THE HOMESTATE GROUP
===============================================================================
PROSPECTUS DATED OCTOBER 30, 1997
THE HOMESTATE GROUP Mailing 1857 William Penn Way, P.O. Box 10666
Address Lancaster, PA 17605-0666
Phone (800) 232-0224 - Toll- Free
(717) 396-7864 - Local & International
INVESTMENT OBJECTIVES AND POLICIES
The HomeState Group (the "Trust") is an open-end management
company, organized on August 26, 1992, as a common law trust
under Pennsylvania law. The Trust is registered as a "series
fund." Currently, there are three series: the HomeState
Pennsylvania Growth Fund, the HomeState Select Opportunities Fund
(the "Funds") and the Year 2000 ("Y2K") Fund. Shares offered by
this Prospectus are for the HomeState Pennsylvania Growth Fund
and the HomeState Select Opportunities Fund.
THE HOMESTATE PENNSYLVANIA GROWTH FUND - The objective of the
Fund is long-term growth of capital through investments primarily
in the common stock of companies with headquarters or significant
operations in the Commonwealth of Pennsylvania. To pursue its
objective, the Fund will invest at least 65% of its total assets
in such companies. The Fund will usually invest in a diversified
portfolio of common stock of approximately 120 companies. There
is no assurance the Fund will achieve this investment objective
(See "Investment Objectives and Policies").
THE HOMESTATE SELECT OPPORTUNITIES FUND - The objective of the
Fund is long-term appreciation of capital through investments in
a non-diversified portfolio of U.S. securities, without regard to
any further issuer location limitations. The Fund will typically
invest in the common stock of no more than fifty U.S. companies.
Due to potential concentration in these issues, the Fund will
close to new investors when total net assets surpass $100
million. While the Fund can invest in companies of varying size,
it will usually emphasize companies having a market
capitalization of less than $1 billion. There is no assurance the
Fund will achieve this investment objective (See "Investment
Objectives and Policies").
PURCHASE INFORMATION
Shares of each Fund can be purchased through any independent
securities dealer having a sales agreement with the Funds'
Distributor, at the then-current net asset value plus a sales
charge of 4.75%. There are several ways to purchase shares at a
reduced sales charge. The required minimum initial investment in
each Fund is $500 and the minimum subsequent investment is $50.
The minimum initial and subsequent investment amounts are $50
under the Funds' AutoInvest Plan. See "How to Purchase Shares of
the Funds" for more information.
ADDITIONAL INFORMATION
This Prospectus sets forth the information a prospective investor
should know before investing. Please read it carefully and retain
it for future reference. A Statement of Additional Information,
dated October 30, 1997 has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated by reference
into this Prospectus. The Statement of Additional Information
includes a description of the Funds' trustees and officers, a
list of investment policies and restrictions, and further details
about the management and operations of each Fund, and is
available at no charge by writing or calling the Funds at the
address or phone numbers listed above.
For further information concerning a new account, call the Funds
at (800) 232-0224. For questions about an established account,
call Rodney Square Management Corporation, the Funds' shareholder
servicing agent, at (800) 892-1351.
Shares of the Funds are not insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other
agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
TABLE OF CONTENTS
WHERE TO FIND INFORMATION CONCERNING PAGE NUMBER
------------------------------------ -----------
Investment Objectives and Policies 1
Purchase Information 1
Additional Information 1
Expenses Summary 3
Financial Highlights 4
Investment Objectives and Policies 6
Investment Techniques 6
Risk Factors 9
Investment Restrictions 12
How to Purchase Shares of the Funds 12
How to Redeem Shares of the Funds 15
How to Exchange Shares of the Funds 16
Valuing the Funds' Shares 16
Management of the Funds 17
Brokerage Allocation 19
Dividends, Distributions and Taxes 20
General Information 21
<PAGE>
THE HOMESTATE GROUP
===============================================================================
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(As a percentage of Maximum offering price)....... 4.75%1
Sales Load Imposed on Reinvested Dividends......... None
Deferred Sales Load................................ None
Redemption Fees.................................... None
Exchange Fees...................................... None
Wire Transfer of Redemption Proceeds Fee........... $7.00
ANNUAL FUND OPERATING EXPENSES2
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
HOMESTATE PENNSYLVANIA HOMESTATE SELECT
GROWTH FUND OPPORTUNITIES FUND
---------------------- ------------------
Management Fees............... 0.75% 0.00%4
12b-1 Fees3................... 0.35% 0.35%
Other Expenses
(After Reimbursement)........ 0.67% 2.00%5
------- ------
Total Operating Expenses 1.77% 2.35%5
EXAMPLE OF EXPENSES
An investor would have directly or indirectly paid the following
expenses at the end of the periods shown on a hypothetical $1,000
investment in the Funds, assuming a 5% annual return and
redemption at the end of each period:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
HomeState Pennsylvania Growth Fund.. $65 $101 $139 $246
HomeState Select Opportunities Fund. $70 $117 $167 $303
This table is provided to help you understand the expense of
investing in the Funds and your share of the operating expenses
which the Funds incur. The table does not represent past or
future expense levels. Actual expenses may be greater or less
than those shown. Federal regulations require the Example to
assume a 5% annual return, but the Funds' actual annual returns
will vary.
1 The rules of the SEC require that the maximum sales charge (in
the Funds' case, 4.75% of the offering price) be reflected in
the above table. However, there are several methods by which
the sales charge can be reduced. See "How to Purchase Shares of
the Funds" for more information.
2 The table shows expenses based on the Funds' management fees
and distribution service (12b-1)fees and other expenses on an
annualized basis for the period ended June 30, 1997.
3 Because of the 12b-1 fee, long-term shareholders may indirectly
pay more than the economic equivalent of the maximum permitted
front-end sales charge.
4 The management fee would have been 1.00% if the adviser had not
waived their fee.
5 The Adviser has agreed to limit the Fund's ordinary operating
expenses to no more than 2.35% at least through and including
June 30, 1998. Absent that limitation, the "Other Expenses" and
"Total Operating Expenses" would have been 6.75% and 8.10%,
respectively.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
FINANCIAL HIGHLIGHTS
The following table presents per share financial information
for the HomeState Pennsylvania Growth Fund since its commencement
of operations on October 1, 1992. This information has been
audited and reported on by The HomeState Group's independent
accountants, in connection with the audit of the Financial Statements.
The Report of Independent Accountants and financial
statements included in The HomeState Group's Annual Report to
shareholders for the period ended June 30, 1997, which should be
read in conjunction with this information, are incorporated
by reference into this Prospectus. The HomeState Group's
Annual Report contains additional performance information that
will be made available without charge upon request directed to
Emerald Advisers, Inc. at (800)-232-0224.
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
PENNSYLVANIA GROWTH FUND
<TABLE>
<CAPTION>
PERIODS ENDED
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
6/30/97 6/30/96 6/30/95 6/30/94 6/30/93+
------- ------- ------- ------- --------
Net asset value at
beginning of period..... $21.25 $15.68 $12.37 $10.98 $10.00
------ ------ ------ ------ ------
Income from Investment
- ----------------------
Operations
- ----------
Net investment income
(loss) ................. (0.07) (0.07) (0.01) (0.03) 0.03
Net realized and
unrealized gain on
investments............. 1.78 6.17 3.54 1.53 0.95
------ ------ ------ ------ ------
Total from investment
operations............ 1.71 6.10 3.53 1.50 0.98
------ ------ ------ ------ ------
Less Distributions
- -------------------
Dividends from net
investment income ...... 0.00 0.00 0.00 (0.03) 0.00
Distributions from net
realized gains ......... (1.41) (0.53) (0.22) (0.08) 0.00
------ ------ ------ ------ ------
Total distributions.... (1.41) (0.53) (0.22) (0.11) 0.00
------ ------ ------ ------ ------
Net asset value at end
of period .............. $21.55 $21.25 $15.68 $12.37 $10.98
====== ====== ====== ====== ======
Total return**........... 9.56% 39.94% 28.96% 13.75% 13.07%
RATIOS / SUPPLEMENTAL DATA
Net assets, end of period
(000s omitted)........... $89,577 $55,828 $20,388 $9,892 $3,026
Ratio of expenses to
average net assets
before reimbursement
by Adviser............... 1.77% 1.85% 2.00% 2.67% 7.85%*
Ratio of expenses to
average net assets after
reimbursement by Adviser. na1 na1 1.91% 2.23% 1.87%*
Ratio of net investment
loss to average net
assets before
reimbursement by Adviser. (0.39)% (0.58)% (0.20)% (0.76)% (5.24)%*
Ratio of net investment
income (loss) to
average net assets
after reimbursement by
Adviser.................. na1 na1 (0.10)% (0.32)% 0.74%*
Average commission
rate paid................. $0.0941 $0.0961 - - -
Portfolio turnover rate... 50% 66% 51% 51% 63%
<FOOTNOTE>
+ From commencement of operations: October 1, 1992.
* Annualized.
