Registration No. 33-51910
811-7160
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X /
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Pre-Effective Amendment No.
Post-Effective Amendment No. 12
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and
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
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Amendment No. 13
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Maplewood Investment Trust (formerly Nottingham Investment Trust)
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(Exact Name of Registrant as Specified in Charter)
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (513)629-2000
John F. Splain, Esq.
312 Walnut Street, 21st Floor
Cincinnati, OH 45202
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
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/ X/ immediately upon filing pursuant to Rule 485(b)
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/ / on ( ) pursuant to Rule 485(b)
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/ / 60 days after filing pursuant to Rule 485(a)
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/ / on ( ) pursuant to Rule 485(a)
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The Registrant has registered an indefinite number of shares under the
Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. The Rule 24f-2 Notice for the
fiscal year ended February 29, 1996 was filed on April 29, 1996.
<PAGE>
MAPLEWOOD INVESTMENT TRUST
Cross-Reference Sheet Pursuant to Rule 495(a)
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Part A Prospectus
Form Item Cross-Reference
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Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary; Synopsis of
Costs and Expenses
Item 3. Condensed Financial Financial Highlights;
Information Dividends, Distributions, Taxes
and Other Information
Item 4. General Description Investment Objective,
of Registrant Investment Policies and Risk
Considerations;Management of the
Fund
Item 5. Management of the Fund Management of the Fund
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Dividends, Distributions,
Distributions, Taxes and Other
Other Securities Information
Item 7. Purchase of Securities How to Purchase Shares;
Being Offered How Shares are Valued;
Distributor and Distribution
Plans; Application
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Pending Legal Proceedings Not Applicable
Statement of
Part B Additional Information
Form Item Cross-Reference
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
<PAGE>
Item 12. General Information Description of the Trust
and History
Item 13. Investment Objectives Investment Objective and
and Policies Policies; Investment Limitations;
Appendix A-Description of
Ratings; Appendix B-Description
of Futures Contracts; Additional
Information on North and South
Carolina
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Trustees and Officers
Principal Holders of
Securities
Item 16. Investment Advisory and Investment Advisor [and Sub-
Other Services Advisor]; Administrator;
Distributor; Other Services;
Distribution Plans Under Rule
12b-1
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock and Description of the Trust
Other Securities
Item 19. Purchase, Redemption Special Shareholder Services;
and Pricing of Services; Additional Purchase
Securities Being and Redemption Information;
Offered How Share Price is Determined
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Distributor
Item 22. Calculation of Calculation of
Performance Data Performance Data
Item 23. Financial Statements Financial Statements and
Reports
<PAGE>
PROSPECTUS
June 20, 1996
AMELIA EARHART: EAGLE EQUITY FUND
==============================================================================
The investment objective of the AMELIA EARHART: EAGLE EQUITY FUND is to seek
capital appreciation by investing primarily in a diversified portfolio of
common stocks and other equity securities issued by companies that are
components of either the Dow Jones Industrial Average or the Pacific Stock
Exchange Technology Index, which is comprised of a broad spectrum of companies
principally engaged in manufacturing or service-related products within the
advanced technology fields. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this Prospectus.
The Fund offers two classes of shares: Class A shares, sold subject to a
maximum 4.5% sales charge and a 12b-1 distribution fee of up to .25% of
average daily net assets, and Class B shares, sold subject to a maximum 5%
contingent deferred sales charge and a 12b-1 distribution fee of up to 1% of
average daily net assets.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
INVESTMENT ADVISOR
AMELIA EARHART CAPITAL MANAGEMENT, INC.
ONE TOWNE SQUARE, SUITE 1913
SOUTHFIELD, MICHIGAN 48076
The Amelia Earhart: Eagle Equity Fund (the "Fund") is a diversified, open-end
series of Maplewood Investment Trust, a registered management investment
company. This Prospectus provides you with the basic information you should
know before investing. You should read it and keep it for future reference.
A Statement of Additional Information, dated June 20, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354,
and its telephone number is 1-800-326-6580. A copy of the Statement of
Additional Information may be obtained at no charge by calling or writing the
Fund.
<PAGE>
TABLE OF CONTENTS
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Prospectus Summary........................................................ 2
Synopsis of Costs and Expenses............................................ 3
Financial Highlights...................................................... 4
Investment Objective, Investment Policies and Risk Considerations......... 5
How to Purchase Shares.................................................... 9
How to Redeem Shares...................................................... 16
How Shares are Valued..................................................... 18
Management of the Fund.................................................... 18
Distributor and Distributions Plans....................................... 19
Dividends, Distributions, Taxes and Other Information..................... 21
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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.
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<PAGE>
PROSPECTUS SUMMARY
==============================================================================
THE FUND. The Amelia Earhart: Eagle Equity Fund (the "Fund") is a diversified,
open-end series of Maplewood Investment Trust, a registered management
investment company commonly known as a "mutual fund." The Fund's investment
objective is to seek capital appreciation. While there is no assurance that
the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment objective,
the Fund will invest primarily in a diversified portfolio of common stocks and
other equity securities issued by companies that are components of either the
Dow Jones Industrial Average or the Pacific Stock Exchange Technology Index.
The Fund may also invest in debt securities. The Fund may invest in limited
amounts in certain securities commonly referred to as "derivative securities,"
including options on portfolio securities and indexes and futures
transactions, which present special risks. The Fund will acquire derivative
securities for hedging purposes only and not for speculation. (See "Investment
Objective, Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. Amelia Earhart Capital Management, Inc. (the "Advisor")
serves as investment advisor to the Fund. For its services, the Advisor
receives compensation of 1% of the average daily net assets of the Fund.
(See "Management of the Fund.")
PURCHASE OF SHARES. Two classes of shares of the Fund are offered in this
Prospectus - Class A and Class B shares. The classification of shares of the
Fund permits an investor to choose the method of purchasing shares that the
investor believes is most beneficial, given the amount of purchase, the length
of time the investor expects to hold the shares, and other relevant
circumstances. Class A shares are offered at net asset value plus a maximum
4.5% front-end sales charge and are subject to 12b-1 distribution fees of up
to .25% of average daily net assets. Class B Shares are offered at net asset
value and are subject to a maximum 5% contingent deferred sales charge and
12b-1 distribution fees of up to 1% of average daily net assets. The front-end
sales charge on Class A shares and the contingent deferred sales charge on
Class B shares may be reduced or eliminated as described in this Prospectus.
Class B shares will convert to Class A shares after eight years from their
date of purchase and will then be subject to the lower distribution fees of
Class A shares. The minimum initial investment for each class of shares is
$2,500 ($2,000 for IRA accounts). (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions of Class A
shares. Redemptions of Class B shares may be subject to a contingent deferred
sales charge as described in this Prospectus. Shares may be redeemed at any
time in which the Fund is open for business at the net asset value next
determined after receipt of a redemption request by the Fund, less any
applicable contingent deferred sales charge. A shareholder who submits written
authorization may redeem shares by telephone. (See "How to Redeem Shares.")
<PAGE>
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is
distributed quarterly. Net capital gains, if any, are distributed annually.
Investors may elect to receive dividends and distributions in cash or the
dividends and distributions may be reinvested in additional Fund shares. (See
"Dividends, Distributions, Taxes and Other Information.")
MANAGEMENT. The Fund is a series of Maplewood Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed MGF Service Corp. (the
"Administrator") to provide administration, accounting and transfer agent
services. (See "Management of the Fund.")
DISTRIBUTOR. Midwest Group Financial Services, Inc. (the "Distributor")
serves as distributor of shares of the Fund. For its services, the Distributor
receives commissions on the sale of Class A shares consisting of the portion
of the front-end sales charge remaining after the discounts it allows to
securities dealers. (See "Distributor and Distribution Plans.")
