<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Homestate Group
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
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[HOMESTATE MUTUAL FUND LETTERHEAD]
July 15, 1998
RE: The HomeState Select Opportunities Fund
Dear Shareholder:
On February 18, 1997, the HomeState Select Opportunities Fund was introduced as
a companion to the HomeState Pennsylvania Growth Fund. While the PA Growth Fund
invests a minimum 65% of its assets in local Pennsylvania companies and
typically holds 110 to 120 stocks in its portfolio, the Select Fund was designed
to invest in companies throughout the entire U.S. and focus its portfolio on no
more than 50 companies. The Select Fund also introduced some aggressive
investment techniques, including the ability to invest more than 5% in any one
stock, to invest up to 25% in any one industry, and to use shorting and hedging
(options) strategies. The basic premise of the Select Fund was to group our
fifty "favorite" investment ideas in one portfolio, and to take a more
aggressive position in these companies.
While we are pleased with the progress of the Select Fund since its
introduction, two specific developments have occurred during the past year which
cause the Fund's Board of Trustees to recommend making some important changes to
the Fund.
* In October of 1997, HomeState introduced the Year 2000 ("Y2K") Fund,
investing primarily in technology companies. A cursory examination of all
three HomeState funds' top 10 holdings shows a greater degree of
repetition than we would like. In fact, the Select Fund's top holdings
many months duplicates the stocks found in the other two HomeState funds.
This runs against our goal of providing shareholders with unique mutual
fund portfolios which provide diversification in an overall investment
portfolio.
* In conducting its in-depth, on-site research of companies for selection
in the Select portfolio, the Fund's investment adviser has consistently
identified opportunities in both the technology (as addressed above) and
banking and financial services industries. The banking and financial
services companies have seen tremendous growth over the past few years as
a result of consolidation and regulatory changes (which are detailed in
the accompanying proxy statement). The Fund's adviser believes that these
trends will continue in the coming years and can provide compelling
growth opportunities. Under its current structure, the Select Fund can
only invest up to 25% in a specific industry, while the Fund's adviser
would like to take a greater advantage of the opportunities it sees in
the banking and financial services industries.
Based on these factors, the Board of Trustees is recommending making several
changes to the Select Fund which are detailed in the accompanying proxy
statement. These changes require shareholder
<PAGE>
July 15, 1998
Page 2
approval, and we ask you to carefully read the proxy statement and then vote and
return your proxy card as indicated. Simply put, the Board is recommending
changes in the Fund's fundamental investment objective and restrictions that
will:
* Allow the Fund to concentrate its investments in the banking and
financial services industries;
* Restrict the Fund to investing no more than 5% in any one stock; and
* Change the Fund's name to the "HOMESTATE SELECT BANKING AND FINANCE FUND"
to reflect its adjusted focus.
We believe these changes will keep the Select Fund focused on what we like to
call "The HomeState Advantage" - Professional Portfolio Management, In-Depth,
On-Site Research and Unique Investment Opportunities.
Please don't hesitate to contact the Fund at (800) 722-4123 if you have any
questions regarding these changes or the enclosed information. We look forward
to continue working to provide The HomeState Advantage on your behalf in the
HomeState Select Banking and Finance Fund.
Sincerely,
/s/ Scott L. Rehr
Scott L. Rehr
President
<PAGE>
THE HOMESTATE GROUP
THE HOMESTATE SELECT OPPORTUNITIES FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, AUGUST 31, 1998
TO THE SHAREHOLDERS OF THE HOMESTATE SELECT OPPORTUNITIES FUND:
A Special Meeting of Shareholders of The HomeState Select Opportunities
Fund (hereinafter called the "Fund") will be held on Monday, August 31, 1998 at
2:00 p.m., local time, at the offices of the Fund, 1857 William Penn Way,
Lancaster, Pennsylvania 17605, for the following purposes:
1. To change the Fund's investment objective to companies principally
engaged in the banking and financial services industries;
2. To modify the Fund's fundamental restriction on concentration to
provide that the Fund may not invest more than 25% of total assets in any one
industry, except that the Fund shall, under normal conditions, invest not less
than 25% of its total assets in securities of companies principally engaged in
the banking industry and not less than 25% of its total assets in securities of
companies principally engaged in the financial services industry;
3. To modify the fundamental restriction on portfolio diversification to
provide that the Fund may not 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);
4. To change the name of the Fund to "HomeState Select Banking and
Finance Fund"; and
5 To transact such other business as may properly come before the
Special Meeting and any adjournment, postponement, or continuation thereof.