** Total return does not reflect 4.75% maximum sales charge.
1 Not applicable: no reimbursements were made by the Adviser.
</FOOTNOTE>
</TABLE>
<PAGE>
THE HOMESTATE GROUP
===============================================================================
FINANCIAL HIGHLIGHTS
The following table presents per share financial information
for the HomeState Select Opportunities Fund since its
commencement of operations on February 18, 1997. This information
has been audited and reported on by The HomeState Group's
independent accountants, in connection with the audit of the
financial statements. The Report of Independent Accountants
and financial statements included in The HomeState Group's Annual
Report to shareholders for the period ended June 30, 1997, which
should be read in conunction with this information, are
incorporated by reference into this Prospectus. The HomeState
Group's Annual Report contains additional performance information
that will be made available without charge upon request directed
to Emerald Advisers, Inc. at (800)-232-0224.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED JUNE 30, 1997+:
SELECT OPPORTUNITIES FUND
Net asset value at
beginning of period........ $10.00
------
Income from Investment
- ----------------------
Operations
- ----------
Net investment loss....... (0.03)
Net realized and
unrealized gain on
investments................ 1.73
------
Total from investment
operations............... 1.70
------
Net asset value at end
of period ................. $11.70
======
Total return**.............. 17.00%
RATIOS / SUPPLEMENTAL DATA
Net assets, end of period
(000s omitted)............. $5,628
Ratio of expenses to
average net assets
before reimbursement
by Adviser and waivers..... 8.10%*
Ratio of expenses to
average net assets after
reimbursement by Adviser
and waivers................ 2.35%*
Ratio of net investment
loss to average net
assets before
reimbursement by Adviser
and waivers................. (6.85)%*
Ratio of net investment
loss to average net assets
after reimbursement by
Adviser and waivers......... (1.10)%*
Average commission
rate paid................... $0.0983
Portfolio turnover rate...... 59%
+ From commencement of operations: February 18, 1997.
* Annualized.
** Total return does not reflect 4.75% maximum sales charge.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
INVESTMENT OBJECTIVES AND POLICIES
The HomeState Group is registered as a "series" fund whereby each
individual series of the Trust, in effect, represents a separate
mutual fund with its own investment objectives and policies, with
varying possibilities for capital appreciation or income, and
subject to varying degrees of market risks. Currently, two series
are in operation: the HomeState Pennsylvania Growth Fund and the
HomeState Select Opportunities Fund. The discussion of investment
objectives and policies that follows relates only to each
specific series as noted. Future series of the Trust would have
their own distinct objectives and policies. Each series may also
employ the techniques described below under "Investment
Techniques" and are subject to specific risks described below
under "Risk Factors."
THE HOMESTATE PENNSYLVANIA GROWTH FUND
The Fund's objective is long-term growth through capital
appreciation. The Fund seeks to achieve this goal mainly by
investing in a diversified portfolio of companies that have their
headquarters in the Commonwealth of Pennsylvania, or companies
based elsewhere but have significant operations in the
Commonwealth of Pennsylvania (i.e. at least 50% of their revenues
are derived from operating units located in Pennsylvania). The
Fund's objective may not be changed without a vote of the holders
of a majority of the outstanding shares of the Fund. There can be
no guarantee the investment objective of the Fund will be
achieved. The Fund will be actively managed but will limit short-
term trading and high portfolio turnover rates. The Fund's annual
portfolio turnover rate is not anticipated to exceed eighty
percent.
THE HOMESTATE SELECT OPPORTUNITIES FUND
The objective of the Fund is long-term appreciation of capital
through investments in a non-diversified portfolio of securities.
The Fund seeks to achieve this goal by typically investing in the
common stock of no more than fifty U.S. companies. While the Fund
can invest in companies of varying size, it will usually
emphasize companies having a market capitalization of less than
$1 billion.
The Fund may invest a larger percentage of its assets in a
particular security or issuer than the average diversified mutual
fund, and will focus on those companies identified by the Fund's
adviser as having what it believes are superior prospects for
price appreciation. Due to potential concentration in these
issues, the Fund will close to new investors when total net
assets surpass $100 million. The Fund's annual portfolio turnover
rate is expected to not exceed one hundred and fifty percent.
Higher portfolio turnover rates increase transaction costs and
the possibility of realizing taxable capital gains. The Fund's
objective may not be changed without a vote of the holders of a
majority of the outstanding shares of the Fund. There can be no
guarantee the investment objective of the Fund will be achieved.
INVESTMENT TECHNIQUES
The following are the investment techniques that may be used by
the Funds. Any discussion of an investment technique specific to
one series will be noted.
EQUITY SECURITIES
Under normal circumstances the Funds will invest a minimum of 65%
of its total assets in common stocks, preferred stocks and
securities convertible into common and preferred stocks.
Investments are based primarily on fundamental analysis and,
although technical factors will not be ignored, the main
investment criteria will focus on an evaluation of revenues,
earnings, debt, capitalization, quality of management, level of
insider ownership, changing market conditions, past performance
and future expectations. The Funds will strive to invest in
companies with strong balance sheets and dominant or leading
positions in niche markets. The Funds will look favorably upon
those companies that have well-defined business plans and long-
term operating strategies designed to increase shareholder value.
When evaluating a company for possible inclusion in a Fund's
portfolio, a member of the Adviser's portfolio management or
research staff will request to conduct an in-person visit to the
company whenever such a visit is judged appropriate, and will
seek to meet with the company's management and survey its
operations. The Adviser will also attempt to interview a cross
section of the company's employees, customers, suppliers and
competitors. The Adviser believes that this "hands-on" approach
to investing may give it an opportunity to spot developing trends
in these companies. The Adviser estimates that approximately 80
<PAGE>
THE HOMESTATE GROUP
===============================================================================
percent of the HomeState Pennsylvania Growth Fund's equity
holdings have historically been a result of this in-house
research effort and that this percentage will be even higher in
the HomeState Select Opportunities Fund. The HomeState Select
Opportunities Fund, however, will not share the HomeState
Pennsylvania Growth Fund's geographic limitation.
SMALL COMPANIES
The Funds can each invest in companies from a wide range of
industries and of varying size, but both will include smaller
companies. The HomeState Select Opportunities Fund will usually
emphasize these smaller companies. Smaller companies are
generally not as widely followed by institutional investment
analysts as larger companies such as those listed on the New York
Stock Exchange. According to surveys by brokerage firms, over 60
percent of all companies listed on the NASDAQ Stock Exchange and
American Stock Exchange have two or fewer analysts following the
company. The Funds' adviser believes that this lack of generally
available information about smaller companies presents an
opportunity for investment managers who provide their own
research analysis to spot developing trends before such
information is widely distributed among the larger investment
community.
REGIONAL INVESTING
To pursue its objective, the HomeState Pennsylvania Growth Fund
will invest at least 65 percent of the value of its total assets
in common stocks, preferred stocks and securities convertible
into common and preferred stocks issued by firms whose
headquarters are located in the Commonwealth of Pennsylvania or
companies based elsewhere but that have significant operations in
the Commonwealth of Pennsylvania. The Funds' Adviser, Emerald
Advisers, Inc., believes that Pennsylvania is positioned to
provide publicly-traded companies and their shareholders
significant opportunities for growth. The state is situated
between two of the nation's most densely populated regions, and
its industries are poised to take advantage of global markets.
The state has ports accessing the Great Lakes system, the
Mississippi and Ohio rivers to the Gulf of Mexico, and the
Atlantic Ocean. Pennsylvania is at the heart of an expansive
railroad system and has a major network of inter-connecting
interstate highways. Its corporate profile is diverse: from high-
tech biopharmaceutical firms headquartered in the state's
southeast corner, to rich farmlands in central Pennsylvania, to
the growing financial and commercial center of the west. From
Erie to Philadelphia and from Pittsburgh to the Poconos, the four
corners of Pennsylvania frame a $244 billion economy. If
Pennsylvania were a free-standing country, its Gross Domestic
Product would rank it similar in size to such countries as Mexico
or the Republic of Korea. The Adviser believes that the Fund will
provide a positive influence on the Pennsylvania economy by
stimulating investor interest and awareness in Pennsylvania
companies.
OTHER INVESTMENT TECHNIQUES
Both Funds may also invest up to 35 percent of the value of their
total assets in preferred stocks, investment-grade corporate
bonds and notes, and high-quality short-term debt securities such
as commercial paper, bankers' acceptances, certificates of
deposit, repurchase agreements, obligations insured or guaranteed
by the United States Government or its agencies, and demand and
time deposits of domestic banks and United States branches and
subsidiaries of foreign banks. (The price of debt securities in
which the Funds invest are likely to decrease in times of rising
interest rates. Conversely, when rates fall, the value of the
Funds' debt securities may rise. Price changes of these debt
securities held by the Funds have a direct impact on the net
asset value per share of the Funds. Investment grade corporate
bonds are generally defined by the four highest rating categories
by Standard & Poor's Corporation ("S & P") and Moody's Investors
Services ("Moody's"): AAA, AA, A or BBB by S & P and Aaa, Aa, A
and Baa by Moody's. Corporate bonds rated BBB by S & P or Baa by
Moody's are regarded as having an adequate capacity to pay
principal and interest but with greater vulnerability to adverse
economic conditions and speculative characteristics (See
"Appendix A" of the Funds' Statement of Additional Information
for further information). The Funds will make use of these short-
term instruments primarily under those circumstances where it has
cash to manage for a brief time period (i.e. after receiving
dividend distributions, proceeds from the sale of portfolio
securities or money from the sale of Fund shares to investors).