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
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SHAREHOLDER TRANSACTION EXPENSES:
CLASS A CLASS B
SHARES SHARES
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price)............. 4.50% None
Maximum Contingent Deferred Sales Charge
(As a percentage of original purchase price or
redemption proceeds, whichever is lower)........ None 5.00%
Sales Charge Imposed on Reinvested Dividends...... None None
Redemption Fee.................................... None None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets) CLASS A CLASS B
SHARES SHARES
Management Fees After Waivers(1) .................... .00% .00%
12b-1 Fees(2) ....................................... .25% 1.00%
Other Expenses....................................... 1.65% 1.65%
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Total Fund Operating Expenses After Waivers
and Expense Reimbursements(3) ..................... 1.90% 2.65%
======== =========
(1)Absent waivers of management fees, such fees would have been 1% for the
fiscal year ended February 29, 1996.
(2)Class A shares may incur 12b-1 fees in an amount up to .25% of average net
assets and Class B shares may incur 12b-1 fees in an amount up to 1% of
average net assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by the National
Association of Securities Dealers.
(3)Absent waivers of management fees and expense reimbursements by the
Advisor, total Fund operating expenses would have been 8.53% for Class A
shares for the fiscal year ended February 29, 1996.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return and redemption at the end of the period:
CLASS A CLASS B
SHARES SHARES
1 Year $ 63 $ 67
3 Years 102 102
5 Years 143 141
10 Years 257 280*
You would pay the following expenses on Class B shares on the same $1,000
investment, assuming no redemption at the end of the period:
<PAGE>
CLASS B
SHARES
1 Year $ 27
3 Years 82
5 Years 141
10 Years 280*
*Based on the conversion of Class B shares to Class A shares after eight
years.
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees
and costs of operating the Fund. The Annual Fund Operating Expenses shown
above for Class A shares are based upon actual operating history for the
fiscal year ended February 29, 1996. The Annual Fund Operating Expenses shown
above for Class B shares are based on estimated amounts for the current fiscal
year. THE EXAMPLES SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN
THOSE SHOWN.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
=============================================================================
The following audited financial information has been audited by KPMG Peat
Marwick LLP, independent accountants, whose report covering the fiscal year
ended February 29, 1996 is contained in the Statement of Additional
Information. This information, which pertains only to Class A shares, should
be read in conjunction with the Fund's latest audited annual financial
statements and notes thereto, which are also contained in the Statement of
Additional Information, a copy of which may be obtained at no charge by
calling the Fund.
===================================================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)
<CAPTION>
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YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28,
1996 1995 1994
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<S> <C> <C> <C>
Net asset value, beginning of year.......................... $ 13.44 $ 12.25 $ 10.00
Income (loss) from investment operations(A)
Net investment loss.................................... ( 0.12 ) ( 0.02 ) ( 0.07 )
Net realized and unrealized gain on investments........ 4.20 1.21 2.49
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Total from investment operations..................... 4.08 1.19 2.42
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Distributions to shareholders from
Net investment income.................................. 0.00 0.00 ( 0.12 )
Net realized gain from investment transactions......... ( 0.43 ) 0.00 ( 0.05 )
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Total distributions.................................. ( 0.43 ) 0.00 ( 0.17 )
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Net asset value, end of year................................ $ 17.09 $ 13.44 $ 12.25
================ ============== ==============
Total return................................................ 30.59%(B) 9.66%(B) 24.39% (B)
================ ============== ==============
Ratios/supplemental data
Net assets, end of year..................................... $ 1,781,734 $ 820,139 $ 244,385
================ ============== ==============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees............ 8.53% 21.00% 24.60%
After expense reimbursements and waived fees............. 1.90% 1.86% 1.85%
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees............ ( 7.47% ) ( 19.32% ) ( 23.39% )
After expense reimbursements and waived fees............. ( 0.86% ) ( 0.17% ) ( 0.72% )
Portfolio turnover rate..................................... 63.90% 2.24% 48.39%
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<FN>
(A) Based on weighted average shares outstanding for the period.
(B) Total return does not reflect payment of sales charge.
</FN>
Further information about the performance of the Fund is contained in the
Annual Report, a copy of which can be obtained at no charge by calling the
Fund.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
==============================================================================
The investment objective of the Fund is to seek capital appreciation through a
diversified portfolio of common stocks and other equity-type securities issued
by companies that are components of either the Dow Jones Industrial Average
(the "DJIA") or the Pacific Stock Exchange Technology Index (the "Technology
Index"). Current income is not a factor in selecting investments for the Fund.
Except for periods during which the Advisor deems a temporary defensive
strategy to be warranted, the Fund will invest at least 65% of its total
assets and may invest up to 100% of its total assets in common stocks and
other equity securities of companies included in either the DJIA or the
Technology Index. When selecting securities, the Advisor will, except as
limited below, be limited only by its best judgment as to what will help
achieve the Fund's investment objective. Any investment involves risk, and
there can be no assurance that the Fund will achieve its investment objective.
The investment objective and fundamental investment limitations of the Fund
may not be altered without the prior approval of a majority (as defined by the
Investment Company Act of 1940) of the Fund's shares.
==============================================================================
The Fund may invest in all or a number of the 30 stocks in the DJIA, a
broad-based price-weighted average of the prices of 30 well-known stocks. The
DJIA is composed of 30 common stocks that are chosen by Dow Jones & Company,
Inc. ("Dow Jones") as representative of the broad market and American
industry. The companies represented on the DJIA are major factors in their
industries, and their stocks are widely held by individuals and institutional
investors. The inclusion of a stock in the DJIA in no way implies that Dow
Jones believes the stock to be an attractive investment.
In addition, the Fund may invest in all or a number of the 100 stocks in the
Technology Index. The Technology Index is a broad-based price-weighted average
of 100 stocks representing a broad spectrum of companies principally engaged
in manufacturing or service-related products within the advanced technology
fields. Stocks that are components of either the DJIA or the Technology Index
will be carefully reviewed by the Advisor to assess their growth history and
intrinsic value. The Advisor will select stocks for the Fund based upon its
evaluation of a number of factors, including past growth track record, future
growth projections (with emphasis on 12-month projections as well as 3-to-5
year projections), industry timeliness relative to the current economic cycle
and intrinsic value of the individual stock under consideration.
The Fund is not sponsored, endorsed, sold or promoted by Dow Jones or the
Pacific Stock Exchange. Neither Dow Jones nor the Pacific Stock Exchange makes
any representation or warranty, implied or express, to the purchasers of the
Fund or any member of the public regarding the advisability of investing in
the Fund or the ability of the DJIA or the Technology Index to track general
stock market performance. Neither Dow Jones nor the Pacific Stock Exchange
guarantee the accuracy and/or completeness of the DJIA or the Technology Index
or any data included therein.
<PAGE>
Under normal market conditions, at least 65% of the Fund's total assets will
be invested in equity securities of companies included in either the DJIA or
the Technology Index. The equity securities in which the Fund may invest
include common stock, convertible debentures, preferred stocks and convertible
preferred stocks.
The Fund may also invest in debt securities, primarily Investment- Grade Debt
Securities (described below). The Fund may, when the Advisor deems a more
conservative approach is warranted, invest up to 100% of its assets in
high-quality short-term fixed-income securities as a temporary defensive
measure, although cash or such short-term debt securities (which are
considered as cash equivalents) are normally expected to represent less than
5% of the Fund's net assets. Such short-term debt securities may be used to
invest uncommitted cash balances, to maintain liquidity to meet shareholder
redemptions or for temporary defensive purposes. These short-term debt
securities include obligations of the United States Government and its
agencies or instrumentalities, commercial paper, bank certificates of deposit,
bankers' acceptances and repurchase agreements collateralized by these
securities. The Fund may engage in substantial short-term trading, which
involves significant risk and may be deemed speculative. Such trading will
result in a higher portfolio turnover rate. (See "Portfolio Turnover.")