The Board of Trustees has fixed the close of business on July 2, 1998 as
the record date for the determination of Shareholders entitled to notice of and
to vote at the Special Meeting.
A copy of the Fund's Prospectus and Annual Report for the year ended June
30, 1997 is available from the Fund upon request. Please contact Firstar Trust
Company at (800) 232-0224 to request those documents.
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If you do not expect to attend the Special Meeting in person, please fill
in, sign, date, and return the enclosed form of proxy in the enclosed envelope
to Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
By Order of the Board of Trustees,
/s/ Scott L. Rehr
Scott L. Rehr
President
Date: July 15, 1998
<PAGE>
THE HOMESTATE GROUP
THE HOMESTATE SELECT OPPORTUNITIES FUND
---------------
PROXY STATEMENT
---------------
This Proxy Statement and the form of proxy enclosed herewith, which are
first being mailed to shareholders on or about July 15, 1998, are furnished in
connection with the solicitation by the Board of Trustees of The HomeState
Group's Select Opportunities Fund (the "Fund") of proxies to be voted at the
Special Meeting of Shareholders (the "Special Meeting") to be held on Monday,
August 31, 1998 at 2:00 p.m., local time, and at any adjournment, postponement,
or continuation thereof, at the offices of the Fund, 1857 William Penn Way,
Lancaster, Pennsylvania 17605. The Fund's principal executive offices are
located at 1857 William Penn Way, Lancaster, Pennsylvania 17605.
Only shareholders of record at the close of business on July 2, 1998 (the
"Record Date"), are entitled to notice of and to vote at the Special Meeting.
The HomeState Group (the "Trust") is a Pennsylvania common law trust composed of
separate series or portfolios, one of which is the Fund. For simplicity and
clarity, the Fund's shares of beneficial interest are referred to as "Shares,"
the holders of Shares are "Shareholders" and the Trust's Board of Trustees is
referred to as the "Board." Each full Share of the Fund outstanding is entitled
to one vote and each fractional Share of the Fund outstanding is entitled to a
proportionate share of one vote with respect to each proposal to be voted upon
by the Shareholders of the Fund.
If the accompanying proxy card is properly executed and returned by a
Shareholder in time to be voted at the Special Meeting, the Shares covered
thereby will be voted in accordance with the instructions marked thereon by the
Shareholder. Executed proxies that are unmarked will be voted in favor of the
proposed changes to the Fund's investment objective and fundamental investment
restrictions and, at the discretion of the proxyholder, on any other matter that
may properly have come before the Special Meeting or any adjournments and
postponements thereof. Any proxy given pursuant to this solicitation may be
revoked at any time before its exercise by giving written notice to the
Secretary of the Fund or by the issuance of a subsequent proxy. To be
effective, such revocation must be received by the Secretary of the Fund prior
to the Special Meeting. In addition, a Shareholder may revoke a proxy by
attending the Special Meeting and voting in person. The solicitation of proxies
will be made primarily by mail but also may be made by telephone, telegraph,
telecopy and personal interviews. Authorization to execute proxies may be
obtained by telephonic or electronically transmitted instructions. The presence
in person or by proxy of Shareholders of the Fund entitled to cast a majority of
all the votes entitled to be cast at the Special Meeting shall constitute a
quorum at the meeting with respect to the Fund. If a quorum is not present at
the Special Meeting or if a quorum is present but sufficient votes to approve
any of the proposals described in the Proxy Statement are not received, the
person named as proxy may propose one or more adjournments of the Special
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those Shares represented at the
Special Meeting in person or by proxy. A Shareholder vote may be taken on the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
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Broker non-votes are shares held in street name for which the broker indicates
that instructions have not been received from the beneficial owners or other
persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as Shares present
for purposes of determining whether a quorum is present but will not be voted
for or against any proposal or for or against any adjournment to permit further
solicitation of proxies. Accordingly, abstentions and broker non-votes
effectively will be a vote against adjournment or against any proposal where the
required vote is a percentage of the shares present or outstanding. In addition,
abstentions and broker non-votes will not be counted as votes cast for purposes
of determining whether sufficient votes have been received to approve a
proposal. The number of outstanding Shares of the Fund as of the Record Date,
July 2, 1998, is 1,299,207.826. To the knowledge of the Fund's management, as of
the Record Date, there are no owners of 5% or more of the outstanding Shares of
the Fund.