The Funds will not engage in direct investment in real estate or
real estate mortgage loans, except those instruments issued or
guaranteed by the United States Government. The mortgage-related
instruments in which the Funds may invest include those issued by
Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") (collectively, the "Mortgage-
Related Instruments"). The underlying mortgages which
collateralize Mortgage-Related Instruments issued by GNMA are
fully guaranteed by the Federal
<PAGE>
THE HOMESTATE GROUP
===============================================================================
Housing Administration or
Veteran's Administration, while those collateralizing Mortgage-
Related Instruments issued by FHLMC or FNMA are typically
conventional residential mortgages conforming to strict
underwriting size and maturity constraints. Mortgage-Related
Instruments provide for a periodic payment consisting of both
interest and principal. The interest portion of these payments
will be distributed by the Fund as income and the capital portion
will be reinvested. Unlike conventional bonds, Mortgage-Related
Instruments pay back principal over the life of the Mortgage-
Related Instrument rather than at maturity. At the time that a
holder of a Mortgage-Related Instrument reinvests the payments
and any unscheduled prepayment of principal that it receives, the
holder may receive a rate of interest which is actually lower
than the rate of interest paid on the existing Mortgage-Related
Instruments. As a consequence, Mortgage-Related Instruments may
be a less effective means of "locking-in" long-term interest
rates than other types of U.S. government securities. While
Mortgage-Related Instruments generally entail less risk of a
decline during periods of rapidly rising interest rates, they may
also have less potential for capital appreciation than other
investments with comparable maturities because as interest rates
decline, the likelihood increases that mortgages will be prepaid.
Furthermore, if Mortgage-Related Instruments are purchased at a
premium, mortgage foreclosures and unscheduled principal payments
may result in some loss of a holder's principal investment to the
extent of premium paid. Conversely, if Mortgage-Related
Instruments are purchased at a discount, both a scheduled payment
of principal and an unscheduled payment of principal would
increase current and total returns and would be taxed as ordinary
income when distributed to shareholders.
On those occasions when, in the opinion of the Funds' investment
adviser, market conditions warrant a temporary defensive
approach, the Funds may invest more than 35 percent of their
total assets in short-term obligations, including the following:
securities issued or guaranteed by the U.S. government,
commercial paper and bankers acceptances. During intervals when
the Funds have adopted a temporary defensive position they will
not be achieving their stated investment objective.
The Funds may from time to time engage in repurchase agreements.
That is, a seller may sell securities to the Fund and agree to
repurchase the securities at the Funds' cost plus interest within
a specified period (normally one day). The arrangement results in
a fixed rate of return that is not subject to market fluctuations
during the period that the underlying security is held by the
Funds. Repurchase agreements involve certain risks, including
seller's default on its obligation to repurchase or seller's
bankruptcy.
OPTIONS AND SHORT-SELLING STRATEGIES - In managing the HomeState
Select Opportunities Fund, the adviser may engage in certain
options and short selling strategies to hedge various market
risks or to enhance potential gain. Certain special
characteristics of and risks associated with using these
instruments are discussed below. Use of options and short
selling is subject to applicable regulations of the SEC, the
several options exchanges upon which these instruments may be
traded, and the various state regulatory authorities. The Board
of Trustees has adopted investment guidelines (described below)
reflecting these trading regulations.
The Fund will not use leverage in its options and short-selling
strategies. Accordingly, the Fund will comply with guidelines
established by the SEC with respect to coverage of these
strategies and will either (1) set aside liquid, unencumbered,
daily marked-to-market assets in a segregated account with the
Fund's custodian in the prescribed amount; or (2) hold securities
or other options whose values are expected to offset ("cover")
its obligations thereunder.
OPTIONS STRATEGIES - The HomeState Select Opportunities Fund may
purchase and write (sell) options on securities and securities
indices that are traded on U.S. exchanges and in the over-the-
counter ("OTC") market. The Fund may purchase call options on
securities in which it is authorized to invest in order to fix
the cost of a future purchase. Call options also may be used as
a means of enhancing returns by, for example, participating in an
anticipated price increase of a security. In the event of a
decline in the price of the underlying security, use of this
strategy would serve to limit the potential loss to the Fund to
the option premium paid; conversely, if the market price of the
underlying security increases above the exercise price and the
Fund either sells or exercises the option, any profit eventually
realized would be reduced by the premium paid. The Fund may also
write covered call options of securities in which it is
authorized to invest for hedging purposes or to increase return
in the form of premiums received.
The Fund may purchase put options on securities that it holds in
order to hedge against a decline in the market value of the
securities held or to enhance return. The put option enables a
Fund to sell the underlying security at the predetermined
exercise price; thus, the potential for loss to the Fund below
the exercise price is limited to the option premium paid. If the
<PAGE>
THE HOMESTATE GROUP
===============================================================================
market price of the underlying security is higher than the
exercise price of the put option, any profit the Fund realizes on
the sale of the security is reduced by the premium paid for the
put option less any amount for which the put option may be sold.
The Fund may also write covered put options on securities in
which it is authorized to invest for hedging purposes or to
increase return in the form of premiums received.
Securities used to cover OTC call options written by the Fund are
considered illiquid and therefore subject to the Fund's
limitations on investing in illiquid securities. The Fund may
purchase put and call options and write covered put and call
options on indexes in much the same manner as the more
traditional options discussed above. The Fund may purchase and
write covered straddles on securities or indexes. The Fund may
purchase put and call warrants with values that vary depending on
the change in the value of one or more specified indexes ("index
warrants"). For a more complete discussion of these and other
related techniques, investors are directed to the Trust's
Statement of Additional Information.
OPTIONS GUIDELINES - The HomeState Select Opportunities Fund has
adopted the following investment guidelines to govern its use of
options strategies; these guidelines may be modified by the Board
of Trustees without shareholder approval:
1. the Fund will write only covered options, and each such
option will remain covered so long as the Fund is obligated
under the option; and
2. the Fund will not write put or call options having
aggregate exercise prices greater than 25% of its net assets.
These guidelines do not apply to options attached to or acquired
with or traded together with their underlying securities and do
not apply to securities that incorporate features similar to
options.
SHORT-SELLING - If the HomeState Select Opportunities Fund
anticipates that the price of a security will decline, it may
sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund may
realize a profit or loss depending upon whether the market price
of a security decreases or increases between the date of the
short sale and the date on which the Fund must replace the
borrowed security. As a hedging technique, the Fund may seek to
lower some of the risk associated with short sales by purchasing
call options on securities sold short by the Fund. Such options
would lock in a future purchase price and protect the Fund in
case of an unanticipated increase in the price of a security sold
short by the Fund.
Whenever the Fund effects a short sale, it will set aside in
segregated accounts cash, U.S. Government Securities or other
liquid assets equal to the difference between (i) the market
value of the securities sold short; and (ii) any cash or U.S.
Government Securities required to be deposited as collateral with
the broker in connection with the short sale (but not including
the proceeds of the short sale). Until the Fund replaces the
security it borrowed to make the short sale, it must maintain
daily the segregated account at such a level that the amount
deposited in it, plus the amount deposited with the broker as
collateral, will equal the current market value of the securities
sold short. No more than 25% of the value of the Fund's total
net assets will be, when added together, (i) deposited as
collateral for the obligation to replace securities borrowed to
effect short sales; and (ii) allocated to segregated accounts in
connection with short sales. The Fund's ability to make short
sales may be limited by a requirement applicable to "regulated
investment companies" under Subchapter M of the Internal Revenue
Code that no more than 30% of the Fund's gross income in any year
may be the result of gains from the sale of property held for
less than three months.
RISK FACTORS
GENERAL
The principal risk factor associated with an investment in the
Funds is that the market value of the portfolios' securities may
decrease and result in a decrease in the value of a shareholder's
investment. All investments, including those in mutual funds,
have risks, and no investment is suitable for all investors. The
Funds are intended for long-term investors.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
SMALL COMPANIES
The Funds' portfolios will include smaller companies, those
defined by the Funds' adviser as having a market capitalization
of less than $1 billion. Stocks of "small cap" companies tend to
be more volatile and less liquid than stocks of large companies.
"Small cap" companies, as compared to larger companies, may have
a shorter history of operations, may not have as great an ability
to raise additional capital, may have a less diversified product
line making them more susceptible to market pressure, may have a
smaller public market for their shares, and may not be nationally
recognized.
REGIONAL INVESTING
Due to its geographic limitation, the HomeState Pennsylvania
Growth Fund's assets may be subject to greater risk of loss from
economic, political or other developments (e.g., natural
disasters) having an unfavorable impact upon business located in
the Commonwealth of Pennsylvania than similar funds whose
investments are geographically more diverse (i.e. the Fund may be
less diversified than other funds with similar investment
objectives but no such geographic limitation. The HomeState
Select Opportunities Fund has no such geographic limitation.)