The Fund may also invest as a temporary defensive measure in debt securities
issued or guaranteed by the United States Government or its agencies or
instrumentalities. These securities include obligations supported by the full
faith and credit of the United States, such as U.S. Treasury obligations and
the obligations of certain agencies, including the Government National
Mortgage Association. The Fund's debt securities may also include government
securities that are backed only by: (i) the right of the issuer to borrow from
the U.S. Treasury, such as one of the Federal Home Loan Banks; (ii) the
discretionary authority of the U.S. Government to purchase such securities,
such as the Federal National Mortgage Association; or (iii) the credit of the
agency or instrumentality itself, such as the Student Loan Marketing
Association. No assurance can be given that the U.S. Government will provide
financial support to U.S. Government agencies or instrumentalities in the
future, other than as set forth above, since it is not obligated to do so by
law. The guarantee of the U.S. Government does not extend to the yield or
value of the Fund's shares.
<PAGE>
INVESTMENT GRADE DEBT SECURITIES. Investment Grade Debt Securities are (i)
convertible bonds and debentures rated in the four highest categories by any
of the nationally recognized statistical rating organizations ("NRSROs"); (ii)
commercial paper rated A-2 or higher by Standard & Poor's Ratings Group; and
(iii) unrated short-term debt securities that are determined by the Advisor to
be of comparable quality. Bonds rated in the four highest categories by any
NRSRO, although considered investment-grade, have speculative characteristics
and may be subject to greater fluctuations in value than higher-rated bonds.
The Fund will not invest in non-Investment Grade Debt Securities if, after
giving effect thereto, more than 5% of the Fund's net assets are held in such
securities. The Fund may invest as a temporary defensive measure in bank
obligations of domestic banks, foreign branches and foreign subsidiaries of
domestic banks, domestic branches of foreign banks, and foreign branches of
foreign banks. The Fund will dispose of debt securities whose rating falls
below "investment grade" within 90 days, or as soon as possible if the
holdings of such non-investment grade debt securities exceeds 5% of net
assets.
OPTIONS ON PORTFOLIO SECURITIES AND INDEXES. The Fund may also, subject to
certain restrictions, purchase and sell put and call options for hedging
purposes (but not for speculation). A put gives the holder (buyer) the right
to sell a security to the writer (seller) at a predetermined price (the
exercise price) on or before a set date (the expiration date). The buyer pays
a premium to the writer for the right to sell the underlying shares at the
exercise price instead of at the then prevailing market price. A call option
gives the holder (buyer) the right to purchase a security at a specified price
(the exercise price) at any time before a certain date (the expiration date).
The writer receives a premium (less a commission) for writing the option. This
premium would partially or completely offset any decline in price. The Fund
may also purchase or sell put and call stock index options for hedging
purposes (but not for speculation). A stock index option generally operates
like an option covering specific securities, except that delivery of cash
rather than the underlying securities is made. A stock index option obligates
the seller (writer) to deliver, and gives the holder (buyer) the right to take
delivery of, cash upon exercise of the option in an amount equal to the
difference between the exercise settlement value of the underlying index on
the day the option is exercised and the exercise price of the option,
multiplied by the specified index "multiplier." The stock index will fluctuate
based on changes in the market values of the stocks included in the index. The
Fund will set aside permissible liquid assets in a segregated account to
secure its potential obligations under its option positions, and such account
will include only cash, U.S. Government Securities and other liquid high-grade
debt securities.
<PAGE>
The Fund's ability to use index options transactions successfully depends upon
the degree of correlation between the index on which the option is written and
the securities that the Fund owns or the market position that it intends to
acquire; the liquidity of the market for options, which cannot be assured; and
the Advisor's skill in predicting the movement of stock indices and
implementing options transactions in furtherance of the Fund's investment
objective. Successful use by the Fund of stock index options will depend
primarily on the Advisor's ability to correctly predict movements in the
direction of the stock markets. This skill is different from the skills and
expertise needed to predict changes in the prices of individual stocks. If the
Advisor forecasts incorrectly the movement of interest rates, market values
and other economic factors, the Fund would be better off without using this
hedging technique. The Fund will write (sell) stock index options for hedging
purposes or to close out positions in stock index options that the Fund has
purchased. The Fund may only write (sell) "covered" options. For example, the
Fund may cover a call option on a stock index by having a portfolio of
securities that approximately correlates with the stock index to which the
option relates. Risks associated with options transactions generally,
including options on futures discussed below, include possible loss of entire
premium and the inability to effect closing transactions at favorable prices.
Brokerage commissions associated with buying and selling operations are
proportionately higher than those associated with general securities
transactions. Additional information concerning the Fund's options
transactions and the associated risks is contained in the Statement of
Additional Information. Investments in options are subject to certain
restrictions. See "Investment Limitations."
<PAGE>
FUTURES TRANSACTIONS. The Fund may also, subject to certain restrictions,
invest in interest rate futures contracts and index futures contracts for
hedging purposes (but not for speculation). Interest rate futures contracts
are contracts for the future delivery of debt securities, such as U.S.
Treasury bonds, U.S. Treasury bills, U.S. Treasury notes, Government National
Mortgage Association modified pass-through mortgage-backed securities, 90-day
commercial paper, bank certificates of deposit, and Eurodollar certificates of
deposit. Index futures contracts are contracts in which the parties agree to
take or make delivery of an amount of cash equal to the difference between the
value of the index at the close of the last trading day of the contract and
the price at which the futures contact was originally written. The Fund may
also write call options and purchase put options on interest rate and index
futures contracts and enter into closing transactions with respect to these
options. These investment practices involve risks that are different in some
respects from the investment risks associated with similar funds that do not
engage in these activities. The correlation between changes in prices of
futures contracts and of the securities being hedged can be only approximate.
A decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may fail due to unexpected market behavior or
interest rate trends. Because of low margin deposits required, futures trading
involves an extremely high degree of leverage. A relatively small price
movement in futures contracts may result in immediate and substantial gain or
loss to the investor. Therefore, a purchase or sale of a futures contract may
result in gains or losses in excess of the amount initially invested in the
futures contract. Since most United States futures exchanges limit the amount
of fluctuation permitted in futures contract prices during a single trading
day, the Fund may not be able to close a futures contract at a favorable
price. Investments in futures are subject to certain restrictions. See
"Investment Limitations."
<PAGE>
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
other high-grade debt securities subject to repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an
agreed upon future date. The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate earned by the Fund
effective for the period of time during which the repurchase agreement is in
effect. Delivery pursuant to the resale typically will occur within one to
five days of the purchase. For purposes of the Investment Company Act of 1940
(the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the securities subject to the repurchase agreement. The Fund
will not enter into a repurchase agreement which will cause more than 5% of
its assets to be invested in repurchase agreements which extend beyond seven
days and other illiquid securities.
INVESTMENT COMPANIES. In order to achieve its investment objective, the Fund
may invest in the securities of open-end investment companies which are
generally authorized to invest in securities eligible for purchase by the
Fund. To the extent the Fund does so, Fund shareholders would indirectly pay a
portion of the operating costs of the underlying investment companies. These
costs include management, brokerage, shareholder servicing and other
operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly. The Fund will only invest in other investment companies by purchase
of such securities on the open market where no commission or profit to a
sponsor or dealer results from the purchase other than the customary broker's
commissions or when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition. The Advisor will waive its advisory fee for
that portion of the Fund's assets invested in other investment companies,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
The Fund may invest up to 10% of its total assets in securities of other
investment companies. In addition, the Fund will not invest more than 5% of
its total assets in securities of any single investment company, nor will it
purchase more than 3% of the outstanding voting securities of any investment
company.
SHORT SELLING "AGAINST THE BOX." The Fund may engage in short selling "against
the box" for hedging purposes (but not for speculation). This involves a
"short" sale (i.e., the sale of securities borrowed from another person) in
anticipation of a decline in the market price for such securities, while at
the same time the short seller also owns the same securities. The owned
securities are left untouched and thus if their price rises the short seller
is able to cover his borrowed position without buying at the higher price. As
a hedging device, short selling against the box also limits the risk of a
decline in value for the owned securities, since any loss in value would be
offset by a profit on the short sale.
