
Florida (5.3%):
500,000 Florida School Boards Assoc., Lease Revenue, 6.75%, 7/1/04,
callable 7/1/00 @ 100 529,000
250,000 Jacksonville, Electric Authority Revenue, 5.40%, 10/1/10,
callable 10/1/20 @ 101 and 10/1/03 @ 100 247,573
500,000 Jacksonville, Electric Authority Revenue, Refunding Saint Johns River,
Issue 2, Series 8, 5.13%, 10/1/07, callable 10/1/02 @ 101
and 10/1/03 @ 100 496,355
500,000 Martin County, Florida, GO, 4.25%, 2/1/01 491,185
500,000 State of Florida Board of Education, 5.13%, 6/1/05 505,985
------------
2,270,098
------------
Georgia (1.2%):
500,000 Atlanta Revenue Bonds, 5.75%, 1/1/08 508,915
------------
Idaho (1.2%):
500,000 Meridian Joint School District #2, Idaho, 5.00%, 7/30/03 507,635
------------
Illinois (25.4%):
200,000 Cherry Valley GO, 6.60%, 1/1/01 215,654
500,000 Chicago Metropolitan Water Capital Improvement, 5.00%, 12/1/02 507,900
500,000 Chicago Metropolitan Water Capital Improvement, 5.25%, 12/1/04 511,500
500,000 Chicago O'Hare International Airport, 6.38%, 1/1/04, callable 1/1/02 @ 102
and 1/1/03 @ 101 536,810
200,000 Chicago Water Revenue, AMBAC Indemnity Corporation, 5.50%, 11/1/03 207,392
250,000 Cook County Community School GO, 5.90%, 12/1/03 266,762
300,000 Du Page, Illinois Airport Authority, Limited Tax Ins.
Certificate of Participation, Series A, FGIC, 4.80%, 2/1/01 301,137
300,000 Illinois Development Finance Authority Revenue, FGIC, 5.45%, 2/1/02 311,973
200,000 Illinois Development Finance Authority Revenue, FGIC, 6.05%, 3/1/04 215,350
510,000 Illinois Development Finance Authority Revenue, (Belvidere) GO,
4.65%, 12/1/03 501,830
500,000 Illinois Development Finance Authority Revenue, S.D. 46, 5.25%, 1/1/06 505,285
500,000 Illinois Development Finance Authority Revenue, Wheaton School 200,
4.75%, 12/1/02 501,105
400,000 Illinois Health Facilities Authority Revenue, MBIA, 4.90%, 11/15/03 399,324
500,000 Illinois Housing Development Authority, 5.10%, 7/1/02 500,065
465,000 Illinois Housing Development Authority, Single Family Mortgage Revenue,
6.50%, 2/1/09 487,441
220,000 Illinois State Sales Tax Revenue, Series Q, 5.75%, 6/15/14 214,647
200,000 Illinois Student Assistance Commission, Student Loan Revenue, GSL,
5.45%, 3/1/99 204,208
300,000 Illinois Student Assistance Commission, Student Loan Revenue,
Series M, 6.30%. 3/1/03 309,987
500,000 Kane County Motor Fuel Tax Revenue, 5.40%, 3/1/06, callable 3/1/01 @ 102.5 502,340
500,000 Kane County Public Building C, Elgin Community College 509-B, 5.75%, 12/1/10 505,215
500,000 Lake Forest, Community High School District 115, 4.70%, 11/1/05,
callable 11/1/01 @ 100 487,030
300,000 Metropolitan Pier & Exposition Authority, State Tax Revenue, 5.20%, 6/15/99 306,102
500,000 Northwest Water Community Cook & Lake Counties, Water Revenue, 4.90%, 5/1/07 478,115
400,000 Sangamon County, Certificate of Participation, 6.40%, 12/1/00 426,988
250,000 State Of Illinois, GO, 4.90%, 6/1/01 252,142
250,000 State Of Illinois, GO, 5.00%, 6/1/02 252,495
100,000 Sterling Hospital Revenue, CGH Medical Center Project, 5.65%, 5/1/99 101,634
250,000 Winnebago County, School District 122, FGIC, 5.75%, 6/1/01 263,670
500,000 Winnebago & Boone Counties, Rockford School District Number 205,
School Bonds, Series 1992 C, 5.25%, 2/1/01 513,705
------------
10,787,806
------------
</TABLE>
<PAGE> 129
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AMCORE VINTAGE INTERMEDIATE TAX-FREE FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------------- --------------------------------------------------------------------------- ------------
<S> <C>
Municipal Bonds, continued:
Indiana (1.8%):
500,000 Indiana Bond Bank (Elkhart Water\Sewer Refunding Bonds),
5.55%, 11/1/10, callable 11/1/04 @ 102 $ 480,645
250,000 Indianapolis, Series A, 6.75%, 2/1/04 269,680
------------
750,325
------------
Iowa (5.0%):
300,000 Ames, Iowa Electric Revenue, 5.20%, 1/1/05, callable 1/1/02 @ 100 302,496
500,000 Iowa City GO, 5.00%, 6/1/04, callable 6/1/02 @ 100 506,055
500,000 Iowa State Certificate of Participation, 6.50%, 7/1/06,
callable 7/1/02 @ 102 and 7/1/04 @ 100 545,465
500,000 Iowa Student Loan, 5.75%, 12/1/06 495,245
250,000 Iowa Student Loan Liquidity Corp., Series A, 5.35%, 12/1/02 254,753
------------
2,104,014
------------
Maryland (0.6%):
250,000 Baltimore, Construction Public Improvement, Series A, AMBAC
Indemnity Corporation, 5.30%, 10/15/07, callable 10/15/03 @ Par 250,208
------------
Massachusetts (2.3%):
500,000 Massachusetts Bay Transportation Authority, 5.30%, 3/1/08,
callable 3/1/06 @ 101 495,190
500,000 Massachusetts Education Loan Authority, 5.60%, 7/1/06,
callable 7/1/05 @ 102 500,725
------------
995,915
------------
Michigan (1.8%):
250,000 Grand Haven, Insured Electric Revenue Bonds, MBIA, 4.90%, 7/1/03 251,345
500,000 Kent County, Michigan Building Authority, 4.80%, 12/1/04 498,145
------------
749,490
------------
Minnesota (3.7%):
500,000 Minneapolis, 4.75%, 9/1/02 505,220
500,000 Minneapolis, Special School District, 5.00%, 2/1/05 499,965
520,000 Ramsey County, 5.60%, 12/1/05, callable 12/1/04 @ 100 545,428
------------
1,550,613
------------
Mississippi (0.8%):
350,000 Mississippi Higher Education, SR Series B, 5.25%, 9/1/01 355,092
------------
Montana (1.0%):
335,000 Montana Higher Education Student Assistance Corp., 5.25%, 12/1/02 336,846
100,000 Montana Student Loan, 5.75%, 12/1/12 92,423
------------
429,269
------------
Nebraska (0.6%):
250,000 Omaha, Airport Authority, 5.00%, 1/1/04 250,355
------------
Nevada (4.0%):
300,000 Clark County, 5.40%, 7/1/03 305,193
500,000 Clark County, Sanitation District, 5.60%, 7/1/07, callable 7/1/03 @ 101 509,715
405,000 Nevada Housing, 5.20%, 4/1/01 407,195
500,000 State of Nevada, 4.40%, 11/1/01 494,615
------------
1,716,718
------------
</TABLE>
<PAGE> 130
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Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------------- --------------------------------------------------------------------------- ------------
<S> <C>
Municipal Bonds, continued:
New Jersey (2.3%):
500,000 New Jersey State Transportation Trust, 5.00%, 6/15/06 $ 497,590
500,000 New Jersey Wastewater Treatment Trust, Series A,
4.80%, 9/1/06 490,740
------------
988,330
------------
New Mexico (2.4%):
500,000 Albuquerque, School District #12, 5.30%, 8/1/08, callable 8/1/03 @ 100 499,960
500,000 New Mexico Educational Assistance, 5.75%, 8/1/07 500,780
------------
1,000,740
------------
Ohio (1.1%):
250,000 Student Loan Funding Corp., Series C, 5.70%, 7/1/99 257,293
200,000 Student Loan Funding Corp., Series C, 5.50%, 12/1/01 202,606
------------
459,899
------------
Pennsylvania (0.6%):
250,000 Commonwealth of Pennsylvania Insured Certificate of Participation,
4.63%, 7/1/00 250,222
------------
Rhode Island (1.8%):
500,000 Rhode Island State, 4.90%, 6/15/04 499,630
250,000 Rhode Island State Construction, Capital Development Loan, Series B,
6.00%, 5/15/99 260,960
------------
760,590
------------
South Dakota (1.2%):
500,000 South Dakota Student Loan, 5.85%, 8/1/00 513,415
------------
Texas (6.9%):
105,000 Arlington Independent School District, 6.10%, 5/15/05 113,249
200,000 Arlington Permanent Independent, 6.70%, 8/15/12 222,042
195,000 Arlington GO, 6.10%, 2/15/05, callable 2/15/02 @ 100 205,592
500,000 Austin, Airport Revenue, 5.50%, 11/15/06 505,175
500,000 Dallas Water & Sewer, 4.90%, 4/1/04 500,000
500,000 Hayes School District GO, 4.50%, 9/1/08 457,090
200,000 Houston, Water & Sewer System, Series C, MBIA, 5.25%, 12/1/00 206,414