There can be no assurance that the economy of Pennsylvania or the
companies headquartered or operating in Pennsylvania will grow in
the future.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
Since the HomeState Pennsylvania Growth Fund will be mainly
investing in a diversified portfolio of companies that have their
headquarters in the Commonwealth of Pennsylvania, or companies
based elsewhere but that have significant operations in
Pennsylvania, Fund investments can be significantly affected by
business trends and the economic health of Pennsylvania. The
following is a brief summary of certain factors affecting the
Pennsylvania Growth Fund. The summary does not purport to be
complete and is based upon information derived from publicly
available documents.
SPECIAL FACTORS AFFECTING INVESTMENTS IN PENNSYLVANIA COMPANIES -
Pennsylvania is the nation's fifth-ranked state in terms of
population, behind California, New York, Texas and Florida.
Pennsylvania's population notched up to 11.9 million in 1990 from
11.8 million in 1980. Pennsylvania's population is evenly split
between the metropolitan areas of Philadelphia and Pittsburgh and
the rest of the State.
Pennsylvania boasts the nation's highest personal savings rate
and the least transitory population of any state in the nation
(81% of the current population was born in the State).
Pennsylvania's workforce totals more than 5.9 million, ranking it
as the sixth largest labor pool in the nation. The State's
seasonally adjusted unemployment rate stood at 5.3% in July 1997,
versus 4.8% for the U.S. economy as a whole. By comparison,
neighboring New Jersey's rate was 5.4%. Pennsylvania has a lower
per capita state tax burden than the surrounding states of New
York, New Jersey, Maryland or Ohio.
Pennsylvania's $244 billion economy is home to 33 Fortune 500
corporations and more than 237,000 public and private businesses.
Pennsylvania is the only state in the nation with two cities
(Philadelphia and Pittsburgh) listed in Fortune's top ten cities
with the largest number of Fortune 500 companies. Since the Fund
commenced operations in 1992, the number of Pennsylvania-based
publicly-traded companies it has identified has grown from 440 to
over 500 companies. See "Appendix B: Pennsylvania-based
Companies" in the Statement of Additional Information for a
complete listing of these companies. Pennsylvania has
historically been identified as among the leading states in
manufacturing and mining. The coal and steel industries have
declined in national importance in recent years, but remain a
major component of the Pennsylvania economy. Due to the cyclical
nature of these businesses, Pennsylvania may be more vulnerable
to the industries' economic fluctuations and downturns.
In part because of the decline in the heavy manufacturing sector,
Pennsylvania's economy has diversified beyond the traditional
"smoke stack" industries. Major new sources for growth are in the
service sector, including medical and health services, trade,
education and financial institutions. The State's workforce has
diversified so that it is almost evenly divided between the
services (24.4%), wholesale and retail trade (23.9%) and
manufacturing (23.3%) employment sectors. The State is home to
the nation's third largest number of technology companies, and
the greater Philadelphia area is ranked as the nation's number-
two region for biotechnology companies.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
Pennsylvania's agriculture industries have also historically
played a prominent role in the State's economy. Crop and
livestock products add an annual $3.5 billion to the State's
economy, while agribusiness and food related industries as a
whole support $38 billion in annual economic activity.
Agribusiness activities can be detrimentally affected by
consistently poor weather conditions.
NON-DIVERSIFICATION
As a "non-diversified" Fund, the HomeState Select Opportunities
Fund has the ability to invest a larger percentage of its assets
in the stock of a smaller number of companies than a
"diversified" fund. Because the appreciation or depreciation of a
single portfolio security may have a greater impact on the net
asset value of the Fund, the net asset value per share of the
Fund can be expected to fluctuate more than that of a comparable
"diversified" fund. See Investment Restriction Number 1, below.
SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING
The Fund may effectively terminate its right or obligations under
an option by entering into a closing transaction. Closing
transactions essentially permit the Fund to realize profits or
limit losses on its options positions prior to the exercise or
expiration of the option. If the Fund is unable to effect a
closing purchase transaction with respect to options it has
acquired, the Fund will have to allow the options to expire
without recovering all or a portion of the option premiums paid.
If the Fund is unable to effect a closing purchase transaction
with respect to covered options it has written, the Fund will not
be able to sell the underlying securities or currencies or
dispose of assets used as cover until the options expire or are
exercised, and the Fund may experience material losses due to
losses on the option transaction itself and in the covering
securities.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
In considering the use of options to enhance returns or for
hedging purposes, particular note should be taken of the
following:
1. The value of an option position will reflect, among other
things, the current market price of the underlying security
or index, the time remaining until expiration, the
relationship of the exercise price to the market price, the
historical price volatility of the underlying security or
index, and general market conditions.
2. Options normally have expiration dates of up to three
years.
3. A position in an exchange-listed option may be closed out
only on an exchange that provides a secondary market for
identical options. Closing transactions may be effected
with respect to options traded in the OTC market only by
negotiating directly with the other party to the option
contract or in a secondary market for the option if such
market exists.
4. With certain exceptions, exchange listed options generally
settle by physical delivery of the underlying security.
5. The Fund's activities in the options markets may result in
a higher portfolio turnover rate and additional brokerage
costs; however, the Fund also may save on commissions by
using options as a hedge rather than buying or selling
individual securities in anticipation of, or as a result
of, market movements.
SHORT-SELLING
Short-selling is a technique that may be considered speculative
and involves risk beyond the initial capital necessary to secure
each transaction. In addition, the technique could result in
higher operating costs for the Fund and have adverse tax effects
for the investor. Investors should consider the risks of such
investments before investing in the Fund.
For a more detailed discussion of these risks, investors are
directed to the Trust's Statement of Additional Information.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
INVESTMENT RESTRICTIONS
The Funds are subject to specific fundamental investment
restrictions, which may not be changed without a vote of a
majority of their outstanding shares. Following is a discussion
of some of these fundamental restrictions:
The HomeState Pennsylvania Growth Fund may not:
1. Invest more than 5% of the value of its assets in the
equity or debt of one issuer (other than obligations issued
or guaranteed by the United States Government).
2. Invest more than 15% of total assets in one industry.
3. Invest in, write or sell put or call options, straddles,
spreads or combinations thereof.
4. Invest in commodities or commodity contracts.
5. Borrow money except for temporary or emergency purposes and
then only from commercial banks and not in excess of 15% of
the Fund's total assets. The Fund will not purchase
securities when borrowing exceeds 5% of total assets.
The HomeState Select Opportunities Fund may not:
1. Invest more than 25% of the value of its assets in the
equity or debt of one issuer (other than obligations issued
or guaranteed by the U.S. Government), nor, in respect of
at least 50% of its assets, invest more than 5% of the
value of its assets in the equity or debt of one issuer
(other than obligations issued or guaranteed by the U.S.
Government.
2. Invest more than 25% of total assets in one industry.
3. Borrow money, except from a bank or for purposes of
purchasing securities on margin (provided that such
purchases may not exceed 120% of total assets taken at
current value); such borrowing will be limited to no more
than 5% of net assets.
The Funds may not :
1. Acquire more than 10% of the voting securities of any one
issuer.
2. Issue or sell senior securities.
The aforementioned investment limitations are considered at the
time the investment securities are purchased.
See the Funds' Statement of Additional Information for the full
text of these policies and the Funds' other Fundamental Policies,
as well as a listing of non-fundamental policies, which the Board
of Trustees may change without shareholder approval.
HOW TO PURCHASE SHARES OF THE FUND
Shares of the Funds are available for purchase through selected
financial service firms (such as broker-dealer firms) that have
signed a selling agreement with Rodney Square Distributors, Inc.
(the "Distributor"), the Funds' principal distributor. If an
investor would like assistance in locating a dealer, he or she
should contact the Funds. Shares can be purchased by mail or by
wire, as described below. The minimum initial investment is $500,
and the minimum subsequent investment is $50. Investors may be
charged a fee if they effect transactions through a broker or
agent.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
Shares of the Funds are purchased at net asset value per share
next determined after an order is received (See "Valuing the
Funds' Shares"), plus any applicable sales charge as described
below, which is known as the "offering price." Funds'
shareholders pay an ongoing distribution services fee at an
annual rate of up to 0.35% of the Portfolio's aggregate average
daily net assets attributable to Funds shares (See "Management of
the Funds - The Distribution Plan").
At a meeting held on November 21, 1996 the Trust's Board of
Trustees voted to reduce the sales load of the HomeState
Pennsylvania Growth Fund. As a result, effective February 18,
1997 the maximum sales load on the purchase of shares of the
Funds is 4.75%. The Offering Price is calculated as follows:
SALES CHARGE AS A
PERCENTAGE OF DEALER'S CONCESSION
DOLLAR AMOUNT INVESTED OFFERING PRICE N.A.V. (AS A % OF OFFERING PRICE)
- ----------------------- -------------- ------ --------------------------
Less Than $50,000 4.75% 4.99% 4.25%
$50,000 to $250,000 3.75 3.90 3.25
$250,000 to $500,000 2.75 2.83 2.50
$500,000 to $1,000,000 2.25 2.30 2.00
$1,000,000 & Above 0.00 0.00 0.50
REDUCED SALES CHARGE
There are several ways for shareholders to qualify to pay a lower
sales charge. Shareholders may qualify by aggregating purchases
being made or that have been made in both Funds:
1. REACH "BREAK POINTS" - Increase the initial investment
amount to reach a higher discount level, as listed above.