LENDING OF SECURITIES. The Fund may lend its investment securities to
qualified institutional investors for the purpose of realizing income. Loans
of securities by the Fund will be collateralized by cash, letters of credit,
or securities issued or guaranteed by the U.S. Government or its agencies. The
collateral will equal at least 100% of the current market value of the loaned
securities, and such loans may not exceed 30% of the value of the Fund's
securities. As with any extension of credit, there are risks of delay in
recovery and loss of rights in the collateral should the borrower of the
security fail financially. See "Additional Investment Limitations" in the
Statement of Additional Information.
<PAGE>
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its
investment objective. To the extent that a major portion of the Fund's
portfolio is invested in equity securities, it may be expected that its net
asset value will be subject to greater fluctuation than a portfolio containing
mostly fixed-income securities. The U.S. stock market tends to be cyclical
with periods when stock prices generally rise and periods when prices
generally decline. The Fund may invest in small and medium-capitalization
stocks contained in the Technology Index. Small-capitalization stocks are
generally classified as having an aggregate market value of between $30
million and $500 million, while medium-capitalization stocks are classified as
having an aggregate market value of between $500 million and $1 billion.
Historically, medium and small-market capitalization stocks have been more
volatile in price than the large-capitalization stocks. Among the reasons for
the greater price volatility of these securities are the less certain growth
prospects of smaller firms, the lower degree of liquidity in the markets for
such stocks, and the greater sensitivity of small and medium-sized companies
to changing economic conditions. Besides exhibiting greater volatility, small
and medium company stocks may, to a degree, fluctuate independently of larger
company stocks. Small and medium company stocks may decline in price as large
company stocks rise, or rise in price as large company stocks decline.
The Fund is also subject to "industry risk," which is the possibility that a
particular group of related stocks will decline in price due to
industry-specific developments. The industry-specific risks of the Fund are
that the earnings prospects of technology companies, which are components of
the Technology Index, may be particularly uncertain or volatile. These
companies may have limited product lines, markets or financial resources, or
they may be dependent upon a small management group. The products and services
offered by technology companies may not prove to be commercially successful or
may be rendered obsolete by advances in science and technology. Hence,
technology-related stocks may exhibit relatively high price volatility and a
high degree of risk.
<PAGE>
PORTFOLIO TURNOVER. The Fund may engage in substantial short-term trading in
order to take advantage of new investment opportunities. The Fund's annual
portfolio turnover generally is not expected to exceed 200%. The degree of
portfolio activity affects the brokerage costs of the Fund and may have an
impact on the amount of taxable distributions to shareholders. Such turnover
rate is likely to increase in the future, particularly when the Fund reaches
the appropriate size to utilize the more involved hedging strategies described
above. The portfolio turnover of the Fund for the fiscal year ended February
29, 1996 was 64%.
BORROWING. The Fund may borrow from a bank but only for temporary or emergency
purposes, up to 5% of its total assets. To the extent the Fund borrows for
these purposes, the effects of market price fluctuations on portfolio net
asset value will be exaggerated. If, while such borrowing is in effect, the
value of the Fund's assets declines, the Fund would be forced to liquidate
portfolio securities when it is disadvantageous to do so. The Fund would incur
interest and other transaction costs in connection with such borrowing.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at
a future date beyond customary settlement time. The Fund is required to hold
and maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient
to meet the purchase price. This requirement must be met unless the Fund
enters into offsetting contracts for the forward sale of other securities it
owns. Purchasing securities on a when-issued or forward commitment basis
involves a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in value of the Fund's other assets. In addition, no income accrues to the
purchaser of when-issued securities during the period prior to issuance.
Although the Fund would generally purchase securities on a when-issued or
forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward
commitment prior to settlement if the Advisor deems it appropriate to do so.
The Fund may realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to
risk, the Fund has adopted certain investment limitations. The Fund will not:
(1) borrow money, except from banks for temporary or emergency purposes, and
not for investment leveraging, provided that borrowing in the aggregate may
not exceed 5% of the value of its total assets (including the amount borrowed)
at the time of such borrowing; (2) invest more than 5% of its net assets in
restricted securities, illiquid securities, or other securities without
readily available market quotations; (3) purchase securities, other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, of any issuer having a record, together with its
predecessors, of less than three years continuous operation, if immediately
after such purchase more than 5% of the value of its total assets would be
invested in such securities; (4) with respect to 75% of the Fund's total
assets, purchase any securities, other than obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, if, immediately
after such purchase, more than 5% of the value of its total assets would be
invested in securities of any one issuer, or more than 10% of the outstanding
securities of one issuer would be owned by the Fund (for this purpose all
indebtedness of an issuer shall be deemed a single class of security); (5)
purchase or sell put or call options on stocks if the total of such
investments exceeds 5% of its total assets and the aggregate value of the
underlying stock exceeds 25% of the Fund's total assets; and (6) enter into
futures contracts or related options if more than 30% of its total assets
would be represented by futures contracts or more than 5% of its total assets
would be committed to initial margins and premiums on futures and related
options. These investment limitations are deemed fundamental, that is, they
may not be changed without shareholder approval. See "Investment Limitations"
in the Fund's Statement of Additional Information for a complete list of
investment limitations.
<PAGE>
If the Board of Trustees determines that the Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment
limitation, the Board can make such change without shareholder approval and
will disclose any such material changes in its Prospectus. Any limitation that
is not specified in the Fund's Prospectus or Statement of Additional
Information as being fundamental is nonfundamental. If a percentage limitation
is satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in the value of the Fund's portfolio
securities will not constitute a violation of such limitation. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
<PAGE>
HOW TO PURCHASE SHARES
==============================================================================
Assistance in opening accounts may be obtained from the Administrator by
calling 1-800-326-6580, or by writing to the Fund at the address shown below
for regular mail orders. Assistance is also available through any
broker-dealer authorized to sell shares of the Fund. Such broker-dealer may
charge you a fee for its services. Payment for shares purchased may be made
through your account at the broker-dealer processing your application and
order to purchase. Your investment will purchase shares at the next determined
public offering price (net asset value plus any applicable sales charge) after
your order is received by the Fund in proper form as indicated herein. The
minimum initial investment in the Fund is $2,500 ($2,000 for IRAs). The Fund
may, in the Advisor's sole discretion, accept certain accounts with less than
the stated minimum initial investment.
==============================================================================
Payment must be made by check or money order drawn on a U.S. bank and payable
in U.S. dollars. All orders received by the Administrator, whether by mail,
bank wire or facsimile order, prior to 4:00 p.m. Eastern time will purchase
shares at the next determined public offering price on that business day. If
your order is not received by 4:00 p.m. Eastern time, your order will purchase
shares at the public offering price determined on the next business day.
Broker-dealers are responsible for transmitting properly completed orders so
that they will be received by 4:00 p.m. Eastern time.
Under certain circumstances, the Advisor, in its sole discretion, may allow
payment in kind for Fund shares purchased by accepting securities in lieu of
cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for more information on purchases in kind.
Due to Internal Revenue Service ("IRS") regulations, the Fund is required to,
and will, withhold taxes on all distributions and redemption proceeds without
social security or tax identification numbers, if the number is not delivered
to the Fund within 60 days. If, however, you have already applied for a social
security or tax identification number at the time of completing your account
application, the application should so indicate.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating
to the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by
the Fund or the Administrator in the transaction.