300,000 Temple, Independent School District, 4.90%, 2/1/04, callable 2/1/01 @ 100 299,787
400,000 Texas State College Student Loan, 5.40%, 8/1/02 407,052
------------
2,916,401
------------
Utah (1.8%):
250,000 Davis County, GO, 4.95%, 6/1/05 248,600
500,000 Salt Lake County, 5.50%, 12/15/04 525,005
------------
773,605
------------
Virginia (2.8%):
500,000 Fairfax County, Series A, 4.90%, 6/1/03,
callable 6/1/00 @ 100.75 505,995
195,000 Virginia Educational Loan Authority, Series E, 5.50%, 3/1/01 201,690
500,000 Virginia State Housing Development Authority, 5.10%, 7/1/06,
callable 1/1/02 @ 102 489,110
------------
1,196,795
------------
</TABLE>
<PAGE> 131
THE COVENTRY GROUP
AMCORE VINTAGE INTERMEDIATE TAX-FREE FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------------- --------------------------------------------------------------------------- ------------
<S> <C>
Municipal Bonds, continued:
Washington (5.6%):
310,000 King County, Public Hospital, Facility Revenue,
AMBAC Indemnity Corporation, 5.70%, 9/1/01 $ 324,524
500,000 Seattle, Water System Revenue, 4.70%, 12/1/00 503,095
500,000 Tacoma, Electric System Revenue, 5.50%, 1/1/12 487,110
500,000 Washington State, 6.80%, 10/1/02, callable 10/1/99 @ 100 535,405
500,000 Washington State GO, 5.35%, 9/1/06, callable 9/1/05 @ 100 509,240
------------
2,359,374
------------
Wisconsin (10.9%):
500,000 City of Beloit, Sewer System Revenue Bond, 4.80%, 7/1/05 490,375
500,000 Franklin Public School District, 4.75%, 4/1/04 492,160
500,000 Green Bay Area Public Schools, 4.40%, 4/1/02 490,080
400,000 Kenosha, Series A, 4.90%, 4/1/99 405,460
500,000 Madison, 5.00%, 4/1/05 501,795
500,000 Milwaukee, 5.15%, 11/15/08 513,230
500,000 Sturgeon Bay, Combined Utility, 4.90%, 1/1/06 488,370
500,000 Wisconsin Housing & Economic Development Authority, Housing Revenue,
4.70%, 11/1/99 495,525
250,000 Wisconsin Housing & Economic Development Authority, Series B,
4.90%, 11/1/01 245,158
500,000 Wisconsin Housing & Economic Development Authority, Series B,
5.20%, 11/1/06, callable 10/1/03 @ 102 489,780
------------
4,611,933
------------
Wyoming (0.6%):
250,000 Cheyenne, GO Unlimited, 5.45%, 12/1/01 260,108
------------
Total Municipal Bonds 40,989,011
------------
Investment Companies (1.9%):
820,920 Prairie Municipal Money Market Fund 820,920
------------
Total Investment Companies 820,920
------------
Total (Cost - $41,739,167)(a) $ 41,809,931
============
</TABLE>
____________________
Percentages indicated are based on net assets of $42,435,956.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $ 361,104
Unrealized depreciation (290,340)
--------
Net unrealized appreciation $ 70,764
========
FGIC - Financial Guarantee Insurance Corporation.
GO - General Obligation.
GSL - Guaranteed Student Loans.
MBIA - Municipal Bond Insurance Association.
See notes to financial statements.
<PAGE> 132
THE COVENTRY GROUP
AMCORE VINTAGE BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------ --------------
<S> <C> <C>
Collateralized Mortgage Obligation (3.6%):
G.E. Capital:
500,000 7.00% (c) $ 485,781
-------------
Total Collateralized Mortgage Obligation 485,781
-------------
Common Stocks (63.4%):
Banking (4.3%):
2,000 BankAmerica Corp. 155,000
3,000 Barnett Banks, Inc. 186,750
3,000 NationsBank Corp. 240,375
-------------
582,125
-------------
Business Services (0.5%):
1,000 First Data Corp. 70,500
-------------
Chemicals (4.2%):
3,000 Air Products & Chemical 163,875
3,000 Eastman Chemical Co. 207,375
1,300 Monsanto Co. 199,550
-------------
570,800
-------------
Computer Hardware (3.9%):
2,400 Cabletron Systems (b) 159,000
4,500 Cisco Systems, Inc. (b) 208,687
2,800 Intel Corp. 159,250
-------------
526,937
-------------
Computer Software (2.9%):
2,000 Microsoft Corp. (b) 206,250
2,000 Oracle Corp. (b) 94,250
1,500 Shared Medical Systems Corp. 90,375
-------------
390,875
-------------
Consumer Goods & Services (4.9%):
5,000 Gillette Co. 258,750
2,500 Kimberly Clark 186,250
2,600 Procter & Gamble Co. 220,350
-------------
665,350
-------------
Defense (1.5%):
4,000 Raytheon Co. 205,000
-------------
Diversified (1.3%):
3,000 Allied Signal, Inc. 177,375
-------------
Electrical & Electronic (4.0%):
3,700 Compaq Computer Corp. (b) 142,912
2,000 Emerson Electric Co. 161,500
3,000 General Electric Co. 233,625
-------------
538,037
-------------
Entertainment (1.4%):
3,000 Walt Disney Co. 191,625
-------------
Financial Services (1.9%):
6,000 Federal National Mortgage Assoc. 191,250
2,000 MBNA Corp. 59,250
-------------
250,500
-------------
</TABLE>
<PAGE> 133
THE COVENTRY GROUP
AMCORE VINTAGE BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------ --------------
<S> <C> <C>
Common Stocks, continued:
Food Products & Services (2.8%):
4,000 McDonald's Corp. $ 192,000
3,000 PepsiCo, Inc. 189,750
-------------
381,750
-------------
Health Care (2.3%):
3,000 Abbott Labs 122,250
2,000 Johnson & Johnson 184,500
-------------
306,750
-------------
Home Furnishings (1.2%):
6,000 Newell Companies, Inc. 160,500
-------------
Insurance (3.6%):
2,450 American International Group 229,381
1,200 General Re Corp. 174,900
1,500 MGIC Investment Corp. 81,750
-------------
486,031
-------------
Medical Equipment & Supplies (2.7%):
2,000 Amgen, Inc. (b) 116,250
3,000 Lincare Holdings, Inc. (b) 97,500
2,500 Medtronic, Inc. 149,063
-------------
362,813
-------------
Office Equipment & Services (2.4%):
2,000 Hewlett Packard 188,000
2,000 Reuters Holding, PLC-ADR 130,250
-------------
318,250
-------------
Oil & Gas Exploration Products & Services (3.5%):
2,000 Amoco Corp. 144,500
1,500 Mobil Corp. 173,813
2,000 Schlumberger Ltd. 158,250
-------------
476,563
-------------
Pharmaceuticals (2.9%):
1,500 Merck & Co., Inc. 93,375
3,000 Pfizer, Inc. 201,000
1,000 Warner Lambert Co. 103,250
-------------
397,625
-------------
Photography (1.5%):
2,900 Eastman Kodak Co. 205,900
-------------
Printing & Publishing (2.5%):
3,000 Gannett, Inc. 201,750
2,000 Tribune Co. 131,750
-------------
333,500
-------------
Retail Stores (1.5%):
2,000 Kohl's Corp. (b) 126,750
3,600 Office Depot, Inc. (b) 70,650
-------------
197,400
-------------
</TABLE>
<PAGE> 134
THE COVENTRY GROUP
AMCORE VINTAGE BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------ --------------
<S> <C> <C>
Common Stocks, continued:
Technology (1.2%):
3,000 Motorola, Inc. $ 159,000
-------------
Telecommunications (4.5%):
3,000 AT&T Corp. 183,750
5,000 GTE Corp. 219,375
4,000 SBC Communications, Inc. 210,500
-------------
613,625
-------------
Total Common Stocks 8,568,831
-------------
Corporate Bonds (3.6%):
Financial Services (1.8%):
250,000 GMAC,
6.50%, 12/5/05 239,375
-------------
Telecommunications (1.8%):
250,000 AT&T Corp.,
7.00%, 5/15/05 253,438
-------------
Total Corporate Bonds 492,813
-------------
U.S. Government Agency (3.7%):
Federal Home Loan Bank:
500,000 5.41%, 4/8/96 499,245
-------------
Total U.S. Government Agency 499,245
-------------
U.S. Treasury Notes (22.3%):
1,000,000 6.38%, 7/15/99 1,010,910
500,000 6.38%, 1/15/00 505,365
1,000,000 6.25%, 5/31/00 1,005,060
500,000 6.25%, 2/15/03 498,530
-------------
Total U.S. Treasury Notes 3,019,865
-------------
Investment Companies (5.8%):
300,103 AMCORE Vintage U.S. Government Fund 300,103
490,007 Prairie Cash Management Fund 490,007
-------------
Total Investment Companies 790,110
-------------
Total (Cost - $12,586,010)(a) $ 13,856,645
=============
</TABLE>
____________
Percentages indicated are based on net assets of $13,516,013.