2. RIGHT OF ACCUMULATION - Add to an existing shareholder
account so that the current offering price value of the
total combined holdings reach a higher discount level, as
listed above.
3. SIGN A LETTER OF INTENT - Inform the Funds or their Agent
that you wish to sign a non-binding "Letter of Intent" (the
"Letter") to purchase an additional number of shares so
that the total equals at least $50,000 over the following
13-month period. Upon the Funds' receipt of the signed
Letter, the shareholder will receive a discount equal to
the dollar level specified in the Letter. If, however, the
purchase level specified by the shareholder's Letter has
not been reached at the conclusion of the 13-month period,
each purchase will be deemed made at the sales charge
appropriate for the actual purchase amount.
4. COMBINED PURCHASE PRIVILEGE - Combine the following
investor accounts into one "purchase" or "holding" to
qualify for a reduced sales charge:
(i) An individual or "company," as defined in Section
2(a)(8) of the Act; (ii) an individual, his spouse and
children under age 21; (iii) a trustee or other
fiduciary for certain trusts, estates, and certain
fiduciary accounts; or (iv) the employee benefit plans
of a single employer. The Funds' Transfer Agent,
Rodney Square Management Corporation (the "Transfer
Agent") must be advised of the related accounts at the
time the purchase is made.
5. PURCHASES AT NET ASSET VALUE - Additionally, the Board of
Trustees has determined that the following shareholders
shall be permitted to purchase shares of the Funds without
paying a sales charge:
(i) Existing shareholders, upon reinvestment of their
dividend income or capital gains distributions as
dividends and capital gains distributions are
reinvested in shares of the Funds at the net asset
value without sales charge;
(ii)Shareholders who have redeemed any or all of their
shares of the Funds within the past 120 days may
purchase shares at the net asset value without sales
charge. The amount which may be reinvested is limited
to the amount up to but not exceeding the redemption
proceeds (or to the nearest full share if fractional
shares are not purchased) and is limited to
shareholders who have not previously exercised this
right. The Transfer Agent must be notified of the
exercise of this privilege when shares are being
purchased;
<PAGE>
THE HOMESTATE GROUP
=============================================================================
(iii)Shareholders of the HomeState Pennsylvania Growth
Fund or the HomeState Select Opportunities Fund may
exchange their Fund shares into shares of the other
Fund at net asset value without sales charge;
(iv)The HomeState Pennsylvania Growth Fund only: Certain
"Institutional Investors" - Pennsylvania State and
local government-affiliated agencies, non-profit and
charitable organizations, and corporations with
headquarters or significant operations in the
Commonwealth of Pennsylvania having a minimum of $5
million in annual sales and fifteen full-time
employees, and the retirement plans of each of the
above may purchase at net asset value without sales
charge. For these purposes, "significant operations" is
defined as having a material impact on the
corporation's financial condition or profitability in
the discretion of the Adviser;
(v) Investor's shares purchased by advisory accounts
managed by SEC-registered investment advisers or bank
trust departments;
(vi)Trustees, Officers, Employees (and those retired) of
the Funds, their services providers and their
affiliates, for their own accounts and for their spouse
and children, and employees of such broker-dealer firms
that have executed a Selling Agreement with the Funds
may purchase shares at net asset value without a sales
charge.
6. On purchases of $1,000,000 or more, shares are acquired at
net asset value with no sales charge or dealer concession
charged to the investor. The Distributor, however, may pay
the broker-dealer up to 0.50% of the Offering Price, from
its own assets.
The Distributor may from time to time allow broker-dealers
selling shares of the Funds to retain 100% of the sales charge.
In such cases, the broker-dealer may be deemed an "underwriter"
under the Securities Act of 1933, as amended.
In addition to the commission paid to broker-dealers selling
Funds shares by way of a selling agreement, the Distributor may
also from time to time pay additional cash bonuses or other
incentives to selected broker-dealers in connection with their
registered representatives selling Funds shares. Such
compensation will be paid solely by the Distributor, and may be
conditioned upon the sale by the broker-dealer's representatives
of a specified minimum dollar amount of shares. Compensation may
include payment for travel expenses, including lodging, incurred
in connection with trips taken by registered representatives and
members of their families to locations within or outside the
United States for meetings of a business nature.
PURCHASING SHARES
Shares of the Funds may be purchased for your account directly by
your financial services firm representative, and may be purchased
by mail or wire.
INVESTING BY MAIL - To invest by mail, an investor must complete
and sign the Subscription Application Form which accompanies this
Prospectus and send it, with a check payable, to The HomeState
Group, c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19899-9752. A purchase order sent by overnight
mail should be sent to The HomeState Group, c/o Rodney Square
Management Corporation, 1105 N. Market Street, Wilmington, DE
19801.
INVESTING BY WIRE - Investors having an account with a commercial
bank that is a member of the Federal Reserve System may purchase
shares of the Funds by requesting their bank to transmit funds by
wire to:
c/o Wilmington Trust Company, Wilmington, DE
ABA #0311-0009-2
DDA# 2688-958-8
Attention: (HomeState Pennsylvania Growth Fund or
HomeState Select Opportunities Fund)
(followed by the name in which the account is
registered, and the account number).
<PAGE>
THE HOMESTATE GROUP
===========================================================================
INITIAL PURCHASES - Before making an investment by wire, an
investor must first telephone the Transfer Agent at (800) 892-
1351 before the close of the New York Stock Exchange (generally,
4:00 p.m.) to be assigned an account number. The Subscription
Application Form which accompanies this Prospectus should be
promptly forwarded to Rodney Square Management Corporation at the
address above under "Investing by Mail."
SUBSEQUENT PURCHASES - Additional investments may also be made
through the wire procedures described above. An investor must
telephone the Transfer Agent at (800) 892-1351 before the close
of the New York Stock Exchange (generally, 4:00 p.m.).
The bank transmitting the wire may charge a fee for this service.
Federal funds wires received before the close of the New York
Stock Exchange ("NYSE") (generally, 4:00 p.m. Eastern time) will
be executed based on each Fund's valuation that same day.
Purchase orders received after the close of the NYSE will be
executed on the next day the exchange is open.
TAX-DEFERRED RETIREMENT PLANS
Shares may be purchased by certain types of retirement plans. The
Funds provide plan forms and custody agreements for the
following:
Individual Retirement Accounts (IRA) - An IRA is a tax-deferred
retirement savings account that may be used by an individual who
has compensation or self-employment income and his or her
unemployed spouse, or an individual who has received a qualified
total or partial distribution from his or her employer's
retirement plan. The current annual maintenance fee for IRA
accounts is $10.00 per year.
In each of these plans, dividends and distributions will be
automatically reinvested. For further details, contact the
Adviser to obtain specific plan documents. Investors should
consult with their tax adviser before establishing any tax-
deferred retirement plans.
AUTOINVEST PLAN
The Funds also provide for an automatic investment plan whereby
shareholders may arrange to make regular monthly, quarterly, semi-
annual, or annual investments in the Funds. Investment amounts
are automatically debited from the shareholder's checking
account. The minimum initial and subsequent investment pursuant
to this plan is $50.
GENERAL PURCHASE INFORMATION
Purchase orders for shares of the Funds placed with a registered
broker-dealer must be received by the broker-dealer before the
close of the NYSE to receive the Funds' valuation calculated that
day. The broker-dealer is responsible for the timely transmission
of orders to the Distributor. Orders placed with the registered
broker-dealer after the close of the NYSE will be executed based
on the Funds' valuation calculated on the next business day.
The Funds may refuse any order for the purchase of shares which
the Board of Trustees deems as not in the best interests of the
Funds.
Stock certificates representing shares of the Funds are not
issued except upon written request. In order to facilitate
redemptions and transfers, most shareholders elect not to receive
certificates. If you lose your certificate, you may incur an
expense to replace it.
HOW TO REDEEM SHARES OF THE FUND
There is no charge for share redemptions. Shares will be redeemed
at the net asset value next determined after the redemption
request has been received in proper order by the Funds' Transfer
Agent. Shares may be redeemed by telephone call or mail delivery
to the Transfer Agent.
BY MAIL - A written request for redemption (along with any
endorsed stock certificates) must be received by the Funds'
Transfer Agent, Rodney Square Management Corporation, P.O. Box
8987, Wilmington, DE 19899-9752, to constitute a valid tender for
redemption. A signature guarantee is required for any written
redemption request which: (1) is in excess of $10,000.00; (2)
requests proceeds be sent to somewhere other than the account's
listed address; or (3) requests proceeds be sent to someone other
than the account's listed owner(s). These requirements may be
waived or modified upon notice to shareholders. Signatures must
be guaranteed by an "eligible guarantor institution" as defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934.
Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations. A broker-dealer guaranteeing signatures must be a
member of a clearing corporation or maintain net capital of at
least $100,000. Credit unions must be authorized
<PAGE>
THE HOMESTATE GROUP
===============================================================================
to issue signature guarantees. Signature guarantees will be accepted
from any eligible guarantor institution which participates in a
signature guarantee program. Payment of a written request for
redemption will be made within seven business days of receipt of
the request.