<PAGE>
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
Amelia Earhart: Eagle Equity Fund, and mail it to:
Amelia Earhart: Eagle Equity Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish
a new account or add to an existing account by wire, please call the Fund, at
1-800-326-6580, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and
accurate handling of your investment. Please have your bank use the following
wiring instructions to purchase by wire:
The Fifth Third Bank
ABA# 04200314
For Maplewood Investment Trust #999-36756
For the Amelia Earhart: Eagle Equity Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. Once your wire
is sent you should, as soon as possible thereafter, complete and mail your
Account Application to the Fund as described under "Regular Mail Orders,"
above. Investors should be aware that some banks may impose a wire service
fee.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. Before
making additional investments by bank wire, please call the Fund at
1-800-326-6580 to alert the Fund that your wire is to be sent. Follow the wire
instructions above to send your wire. When calling for any reason, please have
your account number ready, if known. Mail orders should include, when
possible, the "Invest by Mail" stub which is attached to your Fund
confirmation statement. Otherwise, be sure to identify your account in your
letter.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bimonthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum), which will be automatically invested in
shares at net asset value or the public offering price, whichever is
applicable, on or about the fifteenth day and/or the last business day of the
month. The investor may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
<PAGE>
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
CHOOSING BETWEEN CLASSES OF SHARES Class A shares are sold at net asset value
plus the applicable front-end sales charge. This front-end sales charge may
be reduced or eliminated in some cases. Class A shares are subject to 12b-1
fees at an annual rate not to exceed .25% of the average daily net assets of
such shares. Class B shares are sold at net asset value but may be subject
to a contingent deferred sales charge. A deferred sales charge is imposed if
Class B shares are redeemed within five years of initial purchase. The
deferred sales charge imposed upon the redemption of Class B shares decreases
over time. Class B shares are subject to 12b-1 fees at an annual rate not to
exceed 1% of the average daily net assets of such shares. If the maximum
amount of 12b-1 fees for Class A and Class B shares are imposed on such
shares, Class B shares will have higher operating expenses and will pay
lower dividends than Class A shares of the Fund.
Eight years after the date of purchase, Class B shares will automatically
convert to Class A shares. The purpose of the conversion is to relieve the
holders of Class B shares of the higher operating expenses charged to Class B
shares. The conversion from Class B shares to Class A shares will take place
at the net asset value of each class of shares at the time of the conversion.
Upon such conversion, an investor would hold Class A shares subject to the
operating expenses for Class A shares discussed above. Upon each conversion of
Class B shares that were not acquired through reinvestment of dividends or
distributions, a proportionate amount of Class B shares that were acquired
through reinvestment of dividends or distributions will likewise automatically
convert to Class A shares.
Classification of shares of the Fund is intended to permit each investor to
choose the method of purchasing shares that is most beneficial given the
amount of purchase, the length of time the investor expects to hold the shares
and other relevant circumstances. Investors should determine whether under
their particular circumstances it is more advantageous to incur an initial
front-end sales charge or to have the entire purchase price invested in the
Fund with the investment thereafter being subject to a contingent deferred
sales charge and higher ongoing distribution fees. Before deciding between
Class A and Class B shares of the Fund, an investor should carefully consider
the amount and intended length of his investment. Specifically, an investor
should consider whether the accumulated distribution fees and the contingent
deferred sales charge applicable to Class B shares would be less than the
front-end sales charge and accumulated distribution fees applicable to Class A
shares purchased at the same time and held for the same period, and the extent
to which the difference between those amounts would be offset by the higher
returns associated with Class A shares. Because the operating expenses of
Class B shares are greater than those of Class A shares, the dividends on
Class A shares will be higher than the dividends on Class B shares. However,
since a front-end sales charge is deducted at the time of purchase of Class A
shares, not all of the purchase amount will purchase Class A shares.
Consequently, the same initial investment will purchase more Class B shares
than Class A shares.
<PAGE>
Because of reductions in the front-end sales charge for purchases of Class A
shares aggregating $100,000 or more, it may be advantageous for investors
purchasing large quantities of shares to purchase Class A shares. Similar
sales charge reductions are not available with respect to the contingent
deferred sales charge imposed in connection with Class B shares. In any event,
the Fund will not accept any purchase order for $500,000 or more of Class B
shares. In addition, because the accumulated higher operating expenses of
Class B shares may eventually exceed the amount of the front-end sales charge
and distribution fees associated with Class A shares, investors who intend to
hold their shares for an extended period of time should consider purchasing
Class A shares.
Investors who would qualify for a reduction in the front-end sales charge for
purchases of Class A shares may decide that it is more advantageous to have
the entire purchase amount invested immediately in Class B shares
notwithstanding the higher operating expenses associated with Class B shares.
These higher operating expenses may be offset by any return an investor
receives from the additional shares received as a result of not having to pay
a front-end sales charge. However, investors should understand that the Fund's
future return cannot be predicted, and that there is no assurance that such
return, if any, would compensate for the higher operating expenses associated
with Class B shares. Class B shares will convert into Class A shares
automatically after a conversion period of eight years, and thereafter
investors will be subject to lower ongoing distribution fees. Investors in
Class B shares should take into account whether they intend to redeem their
shares within the five year period during which the contingent deferred sales
charge will be imposed.
The Advisor currently expects to pay sales commissions to dealers at the time
of sale of up to 4.5% of the purchase price of the Class B shares sold by such
dealer. An additional 0.5% of the purchase price of such shares will be paid
by the Advisor to the Distributor. The Advisor will use its own funds or funds
facilitated by the Advisor (which may be borrowed or otherwise financed) to
pay such sales commission.
CLASS A SHARES
Class A shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
front-end sales charge as shown in the following table. The Distributor
receives the sales charge and may reallow it in the form of dealer discounts
as follows:
SALES CHARGE DEALER
AS % OF: REALLOWANCE
NET PUBLIC AS % OF
AMOUNT OFFERING PUBLIC OFFERING
AMOUNT OF INVESTMENT INVESTED PRICE PRICE
Less than $100,000 4.71% 4.50% 4.00%
$100,000 but less than $250,000 3.63 3.50 3.00
$250,000 but less than $500,000 2.56 2.50 2.00
$500,000 or more None None None
<PAGE>
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts from the Distributor may
reallow all or a portion of such dealer discounts to other dealers or brokers.
The dealer discounts shown above apply to all dealers who have agreements with
the Distributor.
REDUCED SALES CHARGES FOR CLASS A SHARES. An investor may purchase Class A
shares at a reduced sales charge or without a sales charge by purchasing
shares through one of the methods described below.
RIGHT OF ACCUMULATION. Pursuant to the right of accumulation, investors are
permitted to purchase Class A shares at the public offering price applicable
to the total of (a) the total public offering price of the Class A shares of
the Fund then being purchased plus (b) an amount equal to the then current net
asset value of the purchaser's current holdings of Fund shares. To receive the
applicable public offering price pursuant to the right of accumulation,
investors must, at the time of purchase, provide sufficient information to
permit confirmation of qualification. The right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.
LETTERS OF INTENT. Investors in Class A shares may qualify for a lower sales
charge by executing a letter of intent. A letter of intent allows an investor
to purchase Class A shares of the Fund over a 13 month period at reduced sales
charges based on the total amount intended to be purchased plus an amount
equal to the then current net asset value of the purchaser's current holdings
of Fund shares. Thus, a letter of intent permits an investor to establish a
total investment goal to be achieved by any number of purchases over a 13
month period. Each investment made during the period receives the reduced
sales charge applicable to the total amount of the intended investment.
The letter of intent does not obligate the investor to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the
period, the investor must pay the difference between the sales charge
applicable to the purchases made and the charges previously paid. If such
difference is not paid by the investor, the Administrator is authorized by the
investor to liquidate a sufficient number of shares held by the investor to
pay the amount due. On the initial purchase of shares, if required (or
subsequent purchases, if necessary), shares equal to at least 5% of the amount
indicated in the letter of intent will be held in escrow during the 13 month
period (while remaining registered in the name of the investor) for this
purpose. The value of any shares redeemed or otherwise disposed of by the
investor prior to termination or completion of the letter of intent will be
deducted from the total purchases made under such letter of intent.
<PAGE>
A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales
charge). The 13 month period would then begin on the date of the first
purchase during the 90-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the letter of intent. Investors must
notify the Administrator whenever a purchase is being made pursuant to a
letter of intent.
Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Application
contained in this Prospectus or is otherwise available from the Administrator.
The letter of intent option may be modified or eliminated at any time or from
time to time by the Trust without notice.