(a) Represents cost for federal income tax purposes and differs from value
by net unrealized appreciation of securities as follows:
Unrealized appreciation $ 1,403,656
Unrealized depreciation (133,021)
-----------
Net unrealized appreciation $ 1,270,635
===========
(b) Represents non-income producing securities.
(c) When-issued security.
ADR - American Depository Receipt.
PLC - Public Liability Company.
See notes to financial statements.
<PAGE> 135
THE COVENTRY GROUP
AMCORE VINTAGE FIXED TOTAL RETURN FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ -------------------------------------- ------------
<S> <C>
Collateralized Mortgage Obligations (23.0%):
Federal Home Loan Mortgage Corp.:
2,000,000 6.50%, 9/15/06 $ 1,942,580
2,000,000 6.50%, 3/15/07 1,973,020
2,000,000 6.00%, 12/15/17 1,919,060
G.E. Capital:
2,000,000 7.00% (b) 1,943,125
Resolution Trust Co.:
1,690,674 7.43%*, 4/25/96 1,698,599
-------------
Total Collateralized Mortgage Obligations 9,476,384
-------------
Corporate Bonds (29.0%):
Banking (8.7%):
1,000,000 Bankers Trust,
8.13%, 5/15/02 1,060,000
500,000 Chase Manhattan Corp.,
8.80%, 2/1/00 511,875
1,000,000 Citicorp,
6.38%, 1/15/06 958,750
1,000,000 Norwest Financial, Inc.,
8.38%, 1/15/00 1,065,000
-------------
3,595,625
-------------
Chemicals (1.0%):
400,000 Monsanto Co.,
8.40%, 1/15/97 408,000
-------------
Electric Utility (2.4%):
1,000,000 Alabama Power, 1st Mortgage,
6.75%, 2/1/03,
Callable 2/1/98 @ 101.6 985,000
-------------
Financial Services (9.5%):
1,000,000 Bear Stearns,
6.70%, 8/1/03 983,750
1,000,000 GMAC,
6.63%, 10/1/02 988,750
1,000,000 Lehman Senior Notes,
6.13%, 2/1/01 971,250
1,000,000 Merrill Lynch & Co.,
7.00%, 4/27/08 993,750
-------------
3,937,500
-------------
Food Products (1.2%):
500,000 Nabisco, Inc.,
7.05%, 7/15/07 487,500
-------------
Industrial Goods & Services (2.4%):
1,000,000 RPM, Inc.,
7.00%, 6/15/05 992,500
-------------
Insurance (2.5%)
1,000,000 Lincoln National Corp.,
7.13%, 7/15/99 1,016,250
-------------
Retail Stores (1.3%):
500,000 Sears Roebuck Co.,
8.45%, 11/1/98 526,875
-------------
Total Corporate Bonds 11,949,250
-------------
</TABLE>
<PAGE> 136
THE CONVENTRY GROUP
AMCORE VINTAGE FIXED TOTAL RETURN FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<S> <C>
U.S. Government Agencies (9.7%):
Federal Home Loan Mortgage Corp.:
1,000,000 6.59%, 6/4/03, Callable
6/4/96 @ 100 $ 1,000,120
2,000,000 6.62%, 3/3/04 1,984,600
Federal National Mortgage Assoc.:
1,000,000 8.00%, 4/13/05, Callable
4/13/98 @ 100 1,028,280
-------------
Total U.S. Government Agencies 4,013,000
-------------
U.S. Treasury Notes (34.0%):
2,000,000 7.50%, 1/31/97 2,032,740
1,000,000 6.75%, 6/30/99 1,021,690
3,000,000 6.38%, 7/15/99 3,032,730
2,000,000 6.38%, 1/15/00 2,021,460
1,000,000 5.25%, 1/31/01 964,950
3,000,000 6.25%, 2/15/03 2,991,180
1,000,000 5.88%, 2/15/04 969,590
1,000,000 5.88%, 11/15/05 963,370
-------------
Total U.S. Treasury Notes 13,997,710
-------------
Investment Companies (6.5%):
735,429 AMCORE U.S. Government
Obligations Fund 735,429
1,960,028 Prairie Cash Management Fund 1,960,028
-------------
Total Investment Companies 2,695,457
-------------
Total (Cost -- $42,570,981)(a) $ 42,131,801
=============
</TABLE>
____________
Percentages indicated are based on net assets of $41,178,394.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 35,302
Unrealized depreciation (474,482)
-------------
Net unrealized depreciation $ (439,180)
=============
</TABLE>
(b) When-issued security.
* Variable rate security. Interest rate is as of March 31, 1996. Maturity
date reflects the next rate change date.
See notes to financial statements.
<PAGE> 137
THE COVENTRY GROUP
AMCORE AGGRESSIVE GROWTH FUND
Schedule of Portfolio Investments
March 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------ -------------------------------------- ------------
<S> <C>
Common Stocks (95.4%):
Automotive (1.6%):
7,000 Lear Seating Corp. (b) $ 228,375
7,000 Wabash National Corp. 132,125
-------------
360,500
-------------
Banking (1.9%):
4,500 Barnett Banks, Inc. 280,125
5,000 First Commerce Corp. 165,000
-------------
445,125
-------------
Beverages (1.1%):
3,000 Coca-Cola Co. 247,875
-------------
Business Services (2.8%):
5,000 First Data Corp. 352,500
5,000 Paychex 292,500
-------------
645,000
-------------
Chemicals (5.1%):
7,200 Air Products & Chemical 393,300
6,000 Eastman Chemical Co. 414,750
2,500 Monsanto Co. 383,750
-------------
1,191,800
-------------
Computer Hardware (7.9%):
6,000 Cabletron Systems (b) 397,500
14,000 Cisco Systems, Inc. (b) 649,250
5,000 Intel Corp. 284,375
8,000 Komag (b) 194,000
13,000 Silicon Graphics, Inc. (b) 325,000
-------------
1,850,125
-------------
Computer Software (6.3%):
8,000 Computer Associates International, Inc. 573,000
3,000 Microsoft Corp. (b) 309,375
6,000 Oracle Corp. (b) 282,750
5,000 Shared Medical Systems Corp. 301,250
-------------
1,466,375
-------------
Consumer Goods & Services (5.3%):
12,000 CUC International, Inc. (b) 351,000
6,500 Gillette Co. 336,375
3,000 International Flavors & Fragrance 143,625
2,000 Kimberly Clark 149,000
3,000 Procter & Gamble Co. 254,250
-------------
1,234,250
-------------
Defense (1.7%):
2,000 OEA, Inc. 73,000
3,000 Raytheon Co. 153,750
3,000 Rockwell International 176,625
-------------
403,375
-------------
</TABLE>
<PAGE> 138
THE COVENTRY GROUP
AMCORE AGGRESSIVE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ---------------------- ------------------------------------------------------------------- -----------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Electrical & Electronic (3.7%):
10,000 Compaq Computer Corp. (b) $ 386,250
4,000 General Electric Co. 311,500
5,000 Molex, Inc. 174,375
-----------
872,125
-----------
Electronics-Semiconductors (1.2%):
6,000 Adaptec, Inc. (b) 289,500
-----------
Entertainment (2.8%):
12,000 Carnival Cruise Lines 330,000
5,000 Walt Disney Co. 319,375
-----------
649,375
-----------
Financial Services (4.1%):
11,000 Federal National Mortgage Assoc. 350,625
4,000 Household International 269,000
11,400 MBNA Corp. 337,725
-----------
957,350
-----------
Food Products & Services (2.3%):
6,000 McDonald's Corp. 288,000
4,000 PepsiCo, Inc. 253,000
-----------
541,000
-----------
Health Care (4.0%):
7,000 Healthcare Compare Corp. (b) 352,625
6,387 Johnson & Johnson 589,201
-----------
941,826
-----------
Home Furnishings (1.1%):
10,000 Newell Companies, Inc. 267,500
-----------
Insurance (3.8%):
7,500 AFLAC, Inc. 234,375
3,500 American International Group 327,687
2,000 MBIA, Inc. 150,000
3,000 MGIC Investment Corp. 163,500
-----------
875,562
-----------
Machinery & Equipment (0.9%):
6,000 Applied Materials (b) 209,250
-----------
Manufacturing-Capital Goods (0.8%):
5,000 Parker Hannifin Corp. 187,500
-----------
Manufacturing-Consumer Goods (1.7%):
4,000 Ionics, Inc. (b) 167,000
8,000 U.S. Filter Corp. (b) 224,000
-----------
391,000
-----------
Medical Equipment & Supplies (7.1%):
6,000 Amgen, Inc. (b) 348,750
8,000 Lincare Holdings, Inc. (b) 260,000
6,500 Medtronic, Inc. 387,563
4,000 Nellcor Puritan Bennett, Inc. (b) 257,000
5,000 W.R. Grace & Co. 391,250
-----------
1,644,563
-----------
</TABLE>
<PAGE> 139
THE COVENTRY GROUP
AMCORE AGGRESSIVE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ---------------------- ------------------------------------------------------------------- -----------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Medical-Hospital Services (1.0%):
8,000 Vivra, Inc. (b) $ 238,000
-----------
Office Equipment & Services (2.9%):
4,000 Hewlett Packard 376,000
4,500 Reuters Holding, PLC-ADR 293,062
-----------
669,062
-----------
Oil & Gas Exploration Products & Services (2.0%):
1,000 Mobil Corp. 115,875
3,500 Schlumberger Ltd. 276,938
3,000 Seitel, Inc. (b) 81,375
-----------
474,188
-----------
Pharmaceuticals (4.3%):
2,000 Merck & Company, Inc. 124,500
5,500 Pfizer, Inc. 368,500
5,000 R.P. Scherer Corp. (b) 219,375
5,000 Schering Plough 290,625
-----------
1,003,000
-----------
Photography (0.6%):
2,000 Eastman Kodak Co. 142,000
-----------
Printing & Publishing (1.2%):
10,500 Banta Corp. 280,875
-----------
Restaurants (1.0%):
10,000 Starbucks Corp. (b) 233,125
-----------
Retail Stores (6.3%):
10,000 Barnes & Noble (b) 347,500
4,500 Kohl's Corp. (b) 285,187
10,000 Lowe's Companies 357,500
14,000 Office Depot, Inc. (b) 274,750
6,000 Pep Boys-Manny Moe & Jack 201,000
-----------
1,465,937
-----------
Services (1.5%):
10,500 Olsten Corp. 338,625