BY TELEPHONE - A shareholder redeeming at least $1,000 of shares
(for which certificates have not been issued) and who has
authorized expedited redemption on the Subscription Application
form filed with the Transfer Agent may, at the time of such
redemption, request that the funds be mailed or wired to the
commercial bank or registered broker-dealer designated on the
application form by telephoning the Transfer Agent at (800) 892-
1351 before close of the New York Stock Exchange. Redemption
proceeds will be sent on the next business day following receipt
of the telephone redemption request. A wire fee of $7.00 will be
deducted from the shareholder account or proceeds before a wire
is sent. Please note that the Funds' Transfer Agent receives all
telephone calls for telephone instructions on a recorded phone
line. The Funds and/or their Transfer Agent will employ such
reasonable procedures to confirm that instructions communicated
by telephone are genuine. If they fail to employ reasonable
procedures, the Funds may be liable for any losses due to
unauthorized or fraudulent instructions. The Funds reserve the
right, at any time, to suspend or terminate the expedited
redemption procedure. During a period of unusual economic or
market changes, shareholders may experience difficulties or
delays in effecting telephone redemptions.
SYSTEMATIC WITHDRAWL PLAN
Shareholders may elect to participate in a "Systematic Withdrawal
Plan" which provides for automatic fixed withdrawals of at least
$50 monthly, quarterly, semi-annually, or annually. The minimum
investment to establish a Systematic Withdrawal Plan is $10,000.
GENERAL REDEMPTION INFORMATION
If a shareholder seeks to redeem shares that were purchased
within fifteen days of the redemption request, the Funds may
delay payment until such time as the funds in question have been
properly cleared and collected by the Funds.
Due to the relatively high administration cost of smaller
shareholder accounts, the Funds reserve the right to redeem, at
net asset value, the shares of any shareholder whose account has
a value of less than $500, other than as a result of a decline in
the net asset value per share of the Funds or as an active
participant in the AutoInvest Plan. The Funds will provide a 30-
day written notice to such shareholder prior to initiating such a
redemption.
HOW TO EXCHANGE SHARES OF THE FUND
Shares of the HomeState Pennsylvania Growth Fund and the
HomeState Select Opportunities Fund may be exchanged for shares
of each other at the then current net asset value by calling the
Funds' Transfer Agent by 4:00 p.m. Eastern Time on a normal
Business Day; or for shares of any other funds which may be
introduced by the Adviser; or shares may also be exchanged for
the Rodney Square Fund ("RSF") which is managed by Rodney Square
Management Corporation and distributed by Rodney Square
Distributors, Inc. Shares of RSF acquired through direct purchase
or in the form of dividends earned on such shares may be
exchanged for shares of any HomeState fund at net asset value
plus the normal sales charge of such funds. The minimum initial
investment of $1,000 is required to establish an account in RSF
by telephone exchange or written request. RSF reserves the right
to amend or change the exchange privilege upon 60 days notice to
the shareholders. Exchanges of the Funds' shares involve the
redemption of the Funds' shares and therefore an exchange may
cause the realization of gains or losses for income tax purposes.
VALUING THE FUNDS' SHARES
The HomeState Pennsylvania Growth Fund's and the HomeState Select
Opportunities Fund's daily closing prices are listed in many
newspapers in the mutual fund prices section as "HomeStPA" and
"HomeStOp," respectively. The net asset value and offering price
of the shares of the Funds are determined once on each Business
Day as of the close of the NYSE, which on a normal Business Day
is usually 4:00 p.m. Eastern Time. A "Business Day" is defined as
a day in which the NYSE is open for trading. Holidays currently
observed by the NYSE are New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Each Fund's
value is
<PAGE>
THE HOMESTATE GROUP
===============================================================================
determined by adding the value of the portfolio
securities and other assets, subtracting its liabilities, and
dividing the result by the number of its shares outstanding. Net
asset value includes interest on fixed income securities, which
is accrued daily. The net asset value of the Funds will fluctuate
with market conditions as the value of the investment portfolio
changes.
With approval of the Board of Trustees, the Funds may use a
pricing service, bank or broker-dealer experienced in such
matters to value the Funds' securities. The prices of bonds and
other fixed income securities provided by such service providers
may be determined without regard to bid or last sale prices but
take into account institutional size trading in similar groups of
securities and any developments related to specific securities.
Fund securities listed or traded on a national securities
exchange or market system for which representative market
quotations are available will be valued at the last quoted sales
price on the security's listed exchange on that day. Listed
securities not traded on an exchange that day, and other
securities traded in the over-the-counter market will be valued
at the mean between the closing asked price and the closing bid
price. Debt securities with maturities of 60 days or less are
valued at amortized cost, which approximates market value. Where
market quotations are not readily available, securities will be
valued using a method which the Board of Trustees believes in
good faith accurately reflects the fair value.
For more information concerning valuation of the Funds' shares,
see "Additional Information Concerning Valuing the Funds' Shares"
in the Statement of Additional Information.
MANAGEMENT OF THE FUNDS
THE BOARD OF TRUSTEES
The operations and management of the Trust are the responsibility
of the Board of Trustees. Pursuant to that responsibility, the
Board of Trustees has approved contracts with the following
organizations to provide, among other things, day-to-day
investment advisory and administrative management services.
THE INVESTMENT ADVISER
Emerald Advisers, Inc. serves as investment adviser to the Funds.
The Adviser was organized as a Pennsylvania corporation on
November 14, 1991, and is registered with the SEC under the
Investment Advisers Act of 1940 and with the Pennsylvania
Securities Commission under the Pennsylvania Securities Act of
1972. In August 1994, Emerald Advisers, Inc. became a wholly-
owned subsidiary of Emerald Asset Management, Inc. Substantially
all of the executives and investment related personnel of Emerald
Advisers continue in their positions. Total assets managed by the
Adviser exceeded $325 million at September 30, 1997. The three
principal officers of the Adviser combine over 40 years of
experience in the mutual fund, investment advisory, pension funds
management and securities brokerage industries.
Pursuant to investment advisory agreements (the "Advisory
Agreements"), the Adviser furnishes each Fund with investment
advisory and administrative services which are necessary to
conduct the Fund's business. Specifically, the Adviser manages
the Funds' investment operations and furnishes advice with
respect to the purchase and sale of securities on a daily basis.
The HomeState Pennsylvania Growth Fund agreement is dated
September 1, 1992 and the HomeState Select Opportunities Fund
agreement is dated February 1, 1997.
Kenneth G. Mertz II, CFA, President of Emerald Advisers, Inc.,
and Vice President and Chief Investment Officer of the Funds, is
primarily responsible for the day-to-day management of the Funds'
portfolios. Mr. Mertz has had this responsibility since the
HomeState Pennsylvania Growth Fund commenced operations on
October 1, 1992. Prior to this date, Mr. Mertz was the Chief
Investment Officer to the $12 billion Pennsylvania State
Employes' Retirement System. Mr. Mertz has had this
responsibility with the HomeState Select Opportunities Fund since
its inception.
Under the terms of the Advisory Agreements, the Funds pay the
Adviser an annual fee based on a percentage of the net assets
under management. The fees are computed daily and paid monthly as
follows:
HomeState Pennsylvania Growth Fund: for assets up to and
including $250,000,000: 0.75%; for assets in excess of
$250,000,000 and up to and including $500,000,000: 0.65%; for
assets in excess of $500,000,000 and up to and including
$750,000,000: 0.55%; for assets in excess of $750,000,000: 0.45%.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
HomeState Select Opportunities Fund: for assets up to and
including $100,000,000: 1.0%; for assets in excess of
$100,000,000: 0.90%. The Fund will be closed to new investors
when total net assets surpass $100 million. These fees are higher
than most other registered investment companies but comparable to
fees paid by equity funds of a similar investment objective and
size.
The Funds pay all of its expenses other than those expressly
assumed by the Adviser. Specifically, the Funds pay the fees and
expenses of their transfer agent, custodian, independent auditors
and legal counsel. These fees are generally for the costs of
necessary professional services, regulatory compliance, and those
pertaining to maintaining the Funds' organizational standing. The
resulting fees may include, but are not limited to: brokerage
commissions, taxes and organizational fees, bonding and
insurance, custody, auditing and accounting services, shareholder
communications and shareholder servicing, and the cost of
financial reports and prospectuses sent to shareholders.
The Adviser will reimburse its fee to the Funds to the extent
such fee exceeds the most restrictive expense limitation in
effect by a state regulatory agency where the Funds' shares are
registered for purchase. The Adviser reserves the right to
voluntarily waive any portion of its advisory fee at any time.
The Adviser has agreed to waive its advisory fee and/or reimburse
other expenses for the HomeState Select Opportunities Fund for
the period at least through and including June 30, 1998 so that
total Fund operating expenses are capped at 2.35% or less.
The Adviser has agreed that a percentage of its net advisory fee
income earned from the HomeState Pennsylvania Growth Fund (less
any fee waivers and expense reimbursements made by the Adviser to
the Fund) will be contributed annually by the Fund on behalf of
the Adviser to provide scholarship funding that will specifically
benefit Pennsylvania residents who have graduated from a
Pennsylvania high school and are attending an accredited
Pennsylvania college, university or trade school. The current
year's contribution is 1% of the HomeState Pennsylvania Growth
Fund's net advisory fee income.