REINVESTMENT. Investors may reinvest proceeds from a redemption of Class A
shares, without a sales charge, in Class A shares of the Fund. The amount that
may be so reinvested may not exceed the amount of the redemption proceeds, and
a written order for the purchase of such shares must be received by the
Administrator within 90 days after the effective date of the redemption.
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number
of shares purchased by reinvestment and the period of time that has elapsed
after the redemption, although for tax purposes the amount disallowed is added
to the cost of the shares acquired upon the reinvestment.
PURCHASES BY RELATED PARTIES AND GROUPS. Reductions in sales charges apply to
purchases by a single "person," including an individual, members of a family
unit, consisting of a husband, wife and children under the age of 21
purchasing securities for their own account, or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate.
Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of this
paragraph, a qualified group consists of a "company," as defined in the 1940
Act, which has been in existence for more than six months and which has a
primary purpose other than acquiring shares of the Fund at a reduced sales
charge, and the "related parties" of such company. For purposes of this
paragraph, a "related party" of a company is: (i) any individual or other
company that directly or indirectly owns, controls, or has the power to vote
5% or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls, or
has the power to vote 5% or more of its outstanding voting securities; (iii)
any other company under common control with such company; (iv) any executive
officer, director or partner of such company or of a related party; and (v)
any partnership of which such company is a partner.
<PAGE>
SALES AT NET ASSET VALUE. The Fund may sell Class A shares at a purchase price
equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund and the Advisor, and
to employees and principals of related organizations and their families, and
certain parties related thereto, including clients and related accounts of the
Advisor. Clients of investment advisors and financial planners may also
purchase Class A shares of the Fund at net asset value if their investment
advisor or financial planner has made arrangements to permit them to do so
with the Distributor. The public offering price of Class A shares of the Fund
may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal
holding company or a public or private investment company.
CLASS B SHARES
Class B shares are sold at net asset value and are subject to a contingent
deferred sales charge at the rates set forth in the chart below if they are
redeemed within five years of their date of purchase. Class B shares are sold
without a front-end sales charge so that the Fund will receive the full amount
of the investor's purchase payment. Dealers, however, will receive commissions
from the Advisor in connection with sales of Class B shares. These
commissions, which will be paid from the Advisor's own funds, may be different
than the reallowances paid to dealers in connection with sales of Class A
shares.
Proceeds from the contingent deferred sales charge and the distribution fees
payable under the Fund's Class B Plan (up to 1% of the Class B shares' average
net assets) will be paid to the Advisor and are used in whole or in part by
the Advisor to defray the expenses of dealers and sales personnel related to
providing distribution-related expenses to the Fund in connection with the
sale of Class B shares, such as the payment of commissions to dealers and
sales personnel for selling Class B shares. The combination of the contingent
deferred sales charge and the ongoing distribution fees facilitates the
ability of the Fund to sell the Class B shares without a front-end sales
charge. After eight years from their date of purchase, Class B shares will
convert automatically into Class A shares of the Fund, which are subject to
lower distribution fees.
CONTINGENT DEFERRED SALES CHARGES. A contingent deferred sales charge ("CDSC")
applies if a redemption of Class B shares is made during the five years since
the purchase of such shares. The charge declines from 5% to zero over a five
year period. The CDSC will be deducted from the redemption proceeds and will
reduce the amount paid to the redeeming investor. A CDSC will be applied to
the lesser of the original purchase price or the current value of the shares
being redeemed. Accordingly, no CDSC will be imposed on increases in net asset
value above the initial purchase price. In addition, no CDSC will be imposed
on shares issued through reinvested dividends or capital gains distributions.
<PAGE>
The amount of the CDSC, if any, will vary depending on the number of years
from the time of initial purchase of Class B shares until the time the shares
are redeemed in accordance with the following schedule.
CONTINGENT DEFERRED SALES
YEARS SINCE PURCHASE CHARGE AS A PERCENTAGE
PAYMENT MADE OF DOLLAR AMOUNT
First 5.00%
Second 4.00
Third 3.00
Fourth 2.00
Fifth 1.00
Sixth and Thereafter None
In determining whether a CDSC is applicable to a redemption, the calculation
will be determined in the manner that results in the lowest applicable rate
being charged. Therefore, it will be assumed that the redemption is first of
shares held for over five years or shares acquired pursuant to reinvestment of
dividends or distributions and then of shares held longest during the
five-year period. The charge will not be applied to dollar amounts
representing an increase in net asset value since the time of purchase.
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the third year after purchase, the net
asset value per share is $12 and, during such time, the investor has acquired
10 additional shares upon dividend reinvestment. If at such time the investor
makes his first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to the deferred sales charge because of dividend reinvestment. With
respect to the remaining 40 shares, the deferred sales charge is applied only
to the original cost of $10 per share and not to the increase in net asset
value of $2 per share. Therefore, $400 of the $600 redemption proceeds will be
charged at a rate of 3% (the applicable rate in the third year after
purchase).
CONTINGENT DEFERRED SALES CHARGE WAIVERS. The Fund offers the following waiver
policies, which are designed to eliminate the CDSC when an investor's state of
affairs unexpectedly changes or under the other limited circumstances
described below. For the waiver to become effective, the investor or
investor's estate must meet all the conditions of the waiver policy. Please
note that additional documentation may be required depending on the policy
requirements.
1. DEATH. The CDSC is waived when death occurs on an individual account if the
beneficiary redeems all or part of the investment within one year of death. A
letter of instruction to redeem from the estate administrator must accompany a
certified certificate of death and a copy of the instrument appointing the
administrator. Class B shares transferred to a beneficiary's account retain
the same CDSC status as the original account.
<PAGE>
Death of fewer than all shareholders in a joint account will not qualify a
Class B share redemption for the waiver at any time during the period in which
the CDSC applies. The remaining shareholder(s) retain the same CDSC status had
the death not occurred.
2. DISABILITY. The CDSC is waived when an individual becomes disabled at any
age. Disability is defined using the definition contained in the Internal
Revenue Code. A person is generally considered disabled if he cannot do any
substantial gainful activity (comparable to what he engaged in prior his
disability) because of any physical or mental impairment. A physician must
determine that the impairment is expected to continue for a long and
indefinite period or to result in death. Qualifying Class B shares must be
redeemed within one year of the initial disability. Subsequent disabling
events may extend the one year redemption period if the disability is separate
and distinct from the initial qualifying disability. The following
documentation is required: A letter of instruction to redeem must accompany a
copy of Social Security Administration Schedule R or a notarized letter from
the shareholder's physician describing the nature of the disability, the date
of onset, and a statement that the disability is semi-permanent or expected to
result in death.
3. SYSTEMATIC WITHDRAWAL. The CDSC is waived when a shareholder chooses
to systematically redeem Class B shares. See "Systematic Withdrawal Plan"
below. A letter of instruction or Systematic Withdrawal Plan must be sent to
the Administrator.
4. MINIMUM REQUIRED DISTRIBUTIONS. The CDSC is waived in connection with
distributions from IRA, 403(b)(7), and qualified employee benefit plan
accounts due to the shareholders reaching age 701/2.
5. INVOLUNTARY REDEMPTIONS. The CDSC is waived in connection with
involuntary redemptions of Class B shares in accounts with low balances as
described in "How to Redeem Shares" below.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES. After eight years (the
"Conversion Period"), Class B shares will be converted automatically into
Class A shares of the Fund. Class A shares are subject to lower distribution
fees. Automatic conversion of Class B shares into Class A shares will occur
eight years after the purchase of Class B shares (the "Conversion Date") on
the basis of the relative net asset value of the shares of the two classes on
the Conversion Date, without the imposition of any sales charge or any other
fee. Conversion of Class B shares to Class A shares will not be deemed a
purchase or sale of the shares for federal income tax purposes.
<PAGE>
In addition, purchases of Class B shares through the reinvestment of dividends
also will convert automatically to Class A shares. The Conversion Date for
dividend reinvestment shares will be calculated taking into account the length
of time the shares underlying such dividend reinvestment shares were
outstanding. If at a Conversion Date the conversion of Class B shares to Class
A shares of the Fund in a single account will result in less that $50 worth of
Class B shares being left in the account, all of the Class B shares of the
Fund held in the account on the Conversion Date will be converted to Class A
shares of the Fund.