-----------
Technology (2.3%):
4,500 Motorola, Inc. 238,500
9,500 Xilinx, Inc. (b) 301,625
-----------
540,125
-----------
</TABLE>
<PAGE> 140
THE COVENTRY GROUP
AMCORE AGGRESSIVE GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ---------------------- ------------------------------------------------------------------- -----------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Telecommunications (1.0%):
8,500 DSC Communications Corp. (b) $ 229,500
-----------
Utilities - Telecommunications (4.1%):
1,000 AT&T Corp. 61,250
11,000 Frontier Corp. 346,500
6,000 GTE Corp. 263,250
5,500 SBC Communications, Inc. 289,438
-----------
960,438
-----------
Total Common Stocks 22,245,851
-----------
Investment Companies (4.6%):
900,000 AMCORE U.S. Government Obligations Fund 900,000
162,343 Prairie Cash Management Fund 162,343
-----------
Total Investment Companies 1,062,343
-----------
Total (Cost - $21,756,961)(a) $23,308,194
===========
</TABLE>
- ----------
Percentages indicated are based on net assets of $23,318,730.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 2,361,833
Unrealized depreciation (810,600)
-----------
Net unrealized appreciation $ 1,551,233
===========
</TABLE>
(b) Represents non-income producing securities.
ADR - American Depository Receipt.
PLC - Public Liability Company.
See notes to financial statements.
<PAGE> 141
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
1. ORGANIZATION:
The Coventry Group ("Group") was organized on January 8, 1992 as a Massachusetts
business trust, and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified, open-end management investment
company. Between the date of organization and the date of commencement of
operations of the AMCORE Vintage U.S. Government Obligations Fund, the AMCORE
Vintage Equity Fund, the AMCORE Vintage Fixed Income Fund, the AMCORE Vintage
Intermediate Tax-Free Fund, the AMCORE Vintage Balanced Fund, the AMCORE Vintage
Fixed Total Return Fund, and the AMCORE Vintage Aggressive Growth Fund
(individually, a "Fund"; collectively, the "Funds"), each a series of the Group,
the Funds earned no investment income and had no operations other than incurring
organizational expenses.
The U.S. Government Obligations Fund's investment objective is to seek current
income consistent with maintaining liquidity and stability of principal by
investing exclusively in short-term U.S. Treasury Bills, notes and other
short-term obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and repurchase agreements with respect thereto.
The investment objective of the Equity Fund is long-term capital appreciation by
investing primarily in a diversified portfolio of equity securities. The
investment objective of the Fixed Income Fund is to seek total return consistent
with the production of current income and the preservation of capital by
investing primarily in fixed income securities that have a stated or remaining
maturity of 15 years or less or expect to maintain a dollar-weighted average
portfolio maturity of 3 to 7 years. The investment objective of the Intermediate
Tax-Free 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 tax-free fixed income securities. The
investment objective of the Balanced fund is to seek long-term growth of capital
and income by investing primarily in a diversified portfolio of equity
securities and high quality fixed income securities. The investment objective of
the Fixed Total Return Fund is to seek long-term total return by investing
primarily in a diversified portfolio of fixed income securities including
certain types of fixed income securities that may exhibit greater volatility
than those invested in by the Fixed Income Fund. The investment objective of the
Aggressive Growth Fund is long-term capital growth by investing primarily in
common stocks and other equity-type securities of small, medium and large
capitalized companies that exhibit a strong potential for price appreciation
relative to other equity securities.
The Group is authorized to issue an unlimited number of shares which are units
of beneficial interest with a par value of $0.01 per share. Sales of shares of
the Funds may be made to the general public.
2. SIGNIFICANT ACCOUNTING PRINCIPLES:
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
effect the reported amounts and disclosures. Actual results could differ from
those estimates.
<PAGE> 142
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MARCH 31, 1996
SECURITIES VALUATION:
Investments of the U.S. Government Obligations Fund ("the money market
fund") are valued at either amortized cost, which approximates market
value, or at original cost which, combined with accrued interest,
approximates market value. Under the amortized cost valuation method,
discount or premium is amortized on a constant basis to the maturity of
the security. In addition, the money market fund may not (a) purchase
any instrument with a remaining maturity greater than thirteen months
unless such investment is subject to a demand feature, or (b) maintain
a dollar-weighted-average portfolio maturity which exceeds 90 days.
Investments in common and preferred stocks, commercial paper, corporate
bonds, municipal bonds, U.S. Government securities and U.S. Government
agency securities of the Equity Fund, the Fixed Income Fund, the
Intermediate Tax-Free Fund, the Balanced Fund, the Fixed Total Return
Fund and the Aggressive Growth Fund (collectively "the variable net
asset value funds") are valued at their market values determined on the
basis of the latest available bid quotation in the principal market
(closing sales prices if the principal market is an exchange) in which
such securities are normally traded. Investments in investment
companies are valued at their respective net asset values as reported
by such companies. Securities, including restricted securities, for
which market quotations are not readily available, are valued at fair
market value by the investment adviser under the supervision of the
Group's Board of Trustees. The differences between the cost and market
values of investments held by the variable net asset value funds are
reflected as either unrealized appreciation or depreciation.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the pro rata amortization
of premium or discount. Dividend income is recorded on the ex-dividend
date. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net
sales proceeds.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from member banks of the
Federal Deposit Insurance Corporation and from financial institutions
such as banks and broker dealers which the investment adviser, AMCORE
Capital Management, Inc. ("AMCORE"), 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 generally equals the price paid by a
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, is required to
maintain the value of collateral held pursuant to the agreement at not
less than the repurchase price (including accrued interest). Securities
subject to repurchase agreements are held by the Fund's custodian or
another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by
a Fund under the 1940 Act.
SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS:
Each Fund may purchase securities on a when-issued or delayed-delivery
basis. When-issued securities are securities purchased for delivery
beyond the normal settlement date at a stated price and/or yield,
thereby, involving the risk that the price and/or yield obtained may be
more or less than those available in the market
<PAGE> 143
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MARCH 31, 1996
when delivery takes place. At the time a Fund makes the commitment to
purchase a security on a when-issued basis, the Fund records the
transaction and reflects the value of the security in determining net
asset value. A segregated account is established and the Fund maintains
cash and marketable securities at least equal in value to commitments
for when-issued securities. Securities purchased on a when-issued basis
or delayed delivery basis do not earn income until settlement date.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid
monthly for the U.S. Government Obligations Fund. Dividends from net
investment income are declared and paid quarterly for the Equity Fund,
the Balanced Fund, the Fixed Total Return Fund and the Aggressive
Growth Fund. Dividends from net investment income are declared and paid
monthly for the Fixed Income Fund and the Intermediate Tax-Free Fund.