THE ADMINISTRATOR, ACCOUNTING AND TRANSFER AGENT
Pursuant to separate administration, accounting services and
transfer agency agreements each dated November 20, 1995, as
amended, Rodney Square Management Corporation ("Rodney Square"),
Rodney Square North, 1100 N. Market Street, Wilmington, DE 19890-
0001, has been retained to serve as administrator, accounting and
transfer agent. As administrator, Rodney Square provides
administrative and operational services and facilities. For its
services as administrator, Rodney Square receives an annual fee
paid monthly from the Funds, based on the Funds' daily assets, of
0.15% on the first $50 million (subject to a minimum fee of $50,000),
0.10% on the next $150 million and 0.07% on assets in excess of
$200 million. As accounting agent, Rodney Square determines net
asset value and provides accounting services to the Funds. Also,
Rodney Square, as transfer agent, performs certain shareholder
servicing duties as listed in the Transfer Agency Agreement.
THE CUSTODIAN
Pursuant to a separate custodian agreement (the "Custodian
Agreement"), Wilmington Trust Company, 1100 North Market Street,
Wilmington, DE 19890 (the "Custodian"), has been retained to
serve as custodian to the Funds' assets, and performs certain
corresponding administrative tasks.
THE DISTRIBUTOR
Rodney Square Distributors, Inc., Rodney Square North, 1100 N.
Market Street, Wilmington, DE 19890-0001, is the sole distributor
of shares of the Funds. The Distributor is a Delaware
corporation, a broker-dealer registered with the SEC and a member
of the National Association of Securities Dealers (the "NASD"),
and an affiliate of Rodney Square, which also performs
administrative, shareholder and accounting servicing duties for
the Funds.
Certain officers and/or employees of the Adviser may also serve
as registered representatives of the Distributor, but only in the
capacity of distributing shares of the Funds.
<PAGE>
THE HOMESTATE GROUP
===============================================================================
THE DISTRIBUTION PLANS
The Distributor will incur certain expenses while providing
selling and sales distribution services for the Funds, including
such costs as compensation to broker-dealers for (i) selling
shares of the Funds, and (ii) providing information and advice to
their shareholder clients regarding ongoing investment in the
Funds, as well as advertising, promotional and printing expenses.
To promote shares of the Funds to the general public, each Fund
has adopted a distribution services plan (the "Plans") under Rule
12b-1 of the Investment Company Act of 1940 (the "Act"). The
Plans allow the Funds to reimburse the Distributor for costs
specifically described in this Section. The Distributor receives
no other compensation from the Funds, except that (i) any sales
charge collected will be paid to the Distributor (See "How to
Purchase Shares of the Funds"), and (ii) the minimum total dollar
amount paid to the Distributor on an annual basis (net of the
amount paid to broker-dealers and/or service organizations) will
be $3,000. The Distributor may pay such sales charge to broker-
dealers who have entered into a Selling Agreement with the
Distributor as a commission paid for selling the Funds' shares.
The Funds pay the Distributor on a monthly basis at an annual
rate not to exceed 0.35% of the series' average net assets.
Expenses acceptable for reimbursement under the Plan include
compensation of broker-dealers or other persons for providing
assistance in distribution and for promotion of the sale of the
shares of the Funds. The Funds' Adviser is responsible to pay the
Distributor for any unreimbursed distribution expenses.
Pursuant to the Plans, a broker-dealer may receive a maintenance
commission in the amount of 0.25% (annualized) of the average net
assets maintained in the Funds by their clients.
The Funds may also compensate a bank under the Plans only to the
extent that a bank may serve as a "service organization,"
providing administrative and accounting services for the Funds'
shareholders. The Glass-Steagall Act and other applicable laws
and regulations prohibit a bank from acting as underwriter or
distributor of securities. If a bank were prohibited from
providing certain administrative services, shareholders would be
permitted to remain as the Funds' shareholders and alternate
means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any
financial consequences as a result of any of those occurrences.
The Board of Trustees of the Trust adopted the Plans after
determining the Plans would likely benefit the Funds and their
shareholders to the extent that the Plans can aid the Distributor
in attracting additional shareholders, promoting the sale of
shares, reducing redemptions, and maintaining and improving
services provided to shareholders by the Distributor or dealers.
The resulting increase in assets should benefit the Funds by
providing a continuous cash flow, thereby affording the Adviser
the ability to purchase and redeem portfolio securities without
making unwanted redemptions of existing portfolio securities.
The Board of Trustees will annually review the success of the
Plans in meeting these objectives based on information provided
by the Adviser.
Future regulatory review and revision of Rule 12b-1 by the SEC,
of Rule 2830 of the Rules of Fair Practice by the NASD, or any
similar review and revision of other applicable regulations by
other regulatory agencies could affect the Funds' Plans. The
Board of Trustees will promptly modify the Plans if such action
is warranted.
BROKERAGE ALLOCATION
The Adviser is responsible for selecting brokers and dealers to
effect portfolio securities transactions and for negotiating
brokerage commissions and dealers' charges. When selecting
brokers and dealers to handle the purchase and sale of portfolio
securities, the Adviser looks for prompt execution of the order
at the best overall terms available. Securities may be bought
from or sold to brokers who have furnished statistical, research
and other financial information or services to the Adviser. The
Adviser may give consideration to those firms which have sold or
are willing to sell shares of the Funds. See "Additional
Brokerage Allocation Information" in the Statement of Additional
Information for more information.
To the extent consistent with applicable provisions of the
Investment Company Act of 1940, Rule 17e-1, and other rules and
exemptions adopted by the SEC under that Act, the Board of
Trustees has determined that transactions for the Funds may be
<PAGE>
THE HOMESTATE GROUP
===============================================================================
executed by affiliated brokers if, in the judgment of the
Adviser, the use of an affiliated broker is likely to result in
price and execution at least as favorable as those qualified
brokers. The Adviser will not execute principal transactions by
use of an affiliated broker.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends, if any, realized by the Funds will be declared and
paid semi-annually, in the months of January and July. Capital
gains, if any, realized by the Funds will be declared and paid
semi-annually in the months of July and December. The Record and
Declaration dates for payments to shareholders will normally be
the 15th of the month, the Ex-Dividend dates will normally be the
16th of the month, and the Payment dates will normally be the
20th of the month (or the next business day if any of these dates
fall on a weekend). Shareholders of record as of the Record Date
will be paid, or have their payments reinvested in additional
shares, as of the Re-Invest and Payable Dates. The net asset
value price of the Funds will be reduced by the corresponding
amount of the per-share payment declared on the Ex-Dividend Date.
Since dividend income is not a primary objective of the Funds,
the Funds do not anticipate paying substantial income dividends
to shareholders.
A shareholder will automatically receive all dividends and
capital gains distributions in additional full and fractional
shares of the Funds at net asset value as of the date of payment,
unless the shareholder elects to receive such distributions in
cash. To change the distribution option chosen, the shareholder
should write to the Funds' Transfer Agent, Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-9752.
The request will become effective with respect to distributions
having record dates after its receipt by the Transfer Agent.
If a shareholder elects to receive distributions in cash, and the
check is returned by the United States Postal Service, the Funds
reserve the right to invest the amount of the returned check in
additional shares of the Funds at the then existing net asset
value and to convert the shareholder's election to automatic
reinvestment of all distributions.
TAXES
Reinvested dividends and capital gains distributions will receive
the same tax treatment as dividends and distributions paid in
cash. Because the Funds are series of a Pennsylvania common law
trust, they will not be liable for corporate income or franchise
tax in the Commonwealth of Pennsylvania. Further, shares of the
Funds are exempt from Pennsylvania personal property taxes.
The Trust intends to qualify for treatment as a "regulated
investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). Qualification under the
Code requires that the Funds satisfy: (1) two gross income tests
that ensure the Funds earn income from investing activities; (2)
two diversification tests that limit the concentration of the
Funds' investment assets in any one issuer; and (3) a series of
distribution rules which require that the Funds distribute to
shareholders substantially all of their investment company
taxable income and net tax-exempt interest income. Each
individual series of the Trust is expected to be treated as a
separate corporation for most federal income tax purposes. So
long as each Fund qualifies for this tax treatment, the Fund will
be relieved of Federal income tax on amounts distributed to
shareholders but amounts so distributed will be taxable to
shareholders.
Distributions out of the "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss), if any,
of the Funds will be taxed to shareholders as long-term capital
gain in the year in which it was received, regardless of the
length of time a shareholder has owned the shares and whether or
not such gain was reflected in the price paid for the shares. All
other distributions, to the extent they are taxable, are taxed to
shareholders as ordinary income. Redemptions and exchanges from
the Funds are each taxable events.
A statement detailing the Federal income tax status of all
distributions made during a taxable year will be sent to
shareholders of record no later than January 31 of the following
year.
Shareholders must furnish to the Funds a certified taxpayer
identification number ("TIN"). The Funds are required to withhold
31% from reportable payments including ordinary income dividends,
capital gains distributions, and redemptions occurring in
<PAGE>
THE HOMESTATE GROUP
===============================================================================
accounts where the shareholder has failed to furnish a certified
TIN and has not certified that such withholding does not apply.
Any shareholders who are non-resident alien individuals, or
foreign corporations, partnerships, trusts or estates, may be
subject to different Federal income tax treatment.