Pursuant to the Investment Company Act of 1940 (the "1940 Act"), the Fund
has adopted an investment objective and certain fundamental restrictions which
may be changed only with shareholder approval. Restrictions and policies that a
Fund has not specifically designated as being fundamental are considered to be
"non-fundamental" and may be changed by the Fund's Board without shareholder
approval. The Board has determined that it is in the best interests of the Fund
to make certain changes to the Fund's investment objective and fundamental
restrictions. In addition, in order to better reflect the new investment
objective of the Fund, the Board has also recommended changing the name of the
Fund to the HomeState Select Banking and Finance Fund.
The following is the text and a summary description of the proposed changes
to the Fund's investment objective and fundamental investment restrictions.
Shareholders may request from the Fund a copy of the Fund's Statement of
Additional Information for the text of the Fund's existing investment objective
and fundamental investment restrictions, by calling (800) 232-0224.
PROPOSAL 1: MODIFICATION OF THE INVESTMENT OBJECTIVE OF THE FUND
The Fund's investment adviser, Emerald Advisers, Inc., has identified the
banking and financial services industries as areas for potential growth over the
next several years for a variety of factors, including the following: (1) The
industries have been undergoing a wave of consolidations. At the end of 1997,
there were over 9,943 commercial banks chartered in the United States. By
comparison, there were 121 banks in all of Canada. The FDIC has reported that
the total number of U.S. banks and savings & loans has declined from over 17,300
in 1987 to 10,500 in 1997. The Fund's investment adviser expects this
consolidation trend to continue as banks seek economies of scale and rely more
heavily on expensive technologies as they expand their market share and
geographic reach. (2) The traditional regulatory and operating distinctions
between banking and financial services institutions are changing, as evidenced
by acquisitions which have taken place between companies in both industries.
There are currently regulatory proposals which would make significant changes in
the federal laws which govern the range of business and services in which
federally regulated banks can engage. Some of these proposals would eliminate
most of the distinctions between commercial and investment banks and would allow
certain banks and their holding companies the ability to offer financial
products and services such as insurance, mutual fund underwriting and securities
underwriting. These new
<PAGE>
opportunities may make some companies more attractive acquisition candidates.
(3) As the large demographic segment of the American population known as "baby
boomers" (traditionally defined as the 76.1 million Americans born between the
years of 1946 and 1964) move nearer to their retirement years, much more
attention has been focused on investments and savings. By example, according to
the Investment Company Institute, the amount of money invested in U.S. mutual
funds has grown from $51 billion in 1976 to $716 billion in 1986 to over $3.5
trillion in 1996.
In order to take advantage of the perceived opportunity in the banking and
financial services industries, the Board recommends changing the investment
objective of the Fund. The objective of the Fund currently 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.
The Board has recommended changing the foregoing investment objective to
the following:
"The objective of the Fund is long-term growth of capital through
investments primarily in the common stock of companies principally engaged
in the banking and financial services industries. Income is a secondary
objective. To pursue its objective, the Fund will invest at least 65% of
its total assets in such companies. For investment purposes, a company is
defined as "principally engaged" in the banking or financial services
industries if (i) at least 50% of either the revenues or earnings was
derived from the creation, purchase and sale of banking or financial
services products, or (ii) at least 50% of the assets was devoted to such
activities, based on the company's most recent fiscal year. Companies in
the banking industry include U.S. commercial and industrial banking and
savings institutions and their parent holding companies. Companies in the
financial services industry include commercial and industrial finance
companies, diversified financial services companies, investment banking,
securities brokerage and investment advisory companies, leasing companies,
Real Estate Investment Trusts, and insurance companies and insurance
holding companies. While the Fund can invest in companies headquartered
anywhere in the U.S. and of varying size, it will usually emphasize
companies located in the Mid-Atlantic states and smaller companies: those
with a market capitalization of less than $1 billion. The Fund's annual
turnover rate is not expected to exceed eighty percent. There can be no
guarantee the investment objective of the Fund will be achieved."
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO MODIFY THE
INVESTMENT OBJECTIVE OF THE FUND.