Distributable net realized capital gains, if any, are declared and
distributed at least annually for each of the Funds. These dividends
are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences
are primarily due to deferrals of certain losses.
FEDERAL INCOME TAXES:
It is the policy of each Fund to qualify or continue to qualify as a
regulated investment company by complying with the provisions available
to certain investment companies, as defined in applicable sections of
the Internal Revenue Code, and to make distributions of net investment
income and net realized capital gains sufficient to relieve it from
all, or substantially all, federal income taxes.
OTHER:
Expenses that are directly related to one of the Funds are charged
directly to that Fund. Expenses relating to the Funds collectively are
prorated to the Funds on the basis of each Fund's relative net assets.
Other expenses for the Group are prorated to the Funds and any other
portfolios of the Group on the basis of relative net assets.
<PAGE> 144
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MARCH 31, 1996
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the year
ended March 31, 1996 are as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
<S> <C> <C>
Equity Fund $77,890,585 $58,371,802
Fixed Income Fund 84,276,615 91,090,195
Intermediate Tax-Free Fund 15,264,839 4,899,282
Balanced Fund (a) 20,016,672 9,251,571
Fixed Total Return Fund (b) 65,129,900 25,071,956
Aggressive Growth Fund (c) 19,480,803 642,802
</TABLE>
- ----------
(a) For the period from June 1, 1995 (commencement of operations) through March
31, 1996.
(b) For the period from June 15, 1995 (commencement of operations) through
March 31, 1996.
(c) For the period from September 29, 1995 (commencement of operations) through
March 31, 1996.
4. RELATED PARTY TRANSACTIONS:
Pursuant to an investment advisory agreement, investment advisory services are
provided to the Funds by AMCORE. Under the terms of the investment advisory
agreement, AMCORE is entitled to receive fees computed daily based on a
percentage of the average net assets of each Fund.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"), an
Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS Ohio") are
subsidiaries of the BISYS Group, Inc.
BISYS, with whom certain officers and trustees of the Group are affiliated,
serves the Funds as administrator. Such officers and trustees are paid no fees
directly by the Funds for serving as officers and trustees of the Group. Under
the terms of the administration agreement, BISYS's fees are computed daily as a
percentage of the average net assets of each Fund.
BISYS Ohio serves the Funds as Transfer Agent and Fund Accountant. Under the
terms of the Transfer Agent and Fund Accountant Agreements, BISYS Ohio's fees
are computed on the basis of number of shareholders and average net assets,
respectively.
The Group has adopted a Distribution and Shareholder Service Plan in accordance
with Rule 12b-1 under the 1940 Act, pursuant to which the Funds are authorized
to pay or reimburse BISYS, as distributor, a periodic amount, calculated at an
annual rate not to exceed 0.25% of the average daily net asset value of each of
the Funds. These fees are used by BISYS to pay banks, including affiliates of
AMCORE, broker dealers and other institutions, or to reimburse BISYS or its
affiliates, for administration, distribution and shareholder services in
connection with the distribution of Fund shares. No amounts were paid or waived
under the terms of this plan during the year ended March 31, 1996.
<PAGE> 145
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MARCH 31, 1996
The Group has adopted an Administrative Services Plan (the "Services Plan"),
pursuant to which the Funds are authorized to pay compensation to banks and
other financial institutions (each a "Service Organization"), which may include
the Adviser, its correspondent and affiliated banks and BISYS, which agree to
provide certain ministerial, recordkeeping and/or administrative support
services for their customers or account holders. In consideration for such
services, a Service Organization receives a fee from a Fund, computed daily and
paid monthly, at an annual rate not to exceed 0.25% of the average daily net
asset value of each of the Funds.
AMCORE has agreed that if the aggregate expenses of any of the Funds, as
defined, for any fiscal year exceed the expense limitation of any State having
jurisdiction over the Fund, AMCORE will reimburse to the Fund, or otherwise
bear, such excess. Such limitation did not affect the calculation of the
investment advisory fees during the year ended March 31, 1996. Furthermore, fees
may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Information regarding these transactions is as follows for the year ended March
31, 1996:
<TABLE>
<CAPTION>
U.S. Government Fixed
Obligations Equity Income
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary
fee reductions (percentage
of average net assets) 0.40% 0.75% 0.60%
Voluntary fee reductions $253,524 -- --
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets of certain shares) 0.20% 0.20% 0.20%
ADMINISTRATIVE SERVICES FEES:
Annual fee (percentage of
average net assets of certain shares) 0.25% 0.25% 0.25%
DISTRIBUTION AND SHAREHOLDER
SERVICE FEES:
Annual fee (percentage of
average net assets of certain shares) 0.25% 0.25% 0.25%
TRANSFER AGENT &
FUND ACCOUNTING FEES: $92,721 $116,729 $70,556
</TABLE>
<PAGE> 146
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MARCH 31, 1996
<TABLE>
<CAPTION>
Intermediate Fixed Aggressive
Tax-Free Balanced Total Return Growth
Fund Fund(a) Fund(b) Fund(c)
---- ------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary
fee reductions (percentage
of of average net assets) 0.60% 0.75% 0.75% 0.95%
Voluntary fee reductions $95,510 -- -- --
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets of certain shares) 0.20% 0.20% 0.20% 0.20%
ADMINISTRATIVE SERVICES FEES:
Annual fee (percentage of
average net assets of certain shares) 0.25% 0.25% 0.25% 0.25%
DISTRIBUTION AND SHAREHOLDER
SERVICE FEES:
Annual fee (percentage of
average net assets of certain shares) 0.25% 0.25% 0.25% 0.25%
TRANSFER AGENT &
FUND ACCOUNTANT FEES: $50,340 $23,240 $31,701 $14,028
</TABLE>
- ----------
(a) For the period from June 1, 1995 (commencement of operations) through March
31, 1996.
(b) For the period from June 15, 1995 (commencement of operations) through
March 31, 1996.
(c) For the period from September 29, 1995 (commencement of operations) through
March 31, 1996.
5. FEDERAL INCOME TAXES:
For federal income tax purposes, the following Funds have capital loss
carryforwards as of March 31, 1996, which are available to offset future capital
gains, if any:
<TABLE>
<CAPTION>
Amount Expires
------ -------
<S> <C> <C>
U.S. Government Obligations Fund $ 13,867 2002
Fixed Income Fund $ 631,115 2003
$1,139,647 2004
Intermediate Tax-Free Fund $ 91,328 2003
$ 47,384 2004
</TABLE>
<PAGE> 147
THE COVENTRY GROUP
AMCORE VINTAGE MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MARCH 31, 1996
6. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Coventry Group designates the following eligible distributions for the
dividends received deduction for corporations:
<TABLE>
<CAPTION>
AMCORE AMCORE AMCORE
Vintage Vintage Vintage
Equity Balanced Aggressive
Fund Fund Growth Fund
---- ---- -----------
<S> <C> <C> <C>
Dividend income $3,487,500 $154,894 $76,108
Dividend income per share $ 0.125 $ 0.069 $ 0.003
</TABLE>
7. EXEMPT-INTEREST DIVIDENDS (UNAUDITED):
The Coventry Group designates the following exempt-interest dividends for the
taxable year ended March 31, 1996:
<TABLE>
<CAPTION>
AMCORE
Vintage
Intermediate
Tax-Free Fund
-------------
<S> <C>
Exempt-interest dividends $1,492,074 (a)
Exempt-interest dividends per share $ 0.432
----------
<FN>
(a) $213,811 of exempt-interest dividends are subject to alternative minimum
taxes.
</TABLE>
<PAGE> 148
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Trustees of
The Coventry Group-AMCORE Vintage Mutual Funds
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments of the AMCORE Vintage Mutual Funds (one
of the series of portfolios constituting The Coventry Group, comprising,
respectively, AMCORE Vintage U.S. Government Obligations Fund, AMCORE Vintage
Equity Fund, AMCORE Vintage Fixed Income Fund, AMCORE Vintage Intermediate
Tax-Free Fund, AMCORE Vintage Balanced Fund, AMCORE Vintage Fixed Total Return
Fund, and the AMCORE Vintage Aggressive Growth Fund) as of March 31, 1996, and
the related statements of operations, the statements of changes in net assets,
and the financial highlights presented herein for each of the respective years
or periods in the period ended March 31, 1996. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
March 31, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
respective portfolios constituting the AMCORE Vintage Mutual Funds of The
Coventry Group as of March 31, 1996, the results of their operations, the
changes in their net assets and the financial highlights presented herein for
each of the respective years or periods in the period ended March 31, 1996, in
conformity with generally accepted accounting principles.