The tax information presented here is based on Federal and state
tax laws and regulations effective as of the date of this
Prospectus, and may subsequently change. Because the information
presented here is only a very brief summary of some of the
important tax considerations for shareholders, shareholders are
urged to consult their tax advisers for more specific
professional advice, especially as it relates to local and state
tax regulations. See "Additional Dividend, Distribution and Taxes
Information" in the Statement of Additional Information for more
information.
GENERAL INFORMATION
The HomeState Group was organized as a Pennsylvania common law
trust on August 26, 1992. Shares of the Trust do not have
preemptive or conversion rights, and are fully-paid and non-
assessable when issued.
Since The HomeState Group is organized as a Pennsylvania common
law trust, it is not required to hold annual meetings, and does
not intend to do so, except as required by the Act or other
applicable Federal or state law. The Trust will assist in
shareholder communications as required by Section 16(c) of the
Act. The Act does require initial shareholder approval of each
investment advisory agreement and election of Trustees. Under
certain circumstances, the law provides shareholders with the
right to call for a special shareholders meeting for the purpose
of removing Trustees or for other proper purposes. Shares are
entitled to one vote per share, and do not have cumulative voting
rights.
The HomeState Group currently issues shares of beneficial
interest with no par value, in two series. Additional series may
be added in the future by the Board of Trustees. Each share of
each Fund has pro rata distribution rights, and shares equally in
dividends and distributions of the respective Fund series.
Shareholders will receive an annual report containing financial
statements which have been audited by the Funds' independent
accountants, and a semi-annual report containing unaudited
financial statements. Each report will include a list of
investment securities held by the Funds. Shareholders may contact
the Funds for additional information.
Duane, Morris & Heckscher, 305 North Front Street, Harrisburg, PA
17108, is legal counsel to the Trust.
Price Waterhouse LLP, 30 South Seventeenth Street, Philadelphia,
PA 19103, is the independent accountant for the Trust.
MANAGEMENT OF THE FUNDS
TRUSTEES - Bruce E. Bowen, Kenneth G. Mertz II, C.F.A., Scott C.
Penwell, Esq., Scott L. Rehr, H.J. Zoffer, Ph.D.
OFFICERS - Scott L. Rehr, President; Kenneth G. Mertz II, C.F.A.,
Vice President and Chief Investment Officer; Daniel W. Moyer IV,
Vice President and Secretary; Diane D. Marky, Assistant Secretary
<PAGE>
[BLANK PAGE]
<PAGE>
THE HOMESTATE GROUP
===============================================================================
---------------------------------------------------
I FUND INFORMATION I
I I
I NEW ACCOUNTS - (800) 232-0224 I
I I
I EXISTING ACCOUNTS/ORDERS - (800) 892-1351 I
I I
I BROKERS ONLY - (800) 232-OK-PA I
I I
I SYMBOLS: I
I PENNSYLVANIA GROWTH FUND: HSPGX I
I SELECT OPPORTUNITIES FUND: HSSAX I
I I
----------------------------------------------------
<PAGE>
THE HOMESTATE GROUP
===============================================================================
THE HOMESTATE GROUP
HOMESTATE PENNSYLVANIA GROWTH FUND
1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666
INVESTMENT ADVISER
GENERAL FUND INFORMATION
Emerald Advisers, Inc.
P.O. Box 10666
Lancaster, PA 17605-0666
DISTRIBUTOR
MARKETING INFORMATION
Rodney Square Distributors, Inc.
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
ADMINISTRATOR
ACCOUNTING AGENT
TRANSFER AGENT
Rodney Square Management Corporation
Rodney Square North
1100 N. Market Street
Wilmington, DE 19890-0001
CUSTODIAN
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware, 19890
LEGAL COUNSEL
Duane, Morris & Heckscher
305 North Front Street
Harrisburg, PA 17108
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
30 South Seventeenth Street
Philadelphia, PA 19103
<PAGE>
SUBSCRIPTION APPLICATION FORM
THE HOMESTATE GROUP
PENNSYLVANIA GROWTH FUND
SELECT OPPORTUNITIES FUND
Mail to: Rodney Square Management Corporation
-------
P.O. Box 8987
Wilmington, DE 19899-9752
FOR ASSISTANCE, CALL (800) 892-1351
- ------------------------------------------------------------------------------
1. AMOUNT INVESTED
[ ] Pennsylvania Growth Fund $----------
[ ] Select Opportunities Fund $----------
Total Amount to be Invested $----------
FORM OF PAYMENT -- INITIAL INVESTMENT
[ ] Check
[ ] NAV Purchase: Attach NAV Purchase Form
[ ] My Dealer purchased ---------------------- on -----------.
(No. of shares) (date)
- ------------------------------------------------------------------------------
2. REGISTRATION (PLEASE PRINT OR TYPE)
INDIVIDUAL *(Joint ownership with rights of survivorship unless otherwise
noted)
------------------------------------------------- ---------------------
(First Name) (Initial) (Last Name) (Social Sec No.)
------------------------------------------------- ---------------------
(Jt. Owner) (Initial) (Last Name) (Social Sec No.)
GIFT TO MINORS
AS CUSTODIAN FOR
--------------------------------- -----------------------
(Name of Custodian--ONE ONLY) (Minor's Name)
Under the Uniform Gift to Minors Act. -- --
------------ -------------------------
(State) (Minor's Soc Sec No.)
CORPORATIONS, PARTNERSHIPS, TRUSTS and OTHERS (complete Corporate
Resolution)
---------------------------------------------------------------------------
(Name of Corporation, Partnership, Trust or Other)
/ / --
------ ------------ -------------------------------- ------------------
(Date of Trust) (Name of Trustee(s)) (Tax I.D. No.)
Citizen of: [ ] U.S. [ ] Other:
----------------------
- ------------------------------------------------------------------------------
3. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)
---------------------------------------------------------------------------
(Street Address)
-------------------------------------------------- ---------------- -------
(City) (State) (Zip)
( ) -- ( ) --
------- -------- -------- --------
(Daytime Phone No.) (Evening Phone No.)
- ------------------------------------------------------------------------------
4. DISTRIBUTION OPTIONS (PLEASE INDICATE ONE -- DISTRIBUTIONS WILL BE
REINVESTED IF NO OPTION IS CHECKED)
[ ] Automatic Compounding (reinvest all dividends and capital gains)
[ ] Cash Dividends (dividends in cash; reinvest capital gains)
[ ] All Cash (all dividends and capital gains in cash)
- ------------------------------------------------------------------------------
5. SHAREHOLDER OPTIONS (FILL-IN THOSE SECTIONS THAT APPLY)
LETTER OF INTENT
[ ] $50,000. [ ] $250,000. [ ] $500,000. [ ] $1,000,000.
[ ] I agree to the letter of intent provisions of the Prospectus and
Statement of Additional Information, Although I am not obligated to
purchase, and the Fund is not obligated to sell, I intend to invest,
over a 13-month period beginning on , 19 , an
aggregate amount in the Fund at least equal to (check appropriate box
above).
RIGHT OF ACCUMULATION/COMBINED PURCHASE PRIVILEGE
I apply for Right of Accumulation or Combined Purchase Privilege reduced
sales charges subject to the Agent's confirmation of the following
holdings of eligible load accounts of the Fund.
-------------------------------- ----------------------- $-----------------
(Shareholder) (Account No.) (Approx. $ Value)
-------------------------------- ----------------------- $-----------------
(Shareholder) (Account No.) (Approx. $ Value)
TELEPHONE TRANSFER OPTION
[ ] I (we) authorize Rodney Square Management Corporation to honor
telephone instructions for my (our) account. Neither the Fund nor Rodney
Square Management Corporation will be liable for properly acting upon
telephone instructions believed to be genuine. PLEASE ATTACH A VOIDED
CHECK ON THE TRANSFER ACCOUNT AND COMPLETE BELOW:
---------------------------------------------- ----------------- ----------
(NAME OF BANK) (CITY) (STATE)
----------------- -------------------------------------------------------
(Account Number) (ABA Bank Routing Number--9-digit number needed to
process)
[ ] Checking [ ] Savings
- ------------------------------------------------------------------------------
6. SIGNATURE AND CERTIFICATION
Required by Federal tax law to avoid 31% backup withholding: "By signing,
I certify under penalties of perjury that the social security or taxpayer
identification number entered above is correct and that I have not been
notified by the IRS that I am subject to backup withholding unless I have
checked the box below:"
[ ] I am subject to backup withholding.
Receipt of the current Prospectus is hereby acknowledged.
------------------------------------- Date: , 19
(Signature) ------------------- ---
[ ] Owner [ ] Custodian [ ] Trustee
-------------------------------------- Date: , 19
(Joint Owner Signature, If Applicable) ------------------- ---
- ------------------------------------------------------------------------------
7. INVESTMENT DEALER INFORMATION
---------------------------------------------------------------------------
(Firm Name)
----------------------------------------- ------------------------------
(Rep. Name) (Rep No.)
-----------------------------------------
(Authorized Signature)
---------------------------------------------------------------------------
(Branch Address) (Branch No.)
------------------------------------ ---------------------- ------------
(City) (State) (Zip)
- ------------------------------------------------------------------------------
<PAGE>