HOW TO REDEEM SHARES
=============================================================================
Shares of the Fund may be redeemed on each day that the Fund is open for
business. The Fund is open for business on each day the New York Stock
Exchange (the "Exchange") is open for business. Any redemption may be for more
or less than the purchase price of your shares depending on the market value
of the Fund's portfolio securities. All redemption orders received in proper
form, as indicated herein, by the Administrator prior to 4:00 p.m. Eastern
time will redeem shares at the net asset value determined as of that business
day's close of trading, less any applicable contingent deferred sales charge
for Class B shares. Otherwise, your order will redeem shares on the next
business day. There is no charge for redemptions from the Fund other than the
contingent deferred sales charge imposed on certain redemptions of Class B
shares. You may also redeem your shares through a broker-dealer or other
institution which may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $2,500 (due to redemptions, exchanges or
transfers, but not due to market action) upon 30 days' written notice. If the
shareholder brings his account value up to $2,500 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans
may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-326-6580, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to the Amelia
Earhart: Eagle Equity Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your
request for redemption must include:
1) your letter of instruction specifying the account number, and the
number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which
they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships,
pension or profit sharing plans, and other organizations.
<PAGE>
Your redemption proceeds will be mailed to you within three business days
after receipt of your redemption request. However, the Fund may delay
forwarding a redemption check for recently purchased shares while it
determines whether the purchase payment will be honored. Such delay (which may
take up to 15 days) may be reduced or avoided if the purchase is made by wire
transfer. In such cases, the net asset value next determined after receipt of
the request for redemption will be used in processing the redemption and your
redemption proceeds will be mailed to you upon clearance of your check to
purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading
on the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
to fairly determine the value of its assets, and (iii) for such other periods
as the Commission may permit.
TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option
of redeeming shares by telephone under certain limited conditions. You may
redeem shares, subject to the procedures outlined below, by calling the Fund
at 1-800-326-6580. The Fund will redeem shares when requested by telephone if,
and only if, the shareholder confirms redemption instructions in writing. The
Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX # 513-629-2901). The confirmation instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder;
4) Shareholder signature as it appears on the application then on file
with the Fund; and
5) Any required signature guarantees (see "Signature
Guarantees").
In such cases, the net asset value used in processing the redemption will be
the net asset value next determined after the telephone request is received.
Proceeds from the redemption of Class B shares will be reduced by the amount
of any applicable contingent deferred sales charge imposed on such shares.
Redemption proceeds will not be remitted until written confirmation of the
redemption request is received. You can choose to have redemption proceeds
mailed to you at your address of record, your bank, or to any other authorized
person, or you can have the proceeds sent by bank wire to your bank ($1,000
minimum). Shares of the Fund may not be redeemed by wire on days in which your
bank is not open for business. Redemption proceeds will only be sent to the
bank account or person named in your Account Application currently on file
with the Fund. You can change your redemption instructions anytime you wish by
filing a letter including your new redemption instructions with the Fund. (See
"Signature Guarantees.")
<PAGE>
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any shareholder or all shareholders, without notice, if the
Trustees believe it to be in the best interest of the shareholders to do so.
During drastic economic and market changes, telephone redemption privileges
may be difficult to implement.
Neither the Trust, the Administrator, nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The affected investors will bear the risk of any such loss. The
Trust or the Administrator, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Trust and/or the
Administrator do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon thirty days' written
notice, to make reasonable charges for wire redemptions. All charges will be
deducted from your account by redemption of shares in your account. Your bank
or brokerage firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
SYSTEMATIC WITHDRAWAL PLAN. An investor who owns shares of the Fund valued at
$5,000 or more at the current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount of
not less than $50. Each month or quarter as specified, the Fund will
automatically redeem sufficient shares from your account to meet the specified
withdrawal amount. The investor may establish this service whether dividends
and distributions are reinvested or paid in cash. Systematic withdrawals may
be deposited directly to the investor's bank account by completing the
applicable section on the Account Application form accompanying this
Prospectus, or by calling or writing the Fund. See the Statement of Additional
Information for further details.
<PAGE>
The amount of regular periodic payments specified by holders of Class B shares
pursuant to a Systematic Withdrawal Plan will be reduced by any applicable
contingent deferred sales charge, unless the shareholder qualifies for a
waiver of such charge under the circumstances described in "How To Purchase
Shares - Contingent Deferred Sales Charge Waivers" above. Because of the
effects of this deferred sales charge, the maintenance of a Systematic
Withdrawal Plan may be disadvantageous for holders of Class B shares unless
the shareholder qualifies for such waiver.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your
account. Signature guarantees are required for (1) change of registration
requests, and (2) requests to establish or change redemption services other
than through your initial account application, and (3) requests for
redemptions in excess of $25,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union, registered broker-dealer or a member firm of a U.S. Stock
Exchange, and must appear on the written request for redemption or change of
registration.
HOW SHARES ARE VALUED
=============================================================================
The net asset value of Class B shares and the public offering price (net asset
value plus applicable sales charge) of Class A shares of the Fund is
determined on each business day that the Exchange is open for trading, as of
the close of the Exchange (currently 4:00 p.m., Eastern time). Net asset value
per share is determined by dividing the total value of all Fund securities
(valued at market value) and other assets, less liabilities, by the total
number of shares then outstanding. Net asset value includes interest on
fixed-income securities, which is accrued daily. The net asset value of each
class of shares will be affected by the expenses accrued and payable by such
class. Because certain expenses such as distribution fees are attributable
solely to one class of shares, the net income attributable to and the
dividends payable by each class of shares will differ from one another. See
the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale
price, if available, otherwise, at the last quoted bid price. Securities
traded on a securities exchange are valued based upon the closing price on the
valuation date on the principal exchange where the security is traded.
Securities that are listed on an exchange and which are not traded on the
valuation date are valued at the mean of the bid and asked prices. Securities
in which market quotations are not readily available may be valued on the
basis of prices provided by an independent pricing service, when such prices
are believed to reflect the fair market value of such securities. Securities
and other assets for which no quotations are readily available will be valued
in good faith at fair value using methods determined by the Board of Trustees.
<PAGE>
MANAGEMENT OF THE FUND
=============================================================================
The Fund is a diversified series of Maplewood Investment Trust (the "Trust"),
an investment company organized as a Massachusetts business trust in 1992,
which was formerly known as The Nottingham Investment Trust. The Board of
Trustees has overall responsibility for management of the Fund under the laws
of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Amelia
Earhart Capital Management, Inc. (the "Advisor") provides the Fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement with the Trust. The
Advisor is also responsible for the selection of broker-dealers through which
the Fund executes portfolio transactions, subject to brokerage policies
established by the Trustees.
The Advisor is controlled by Sandra J. Seligman, Scott J. Seligman and
Jill H. Travis. The Advisor's portfolio manager has been rendering
investment counsel, utilizing investment strategies similar to that of
the Fund, to other institutions and clients since 1977. The Advisor's
address is One Towne Square, 26100 Northwestern Highway, Suite 1913,
Southfield, Michigan 48076.
Jill H. Travis, President and Chief Executive Officer of the Advisor, is
primarily responsible for the day-to-day management of the Fund's portfolio
and has been managing the Fund since its inception. Ms. Travis also serves as
portfolio manager of the Regional Opportunity Fund, another series of the
Trust and has been managing that fund since November 1995. Since 1991, Ms.
Travis has been a self-employed certified financial planner and business
consultant. In 1991 she was Senior Vice President of Huntington Banks.
Under the Investment Advisory Agreement with the Fund, the Advisor receives a
monthly management fee equal to an annual rate of 1% of the average daily net
assets of the Fund. Although the investment advisory fee is higher than that
paid by most other investment companies, the Board of Trustees believes the
fee to be comparable to advisory fees paid by many funds having similar
objectives and policies. The Advisor may periodically voluntarily waive or
reduce its advisory fee to increase the performance of the Fund.