<PAGE>
PROPOSAL 2: MODIFICATION OF THE FUNDAMENTAL RESTRICTION ON CONCENTRATION
The Board has recommended changing one of the Fund's fundamental
restrictions to allow the Fund to concentrate its investments in the banking and
financial services industries, as required by the proposed investment objective.
The following is an existing fundamental restriction of the Fund: "The
Fund may not invest more than 25% of total assets in one industry."
The Board proposes to substitute the following new fundamental restriction:
"The Fund may not invest more than 25% of total assets in any one
industry, except that the Fund shall, under normal conditions, invest not
less than 25% of its total assets in securities of companies principally
engaged in the banking industry and not less than 25% of its total assets
in securities of companies principally engaged in the financial services
industry."
As a result of this concentration in the banking and financial services
industries, the Fund may be subject to greater risks than a portfolio without
such a concentration. For example, as proposed the Fund's investments and
performance returns will be affected by general market and economic conditions
as well as other risks specific to the banking and financial services
industries. Banking and financial services companies are subject to extensive
government regulation. Such regulation may limit both the amount and types of
loans and other financial commitments a banking or financial services company
(such as insurance company) can make, and the interest rates and fees it can
charge. These limitations may have a significant impact on the profitability of
a banking or financial services company since that company's profitability is
attributable, at least in part, to its ability to make financial commitments
such as loans. Profitability is to a significant degree dependent upon the
availability and cost of capital funds. The financial difficulties of borrowers
can negatively impact the industry to the extent that borrowers may not be able
to repay loans made by banking or financial services companies. Economic
conditions in the real estate market may have a particularly strong impact on
certain banks and savings associations.
Insurance companies may be subject to severe price competition, claims
activity, marketing competition and general economic conditions. Particular
insurance lines will also be influenced by specific circumstances. For example,
property and casualty insurer profits may be affected by weather catastrophes or
other disasters; life and health insurer profits may be affected by mortality
risks and morbidity rates. Also, individual insurance companies may be subject
to material risks including reserve funds which are inadequate to pay claims and
failures by reinsurance carriers. Investment banking, securities brokerage and
investment advisory companies are particularly subject to government regulation
and the risks inherent in securities trading and underwriting activities.
There are current legislative proposals to reduce the separation between
commercial and investment banking businesses. If enacted, the legislation could
significantly impact the industry. While banks may be able to expand the
services they offer (which are currently typically limited to
<PAGE>
certain non-securities activities such as making loans and accepting deposits),
expanded powers related to securities activities could expose banks to well-
established competitors, particularly as the distinctions between banks and
other financial services companies erode. The broadening of bank powers to
include multi-state operations and diversification of operations can also expose
certain banks to well-established competitors in new areas of operations. The
financial services industry itself continues to undergo significant change,
resulting from industry-wide consolidation as well as continuing new product
development and further regulatory initiatives.
The Board has weighed the foregoing risks against the potential benefits of
the proposed changes and as a result, THE BOARD RECOMMENDS THAT YOU VOTE "FOR"
THE PROPOSAL TO MODIFY THE FUNDAMENTAL RESTRICTION ON CONCENTRATION.
PROPOSAL 3: MODIFICATION OF THE FUNDAMENTAL RESTRICTION ON PORTFOLIO
DIVERSIFICATION
Currently, the Fund is considered a "non-diversified" fund under the 1940
Act because it may invest up to 25% of its assets in the equity or debt of one
issuer. In conjunction with the other three Proposals contained herein, the
Board has recommended changing this fundamental restriction to require better
diversification among issuers.
The Fund was originally formed as a "non-diversified" fund in conjunction
with its fundamental investment objectives, which included investing in a
focused manner in typically no more than fifty companies (see Proposal 1:
Modification of the Investment Objective of the Fund" for a complete discussion
of changes to the fundamental investment objective). The Board has recommended
changes to this fundamental objective to focus on the banking and financial
services industries, in effect eliminating this "non-diversified" strategy.
Because the Fund will no longer be bound to typically invest in fifty companies
or less, the Board recommends a corresponding modification in the fundamental
restriction on portfolio diversification. This change will limit the Fund to
investing in no more than 5% of the value of its assets in any one issuer, which
is normal for a "diversified" fund under the 1940 Act.
The following is an existing fundamental restriction of the Fund: "The
Fund may not 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)."
The Board proposes to substitute the following new fundamental restriction:
"The Fund may not 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)."
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO MODIFY THE
FUNDAMENTAL RESTRICTION ON PORTFOLIO DIVERSIFICATION.