Columbus, Ohio
April 24, 1996
<PAGE> 149
PART C
------
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements
--------------------
1. With respect to AMCORE Vintage U.S.
Government Obligations Fund, AMCORE Vintage
Fixed Income Fund, AMCORE Vintage
Intermediate Tax-Free Fund and AMCORE Vintage
Equity Fund:
Included in Part A:
Financial Highlights
Included in Part B:
Report of Independent Auditors
Statements of Assets and Liabilities dated
March 31, 1996
Statements of Operations for the year ended
March 31, 1996
Statements of Changes in Net Assets for the
years ended March 31, 1995 and March 31, 1996
Schedules of Portfolio Investments as of
March 31, 1996
Notes to Financial Statements
Financial Highlights for the years ended
March 31, 1996, March 31, 1995 and March 31,
1994 and for the periods ended March 31,
1993.
2. With respect to AMCORE Vintage Balanced Fund,
AMCORE Vintage Fixed Total Return Fund and
AMCORE Vintage Aggressive Growth Fund:
Included in Part A:
Financial Highlights for the period from
commencement of operations through
March 31, 1996
<PAGE> 150
Included in Part B:
Report of Independent Auditors
Statements of Assets and Liabilities dated
March 31, 1996
Statements of Operations for the period from
commencement of operations through
March 31, 1996
Statements of Changes in Net Assets for the
period from commencement of operations
through March 31, 1996
Schedules of Investments as of March 31, 1996
Notes to Financial Statements
Financial Highlights for the period from
commencement of operations through
March 31, 1996
(b) Exhibits
--------
(1) Declaration of Trust(1)
(2) (a) By-Laws(2)
(b) Establishment and Designation of
four Series of Shares (AMCORE
Vintage U.S. Government Obligations
Fund, AMCORE Vintage Equity Fund,
AMCORE Vintage Fixed Income Fund,
and AMCORE Vintage Intermediate
Tax-Free Fund)(2)
(c) Establishment and Designation of
three Series of Shares (AMCORE
Vintage Balanced Fund, AMCORE Vintage
Aggressive Growth Fund and AMCORE
Vintage Fixed Total Return Fund)(3)
- ------------------
1 Filed with initial Registration Statement on January 8, 1992.
2 Filed with Post-Effective Amendment No. 2 on September 4, 1992.
3 Filed with Post-Effective Amendment No. 15 on March 17, 1995.
C-2
<PAGE> 151
(3) Not Applicable
(4) Certificates for Shares are not issued.
Articles IV, V, VI and VII of the Declaration
of Trust, previously filed as Exhibit 1
hereto, define rights of holders of Shares.
(5) (a) Investment Advisory Agreement
between Registrant and AMCORE
Capital Management, Inc. (with
respect to AMCORE Vintage Equity
Fund, AMCORE Vintage Fixed Income
Fund, AMCORE Vintage Intermediate
Tax-Free Fund and AMCORE Vintage
U.S. Government Obligations Fund)(4)
(b) Investment Advisory Agreement
between Registrant and AMCORE
Capital Management, Inc. (with
respect to AMCORE Vintage Balanced
Fund, AMCORE Vintage Aggressive
Growth Fund and AMCORE Vintage Fixed
Total Return Fund)(5)
(6) Distribution Agreement between Registrant and
BISYS Fund Services, Limited Partnership(5)
(7) Not Applicable
(8) (a) Custodian Agreement between
Registrant and The First National
Bank of Chicago (with respect to
AMCORE Vintage Equity Fund, AMCORE
Vintage Fixed Income Fund, AMCORE
Vintage Intermediate Tax-Free Fund
and AMCORE Vintage U.S. Government
Obligations Fund)(6)
(b) Custodian Agreement between
Registrant and The First National
Bank of Chicago (with respect to
AMCORE Vintage Balanced Fund, AMCORE
Vintage Aggressive Growth Fund and
AMCORE Vintage Fixed Total Return
Fund)(5)
(9) (a) Management and Administration
Agreement between the Registrant and
BISYS Fund Services, Limited
Partnership (with respect to AMCORE
Vintage Equity Fund, AMCORE Vintage
Fixed Income Fund, AMCORE Vintage
Intermediate Tax-Free Fund and
C-3
<PAGE> 152
AMCORE Vintage U.S. Government
Obligations Fund)(4)
(b) Management and Administration
Agreement between the Registrant and
BISYS Fund Services, Limited
Partnership (with respect to AMCORE
Vintage Balanced Fund, AMCORE
Vintage Aggressive Growth Fund and
AMCORE Vintage Fixed Total Return
Fund)(5)
(c) Fund Accounting Agreement between
the Registrant and BISYS Fund
Services Ohio, Inc. (with respect to
AMCORE Vintage Equity Fund, AMCORE
Vintage Fixed Income Fund, AMCORE
Vintage Fixed Income Fund, AMCORE
Vintage Intermediate Tax-Free Fund
and AMCORE Vintage U.S. Government
Obligations Fund)(4)
(d) Fund Accounting Agreement between
the Registrant and BISYS Fund
Services Ohio, Inc. Corporation
(with respect to AMCORE Vintage
Balanced Fund, AMCORE Vintage
Aggressive Growth Fund and AMCORE
Vintage Fixed Total Return Fund)(5)
(e) Transfer Agency Agreement between
the Registrant and BISYS Fund
Services Ohio, Inc. (with respect to
AMCORE Vintage Equity Fund, AMCORE
Vintage Fixed Income Fund, AMCORE
Vintage Intermediate Tax-Free Fund
and AMCORE Vintage U.S. Government
Obligations Fund)(4)
(f) Transfer Agency Agreement between
the Registrant and BISYS Fund
Services Ohio, Inc. (with respect to
AMCORE Vintage Balanced Fund, AMCORE
Vintage Aggressive Growth Fund and
AMCORE Vintage Fixed Total Return
Fund)(5)
- ---------------------
4 Filed with Post-Effective Amendment No. 4 on November 2, 1992.
5 Filed with Post-Effective Amendment No. 16 on June 1, 1995.
6 Filed with Post-Effective Amendment No. 11 on July 29, 1994.
C-4
<PAGE> 153
(g) Administrative Services Plan(5)
(10) Opinion and Consent of Counsel(7)
(11) Consent of Independent Auditors
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) (a) Distribution and Shareholder Service
Plan(5)
(b) Rule 12b-1 Agreement between the
Registrant and AMCORE Bank Rockford,
N.A. (with respect to AMCORE Vintage
Equity Fund, AMCORE Vintage Fixed
Income Fund, AMCORE Vintage
Intermediate Tax-Free Fund and
AMCORE Vintage U.S. Government
Obligations Fund)(2)
(c) Rule 12b-1 Agreement between the
Registrant and AMCORE Bank Rockford,
N.A. (with respect to AMCORE Vintage
Balanced Fund, AMCORE Vintage
Aggressive Growth Fund and AMCORE
Vintage Fixed Total Return Fund)(6)
(16) Schedules for Computation of Performance Data
(27) Financial Data Schedules
Item 25. Persons Controlled by or Under Common Control with Registrant
- -------- -------------------------------------------------------------
Not applicable.
- ----------------------
7 Filed with Rule 24f-2 Notice on May 25, 1995.
C-5
<PAGE> 154
Item 26. Number of Record Holders
- -------- ------------------------
As of March 31, 1996, the number of record holders of the
series of the Registrant was as follows:
AMCORE Vintage U.S. Government Obligations Fund 866
AMCORE Vintage Fixed Income Fund 266
AMCORE Vintage Intermediate Tax-Free Fund 123
AMCORE Vintage Equity Fund 974
AMCORE Vintage Balanced Fund 127
AMCORE Vintage Aggressive Growth Fund 245
AMCORE Vintage Fixed Total Return Fund 56
Brenton U.S. Government Money Market Fund 125
Brenton Intermediate U.S. Government
Securities Fund 16
Brenton Intermediate Tax-Free Fund 11
Brenton Value Equity Fund 304
The Shelby Fund 3
Ernst Asia Fund 41
Ernst Global Resources Fund 16
Ernst Global Asset Allocation Fund 1
Ernst Global Smaller Companies Fund 0
Ernst Australia - New Zealand Fixed Income Fund 0
Item 27. Indemnification
- -------- ---------------
Article IV of the Registrant's Declaration of Trust states as
follows:
Section 4.3. Mandatory Indemnification.
------------ --------------------------
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust shall be indemnified by the Trust to the fullest
extent permitted by law against all liability and against all
expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof; and
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings
(civil, criminal, administrative or other, including appeals),
actual or threatened; and the words "liability" and "expenses"
shall include, without limitation, attorneys fees, costs,
judgments,
C-6
<PAGE> 155
amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust, a Series thereof, or
the Shareholders by reason of a final adjudication by a court
or other body before which a proceeding was brought that he
engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
his office;
(ii) with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good faith in
the reasonable belief that his action was in the best interest
of the Trust; or
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i)
or (b)(ii) resulting in a payment by a Trustee or officer,
unless there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of his office:
(A) by the court or other body approving the
settlement or other disposition; or
(B) based upon a review of readily available facts
(as opposed to a full trial-type inquiry) by (1) vote
of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the
Disinterested Trustees then in office acts on the
matter) or (2) written opinion of independent legal
counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not affect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the
heirs, executors, administrators and assigns of such person. Nothing
contained herein shall affect any rights to indemnification to which
personnel of the Trust other than Trustees and officers may be
entitled by contract or otherwise under law.