<PAGE>
PROPOSAL 4: CHANGE OF THE NAME OF THE FUND
Under Section 35 of the 1940 Act, an investment company is prohibited from
using a name or title for its funds that is deceptive or misleading. Therefore,
consistent with the provisions of Section 35 of the 1940 Act, if the
shareholders approve each of the three Proposals set forth above, the Board
recommends changing the name of the Fund from the "HomeState Select
Opportunities Fund" to the "HomeState Select Banking and Finance Fund" to
reflect the Fund's new investment objective.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL TO CHANGE THE NAME OF
THE FUND.
REQUIRED VOTE
Approval of each of the Proposals set forth herein requires the affirmative
vote of a "majority of the outstanding voting securities" of the Fund, which for
this purpose means the affirmative vote of the lesser of (1) more than 50% of
the outstanding Shares of the Fund or (2) 67% or more of the Shares of the Fund
present at the meeting if more than 50% of the outstanding Shares of the Fund
are represented at the meeting in person or by proxy. Shareholders of the Fund
may vote against the Proposals in the manner indicated on the proxy card. If
all of the Proposals are approved by Shareholders of the Fund at the Special
Meeting, they will be effective upon appropriate disclosure being made in the
Fund's prospectus and statement of additional information. IF ONE OR MORE OF
THE PROPOSALS ARE NOT APPROVED BY SHAREHOLDERS OF THE FUND, THE EXISTING
FUNDAMENTAL RESTRICTIONS OF THE FUND WILL CONTINUE IN EFFECT AS WELL AS THE
FUND'S CURRENT NAME.
SHARES HELD BY MANAGEMENT
The following table sets forth information as of July 2, 1998 with respect
to the beneficial ownership of the Shares of the Fund by (i) each person serving
as Trustee of the Fund; and (ii) all Trustees and executive officers of the Fund
as a group. Unless otherwise indicated, all Shares are owned directly and the
indicated owner has sole voting and dispositive power with respect thereto. To
the knowledge of the Fund's management, as of July 2, 1998, there are no owners
beneficially owning five percent (5%) or more of the Shares of the Fund.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED (1)
----------------------
Beneficial Owner NUMBER PERCENT (%)
- ------------------------------------------- --------- -----------
<S> <C> <C>
TRUSTEES
Bruce E. Bowen ........................ 799.915 *
Kenneth G. Mertz II (2)............... 270.073 *
Scott C. Penwell ........................ 000.000 --
Scott L. Rehr (3)........................ 483.315 *
Dr. H. J. Zoffer ........................ 812.492 *
EXECUTIVE OFFICERS (4)
Daniel W. Moyer (5) .................. 342.749 *
</TABLE> [CAPTION]
<PAGE>
ALL TRUSTEES AND EXECUTIVE
OFFICERS AS A GROUP (total 6 persons) 2,708.544 *
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* Less than 1% of the outstanding Shares of the Fund.
(1) Pursuant to the regulations of the Securities and Exchange Commission
(the "Commission"), shares are deemed to be "beneficially owned" by a
person if such person directly or indirectly has or shares (i) the power
to vote or dispose of such shares, whether or not such person has any
pecuniary interest in such shares, or (ii) the right to acquire the power
to vote or dispose of such shares within 60 days, including any right to
acquire through the exercise of any option, warrant or right.
(2) Includes 94.324 Shares owned jointly by Mr. Mertz and his spouse and
175.749 Shares held in trust for the benefit of their child.
(3) These Shares are held jointly by Mr. Rehr and his spouse.
(4) Mr. Kenneth G. Mertz II is also Vice President of the Fund and Scott L.
Rehr is also President of the Fund.
(5) Includes 5.456 Shares owned jointly by Mr. Moyer and his spouse and
337.293 Shares, in the aggregate, held in trusts for the benefit of their
children.
GENERAL INFORMATION SOLICITATION OF PROXIES
The Fund will request broker/dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the Shares
held of record by such persons. The Fund may reimburse such broker/dealer
firms, custodians, nominees and fiduciaries for their reasonable expense
incurred in connection with such proxy solicitation. In addition to the
solicitation of Proxies by mail, officers of the Fund and employees of Emerald
Advisers, Inc. and its affiliates, without additional compensation, may solicit
Proxies in person or by telephone. The costs associated with such solicitation
and the Special Meeting will be borne by Emerald Advisers, Inc.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not know of any matters to be presented at the Special Meeting
other than those described in this Proxy Statement but should any other matter
requiring a vote of Shareholders arise, the Proxyholder will vote thereon
according to his best judgment in the interests of the Fund.