C-7
<PAGE> 156
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 4.3 may be advanced by the Trust prior
to final disposition thereof upon receipt of an undertaking by or on
behalf of the recipient to repay such amount if it is ultimately
determined that he is not entitled to indemnification under this
Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some
other appropriate security provided by the recipient, or the
Trust shall be insured against losses arising out of any such
advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees
acts on the matter) or an independent legal counsel in a
written opinion shall determine, based upon a review of
readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who is
not (i) an Interested Person of the Trust (including anyone who has
been exempted from being an Interested Person by any rule, regulation
or order of the Commission), or (ii) involved in the claim, action,
suit or proceeding.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the Registrant by the Registrant
pursuant to the Declaration of Trust or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers
or controlling persons of the Registrant in connection with
the successful defense of any act, suit or proceeding) is
asserted by such trustees, officers or controlling persons in
connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against
C-8
<PAGE> 157
public policy as expressed in the Act and will be governed by
the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser and its
- -------- ------------------------------------------------------------
Officers and Directors
----------------------
AMCORE Capital Management, Inc. ("AMCORE") is the investment
adviser for AMCORE Vintage U.S. Government Obligations Fund,
AMCORE Vintage Fixed Income Fund, AMCORE Intermediate Tax-Free
Fund, AMCORE Vintage Equity Fund, AMCORE Vintage Balanced
Fund, AMCORE Vintage Aggressive Growth Fund and AMCORE Vintage
Fixed Total Return Fund. AMCORE is controlled by AMCORE Bank
Rockford, N.A. which is a subsidiary of AMCORE Financial, Inc.
Set forth below are the senior officers and directors of
AMCORE and their principal business and other connections.
The Business Address of the officers and directors is 701
Seventh Avenue, Rockford, Illinois 61110.
<TABLE>
<CAPTION>
Position with
Name the Adviser Principal Occupation
- ---- ------------- --------------------
<S> <C> <C>
Jay Evans President and Director President and Chief Investment Officer,
AMCORE Capital Management, Inc. (1992 to
Present); Senior Vice President, AMCORE
Bank N.A., Rockford (1987-1991)
Elizabeth S. Pierson Treasurer and Director Vice President and Portfolio
Manager, AMCORE Capital Management, Inc.
Lawrence R. Lucy Secretary and Director Managing Director, Marketing, Sales,
and Product Development, AMCORE Investment
Group
Darrell C. Thompson Assistant Secretary and Senior Vice President and Senior Equity
Director Manager, AMCORE Capital Management, Inc.
Patricia M. Bonavia Director Marketing Director, Personal Investor
Services, Vintage Fund Product Manager,
AMCORE Investment Group.
</TABLE>
C-9
<PAGE> 158
<TABLE>
<CAPTION>
Position with
Name the Adviser Principal Occupation
- ---- ------------- --------------------
<S> <C> <C>
</TABLE>
Item 29. Principal Underwriter
- -------- ---------------------
(a) BISYS Fund Services, Limited Partnership ("BISYS Fund
Services") acts as distributor and administrator for
Registrant. BISYS Fund Services also distributes the
securities of The Victory Funds, The Riverfront Funds, Inc.,
The HighMark Group, The Parkstone Group of Funds, The BB&T
Mutual Funds Group, the Summit Investment Trust, the Qualivest
Funds, The ARCH Fund, Inc., the American Performance Funds,
The Sessions Group, the Pacific Capital Funds, the AmSouth
Mutual Funds, the MMA Praxis Mutual Funds, the MarketWatch
Funds and M.S.D.&T Funds, each of which is an open-end
management investment company.
(b) Partners of BISYS Fund Services, as of March 31, 1996, were as
follows:
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address BISYS Fund Services Registrant
- ---------------- ------------------- ----------
<S> <C> <C>
BISYS Fund Services Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Corporation Sole Limited Partner None
150 Clove Road
Little Falls, New Jersey 07424
The BISYS Group, Inc. Sole Shareholder None
150 Clove Road
Little Falls, New Jersey 07424
</TABLE>
(c) Not Applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books, and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated
thereunder are in the possession of AMCORE Capital
C-10
<PAGE> 159
Management, Inc., 501 Seventh Avenue, Rockford, Illinois 61110
(records relating to its function as adviser), BISYS Fund
Services, Limited Partnership, 3435 Stelzer Road, Columbus,
Ohio 43219 (records relating to its functions as general
manager, administrator and distributor), and BISYS Fund
Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219
(records relating to its functions as transfer agent).
Item 31. Management Services
- -------- -------------------
Not Applicable.
Item 32. Undertakings.
- -------- -------------
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant undertakes to furnish each person to whom
a prospectus is delivered a copy of the Registrant's
latest annual report to shareholders, upon request
and without charge, in the event that the information
called for by Item 5A of Form N-1A has been presented
in the Registrant's latest annual report to
shareholders.
(d) Registrant undertakes to call a meeting of
Shareholders for the purpose of voting upon the
question of removal of a Trustee or Trustees when
requested to do so by the holders of at least 10% of
the Registrant's outstanding shares of beneficial
interest and in connection with such meeting to
comply with the shareholders communications
provisions of Section 16(c) of the Investment Company
Act of 1940.
C-11
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 26 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Washington in the District of Columbia on the 29th day of April, 1996.
THE COVENTRY GROUP
By: Walter B. Grimm
-----------------------------
Walter B. Grimm, President***
By: Jeffrey L. Steele
--------------------------------------
Jeffrey L. Steele, as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Walter B. Grimm Chairman, President April 29, 1996
- --------------------- and Trustee
Walter B. Grimm*** (Principal Executive
Officer)
Chalmers P. Wylie Trustee April 29, 1996
- ---------------------
Chalmers P. Wylie**
Maurice G. Stark Trustee April 29, 1996
- ---------------------
Maurice G. Stark*
Michael M. Van Buskirk Trustee April 29, 1996
- ----------------------
Michael M. Van Buskirk*
</TABLE>
<PAGE> 161
<TABLE>
<S> <C> <C>
Nancy E. Converse Trustee April 29, 1996
- ---------------------
Nancy E. Converse***
William J. Tomko Treasurer April 29, 1996
- --------------------- (Principal
William J. Tomko* Financial and
Accounting Officer)
By: Jeffrey L. Steele
---------------------------
Jeffrey L. Steele,
as attorney-in-fact
<FN>
* Pursuant to power of attorney filed with Pre-Effective Amendment No. 3
on April 6, 1992.
** Pursuant to power of attorney filed with Post-Effective Amendment No.
6 on May 4, 1993.
*** Pursuant to power of attorney filed herewith.
</TABLE>
<PAGE> 162
POWER OF ATTORNEY
Nancy E. Converse, whose signature appears below, does hereby
constitute and appoint Jeffrey L. Steele, Patrick W.D. Turley, Robert L. Tuch
and Paul F. Roye, each individually, his true and lawful attorneys and agents,
with power of substitution or resubstitution, to do any and all acts and things
and to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to
enable The Coventry Group (the "Group"), to comply with the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended ("Acts"),
and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing and effectiveness
of any and all amendments to the Group's Registration Statement on Form N-1A
pursuant to said Acts, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned, Nancy E. Converse, as a trustee of the Group, any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or any of them, shall do or cause to be done by virtue thereof.
Date: April 27, 1996
Nancy E. Converse
------------------------
Nancy E. Converse
<PAGE> 163
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Jeffrey L. Steele, Robert W. Helm, Patrick W.D. Turley, and Robert L.
Tuch and each of them, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution for him in his name, place, and stead,
in any and all capacities, to sign any and all registration statements in the
name of The Coventry Group and any amendments, exhibits, or supplements
thereto, and to file the same, with all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this power of
attorney on the date indicated.
NAME DATE
---- ----
Walter B.Grimm February 26, 1996
- ------------------------
Walter B. Grimm
Chairman, President
and Trustee (Principal Executive
Officer)
<PAGE> 164
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
FILED
WITH
POST-EFFECTIVE AMENDMENT NO. 26
TO THE
REGISTRATION STATEMENT
OF
THE COVENTRY GROUP
<PAGE> 165
INDEX TO EXHIBITS
(FOR POST-EFFECTIVE AMENDMENT NO. 26)
-------------------------------------
EXHIBIT NO.
UNDER PART C
OF FORM N-1A NAME OF EXHIBIT
- ------------ ---------------
11 Consent of Independent Auditors
27 Financial Data Schedules
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the caption "Financial
Highlights" in the Prospectus and under the captions "Independent Auditors" and
"Financial Statements" in the Statement of Additional Information, both
included in Post-Effective Amendment No. 26 to the Registration Statement (Form
N-1A No. 33-44964) of the AMCORE Vintage Mutual Funds, one of the series of
portfolios constituting The Coventry Group, and to the use of our report dated
April 24, 1996, included therein.