SHAREHOLDER PROPOSALS
Shareholders desiring to submit a proposal for consideration at a meeting of
shareholders must deliver their proposal to the Fund's investment adviser at
least one hundred and twenty days before such a meeting. As a common law trust,
the Fund is not required to and does not intend to hold annual shareholder
meetings.
<PAGE>
ADVISERS
The names and addresses of the Fund's investment adviser, administrator and
principal underwriter are as follows:
Investment Adviser: Emerald Advisers, Inc., 1857 William Penn Way,
-------------------
Lancaster, Pennsylvania 17605.
Administrator: Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
--------------
53201-0701.
Principal Underwriter: Rafferty Capital Markets, Inc., 550 Mamaroneck
----------------------
Avenue, Harrison, NY 10528.
REPORTS TO SHAREHOLDERS
THE FUND WILL FURNISH TO SHAREHOLDERS, WITHOUT CHARGE AND UPON REQUEST, A COPY
OF THE MOST RECENT ANNUAL REPORT AND A COPY OF THE MOST RECENT SEMI-ANNUAL
REPORT FOLLOWING SUCH ANNUAL REPORT OF ANY FUND. REQUESTS FOR SUCH REPORTS MAY
BE MADE BY WRITING TO THE FUND C/O FIRSTAR TRUST COMPANY, P.O. BOX 701,
MILWAUKEE, WI 53201-0701, OR BY CALLING (800) 232-0224. IN ORDER THAT THE
PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PROMPT EXECUTION AND RETURN
OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees,
/s/ Scott L. Rehr
Scott L. Rehr
President
July 15, 1998
<PAGE>
THE HOMESTATE SELECT OPPORTUNITIES FUND ("FUND")
PROXY SOLICITED BY THE BOARD OF TRUSTEES
By my signature below, I appoint Scott L. Rehr (the "Proxyholder") as my
attorney to vote all Fund shares that I am entitled to vote at the Special
Meeting of Shareholders to be held at the offices of the Fund, 1857 William Penn
Way, Lancaster, PA 17605, on August 31, 1998 at 2:00 p.m., local time, and at
any adjournments or postponements thereof. The Proxyholder may vote my shares,
and he may appoint substitutes to vote my shares on his behalf. I instruct the
Proxyholder to vote this proxy as specified on the reverse side, and I revoke
any previous proxies that I have executed. I acknowledge receipt of the Fund's
Notice of Special Meeting of Shareholders and Proxy Statement.
PLEASE SIGN PROMPTLY
IN THE ENCLOSED ENVELOPE
Date _______________
NOTE: Please sign exactly as your name
appears on this proxy. When signing in a
fiduciary capacity, such as executor,
administrator, trustee, attorney, guardian,
etc., please so indicate. Corporate and
partnership proxies should be signed by an
authorized person indicating the person's
title.
--------------------------------------------
Signature and Title, if applicable
--------------------------------------------
Signature and Title, if applicable
<PAGE>
Please refer to the Proxy Statement discussion of these Proposals. THE PROXY
WILL BE VOTED FOR THE PROPOSALS IF YOU DO NOT SPECIFY OTHERWISE. THE
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PROXYHOLDER WILL VOTE ANY OTHER MATTERS THAT ARISE AT THE MEETING IN ACCORDANCE
WITH HIS BEST JUDGMENT. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING:
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PLEASE VOTE BY CHECKING THE APPROPRIATE BOX BELOW.
FOR AGAINST ABSTAIN
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1. To change the Fund's investment objective to companies prin- [_] [_] [_]
cipally engaged in the banking and financial services industries.
2. To modify the Fund's fundamental restriction on concentration to [_] [_] [_]
provide that the Fund may not invest more than 25% of total assets in
any one industry, except that the Fund shall, under normal conditions,
invest not less than 25% of its total assets in securities of companies
principally engaged in the banking industry and not less than 25% of its
3. To modify the fundamental restriction on portfolio diversification [_] [_] [_]
to provide that the Fund may not 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).
4. To change the name of the Fund to "HomeState Select Banking [_] [_] [_]
and Finance Fund."
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
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