ERNST & YOUNG LLP
Columbus, Ohio
April 29, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882748
<NAME> THE COVENTRY GROUP
<SERIES>
<NUMBER> 1
<NAME> AMCORE U.S. GOVERNMENT OBLIGATIONS FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 154,411,220
<INVESTMENTS-AT-VALUE> 154,411,220
<RECEIVABLES> 118,976
<ASSETS-OTHER> 10,284
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 154,540,480
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 704,811
<TOTAL-LIABILITIES> 704,811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 153,853,494
<SHARES-COMMON-STOCK> 153,853,494
<SHARES-COMMON-PRIOR> 137,983,331
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 17,704
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 153,835,790
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,897,040
<OTHER-INCOME> 0
<EXPENSES-NET> 763,897
<NET-INVESTMENT-INCOME> 7,133,143
<REALIZED-GAINS-CURRENT> 77,670
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,210,813
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,133,143
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 473,468,676
<NUMBER-OF-SHARES-REDEEMED> 458,009,749
<SHARES-REINVESTED> 411,236
<NET-CHANGE-IN-ASSETS> 15,947,833
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 95,374
<GROSS-ADVISORY-FEES> 561,461
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,017,421
<AVERAGE-NET-ASSETS> 140,365,203
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.051
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.051
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.540
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882748
<NAME> THE COVENTRY GROUP
<SERIES>
<NUMBER> 2
<NAME> AMCORE VINTAGE EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 157,064,943
<INVESTMENTS-AT-VALUE> 211,263,976
<RECEIVABLES> 812,616
<ASSETS-OTHER> 204,367
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 212,280,959
<PAYABLE-FOR-SECURITIES> 1,096,490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 234,733
<TOTAL-LIABILITIES> 1,331,223
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 153,592,918
<SHARES-COMMON-STOCK> 14,564,208
<SHARES-COMMON-PRIOR> 13,050,242
<ACCUMULATED-NII-CURRENT> 24,496
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,133,289
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 54,199,033
<NET-ASSETS> 210,949,736
<DIVIDEND-INCOME> 3,487,500
<INTEREST-INCOME> 148,192
<OTHER-INCOME> 0
<EXPENSES-NET> 1,937,402
<NET-INVESTMENT-INCOME> 1,698,290
<REALIZED-GAINS-CURRENT> 7,593,903
<APPREC-INCREASE-CURRENT> 36,320,821
<NET-CHANGE-FROM-OPS> 45,613,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,735,147
<DISTRIBUTIONS-OF-GAINS> 3,191,515
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,484,471
<NUMBER-OF-SHARES-REDEEMED> 3,200,256
<SHARES-REINVESTED> 229,751
<NET-CHANGE-IN-ASSETS> 61,716,852
<ACCUMULATED-NII-PRIOR> 61,353
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1,269,099
<GROSS-ADVISORY-FEES> 1,328,833
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,937,402
<AVERAGE-NET-ASSETS> 177,274,264
<PER-SHARE-NAV-BEGIN> 11.440
<PER-SHARE-NII> 0.130
<PER-SHARE-GAIN-APPREC> 3.270
<PER-SHARE-DIVIDEND> 0.130
<PER-SHARE-DISTRIBUTIONS> 0.230
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 14.480
<EXPENSE-RATIO> 1.090
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882748
<NAME> THE COVENTRY GROUP
<SERIES>
<NUMBER> 3
<NAME> AMCORE VINTAGE FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 89,017,650
<INVESTMENTS-AT-VALUE> 88,485,027
<RECEIVABLES> 1,250,352
<ASSETS-OTHER> 51,794
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,787,173
<PAYABLE-FOR-SECURITIES> 4,923,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 112,480
<TOTAL-LIABILITIES> 5,035,605
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 87,290,632
<SHARES-COMMON-STOCK> 8,535,610
<SHARES-COMMON-PRIOR> 8,413,958
<ACCUMULATED-NII-CURRENT> 66,390
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 2,072,831
<ACCUM-APPREC-OR-DEPREC> (532,623)
<NET-ASSETS> 84,751,568
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,296,596
<OTHER-INCOME> 0
<EXPENSES-NET> 760,816
<NET-INVESTMENT-INCOME> 4,535,780
<REALIZED-GAINS-CURRENT> (462,154)
<APPREC-INCREASE-CURRENT> 2,772,427
<NET-CHANGE-FROM-OPS> 6,846,053
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,561,119
<DISTRIBUTIONS-OF-GAINS> 55,764
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,921,879
<NUMBER-OF-SHARES-REDEEMED> 5,888,472
<SHARES-REINVESTED> 88,245
<NET-CHANGE-IN-ASSETS> 3,078,638
<ACCUMULATED-NII-PRIOR> 91,729
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1,554,913
<GROSS-ADVISORY-FEES> 471,823
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 760,816
<AVERAGE-NET-ASSETS> 78,588,727
<PER-SHARE-NAV-BEGIN> 9.710
<PER-SHARE-NII> 0.610
<PER-SHARE-GAIN-APPREC> 0.230
<PER-SHARE-DIVIDEND> 0.620
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.930
<EXPENSE-RATIO> 0.970
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882748
<NAME> THE COVENTRY GROUP
<SERIES>
<NUMBER> 4
<NAME> AMCORE INTERMEDIATE TAX-FREE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 41,739,167
<INVESTMENTS-AT-VALUE> 41,809,931
<RECEIVABLES> 649,603
<ASSETS-OTHER> 26,339
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,485,873
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49,917
<TOTAL-LIABILITIES> 49,917
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,483,364
<SHARES-COMMON-STOCK> 4,133,363
<SHARES-COMMON-PRIOR> 3,081,659
<ACCUMULATED-NII-CURRENT> 20,540
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 138,712
<ACCUM-APPREC-OR-DEPREC> 70,764
<NET-ASSETS> 42,435,956
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,753,394
<OTHER-INCOME> 0
<EXPENSES-NET> 265,726
<NET-INVESTMENT-INCOME> 1,487,668
<REALIZED-GAINS-CURRENT> (5,701)
<APPREC-INCREASE-CURRENT> 844,066
<NET-CHANGE-FROM-OPS> 2,326,033
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,492,074
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,538,333
<NUMBER-OF-SHARES-REDEEMED> 506,382
<SHARES-REINVESTED> 19,753
<NET-CHANGE-IN-ASSETS> 11,719,021
<ACCUMULATED-NII-PRIOR> 24,946
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 133,011
<GROSS-ADVISORY-FEES> 211,991
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 361,236
<AVERAGE-NET-ASSETS> 35,336,530
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> 0.430
<PER-SHARE-GAIN-APPREC> 0.300
<PER-SHARE-DIVIDEND> 0.430
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.27
<EXPENSE-RATIO> 0.750
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882748
<NAME> THE COVENTRY GROUP
<SERIES>
<NUMBER> 10
<NAME> AMCORE BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 12,586,010
<INVESTMENTS-AT-VALUE> 13,856,645
<RECEIVABLES> 81,212
<ASSETS-OTHER> 89,601
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,027,458
<PAYABLE-FOR-SECURITIES> 487,187
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,258
<TOTAL-LIABILITIES> 511,445
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,719,553
<SHARES-COMMON-STOCK> 1,219,332
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,947
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 521,878
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,270,635
<NET-ASSETS> 13,516,013
<DIVIDEND-INCOME> 154,894
<INTEREST-INCOME> 385,942
<OTHER-INCOME> 0
<EXPENSES-NET> 179,321
<NET-INVESTMENT-INCOME> 361,515
<REALIZED-GAINS-CURRENT> 521,878
<APPREC-INCREASE-CURRENT> 1,270,635
<NET-CHANGE-FROM-OPS> 2,154,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 357,568
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,918,288
<NUMBER-OF-SHARES-REDEEMED> 731,814
<SHARES-REINVESTED> 32,858
<NET-CHANGE-IN-ASSETS> 13,516,013
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 101,842
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 179,321
<AVERAGE-NET-ASSETS> 16,288,724
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> 0.240
<PER-SHARE-GAIN-APPREC> 1.080
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.080
<EXPENSE-RATIO> 1.320
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882748
<NAME> THE COVENTRY GROUP
<SERIES>
<NUMBER> 11
<NAME> AMCORE FIXED TOTAL RETURN FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> JUN-15-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 42,570,981
<INVESTMENTS-AT-VALUE> 42,131,801
<RECEIVABLES> 542,830
<ASSETS-OTHER> 518,295
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,192,926
<PAYABLE-FOR-SECURITIES> 1,948,750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 65,782
<TOTAL-LIABILITIES> 2,014,532
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,617,215
<SHARES-COMMON-STOCK> 4,161,918
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 31,047
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 30,688
<ACCUM-APPREC-OR-DEPREC> (439,180)
<NET-ASSETS> 41,178,394
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,204,009
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