<PAGE>
The Advisor currently intends to waive its investment advisory fees and
reimburse the Fund for expenses to the extent necessary to limit total
operating expenses (exclusive of interest, taxes, brokerage commissions, sales
charges and extraordinary expenses) to 1.90% per annum of Class A shares'
average daily net assets and 2.65% per annum of Class B shares' average daily
net assets. However, there is no assurance that any voluntary fee waivers or
expense reimbursements will continue in the current or future fiscal years,
and expenses may therefore exceed 1.90% and 2.65% of the average daily net
assets of Class A shares and Class B shares, respectively.
ADMINISTRATOR. The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying agent
and shareholder service agent. The Administrator is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange Commission and state
securities authorities. The Fund pays the Administrator a fee for these
administrative services at the annual rate of .15% of the average value of its
daily net assets up to $50 million, .125% of the next $50 million of such
assets and .1% of such assets in excess of $100 million.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives a monthly fee of $3,000 for calculating daily net
asset value per share and maintaining such books and records as are necessary
to enable it to perform its duties. The Administrator also charges the Fund
for certain costs involved with the daily valuation of investment securities
and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank. The
Custodian's mailing address is 38 Fountain Square Plaza, Cincinnati, Ohio
45263. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income, disperses monies at the Fund's
request and maintains records in connection with its duties.
<PAGE>
OTHER EXPENSES. The Fund is responsible for the payment of all of its
operating expenses. These include the fees payable to the Advisor, or expenses
otherwise incurred in connection with the management of the investment of the
Fund's assets, the fees and expenses of the Custodian, the fees and expenses
of the Administrator, the fees and expenses of Trustees, outside auditing and
legal expenses, all taxes and corporate fees payable by the Fund, registration
fees, state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders,
costs of shareholder reports and shareholder meetings, and any extraordinary
expenses. The Fund also pays for brokerage commissions and transfer taxes (if
any) in connection with the purchase and sale of portfolio securities.
Expenses attributable to a particular series of the Trust, including the Fund,
will be charged to that series, and expenses not readily identifiable as
belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular class
of shares of the Fund will be borne solely by such class.
BROKERAGE. In selecting broker-dealers through which to execute brokerage
transactions for the Fund, the Advisor attempts to obtain the best execution
for all such transactions. If it is believed that more than one broker is able
to provide the best execution, the Advisor will consider the receipt of
quotations and other market services, receipt of research, statistical and
other data and the sale of shares of the Fund in selecting a broker. The
Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker. The Statement of Additional Information contains more information
about the management and brokerage practices of the Fund.
DISTRIBUTOR AND DISTRIBUTION PLANS
=============================================================================
Midwest Group Financial Services, Inc., 312 Walnut Street, Cincinnati, Ohio
45202 (the "Distributor"), is the national distributor for the Fund under an
Underwriting Agreement with the Trust. The Distributor may sell Fund shares to
or through qualified securities dealers or others. The Distributor is a
subsidiary of Leshner Financial, Inc. Robert G. Dorsey, Treasurer of the
Distributor, is Vice President of the Trust. John F. Splain is Secretary of
both the Distributor and the Trust.
The Trust has adopted a Distribution Plan for Class A shares of the Fund (the
"Class A Plan") and a Distribution Plan for Class B shares of the Fund (the
"Class B Plan") (collectively, the "Plans") pursuant to Rule 12b-1 under the
1940 Act. Under the Class A Plan the Fund may reimburse any expenditures to
finance any activity primarily intended to result in the sale of Class A
shares or the servicing of shareholder accounts, including, but not limited
to, the following: (i) payments to the Distributor, securities dealers, and
others for the sale of Class A shares; (ii) payment of compensation to and
expenses of personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the
Administrator or Custodian; and (iii) formulation and implementation of
marketing and promotional activities. Expenditures by the Fund pursuant to the
Class A Plan are accrued based on average daily net assets and may not exceed
.25% of the Class A shares' average net assets for each year elapsed
subsequent to the adoption of the Class A Plan.
<PAGE>
Under the Class B Plan, the Fund may reimburse any expenditures to finance any
activity primarily intended to result in the sale of Class B shares or the
servicing of shareholder accounts, including, but not limited to the
following: (i) payments to the Advisor, securities dealers and others for the
sale of Class B shares or the servicing of Class B shareholder accounts,
including payments used to pay for or finance sales commissions and other fees
payable to dealers and others who may sell Class B shares or service accounts
of Class B shareholders; (ii) payment of compensation to and expenses of
personnel who engage in or support distribution of shares or who render
shareholder support services not otherwise provided by the Administrator or
Custodian; and (iii) formulation and implementation of marketing and
promotional activities. Expenditures by the Fund pursuant to the Class B Plan
are accrued based on average daily net assets and may not exceed 1% of the
Class B shares' average net assets for each year elapsed subsequent to the
adoption of the Class B Plan. Such expenditures paid as service fees to any
person who sells Class B shares of the Fund may not exceed .25% of the average
daily net assets of Class B shares; such expenditures paid as distribution
fees for distribution-related activities as an asset-based sales charge under
the Class B Plan may not exceed .75% of the average daily net assets of Class
B shares.
The distribution fees payable under the Class B Plan are designed to permit an
investor to purchase Class B shares through dealers without the assessment of
a front-end sales charge and at the same time to permit the dealer to
compensate its personnel in connection with the sale of Class B shares. In
this regard, the purpose and function of the ongoing distribution fees and the
deferred sales charge are the same as those of the initial sales charge with
respect to the Class A shares in that the distribution fees and the contingent
deferred sales charges provide for the financing of the distribution of Class
B shares.
During the fiscal year ended February 29, 1996, Class A shares incurred $3,556
in expenses under the Class A Plan.
In addition to the payments by the Fund pursuant to the Plans for distribution
fees, dealers and other service organizations may charge their clients
additional fees for account services. Customers who are beneficial owners of
shares of the Fund should read this Prospectus in light of the terms and fees
governing their accounts with dealers or other service organizations.
The National Association of Securities Dealers, in its Rules of Fair Practice,
places certain limitations on asset-based sales charges of mutual funds. These
Rules require fund-level accounting in which all sales charges - front-end
charge, 12b-1 fees or contingent deferred charge - terminate when a percentage
of gross sales is reached. Expenditures paid as shareholder servicing fees
under the Plans which are limited to .25% of average daily net assets of each
class are not included in the limit. If in any month the Distributor expends
more monies than are immediately payable under the Plans because of the
percentage limitations described above (or, due to any expense limitation
imposed on the Fund, monies otherwise payable by the Fund to the Distributor
under the Plans are rendered uncollectible), the unpaid expenditures may be
"carried forward" from month to month until such time, if ever, as they may be
paid. In addition, payments to service organizations (which may include the
Distributor, the Advisor, and their affiliates) are not tied directly to the
organizations' own out-of-pocket expenses and therefore may be used as they
elect (including, for example, to defray their overhead expenses).
<PAGE>
Amounts accrued by each class under the Plans in one year but which are not
actually paid in that year, may be paid in subsequent years. Amounts not
accrued by each class under the Plans during a year may not be carried forward
to subsequent years. The Plans may not be amended to increase materially the
amount to be spent under the Plans without shareholder approval. The
continuation of the Plans must be approved annually by the Board of Trustees.
At least quarterly the Board of Trustees will review a written report of
amounts expended pursuant to the Plans and the purposes for which such
expenditures were made.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
=============================================================================
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general
and, particularly, with respect to dividends and distributions and other
matters. The discussion herein of the federal income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently,
investors should seek qualified tax advice.
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed
to them. The Fund intends to declare dividends, if any, quarterly and will
distribute any net short-term or long-term capital gains derived from the sale
of securities at the end of its fiscal year. In addition, the Fund may make a
supplemental distribution of capital gains annually in December. The nature
and amount of all dividends and distributions will be identified separately
when tax information is distributed by the Fund at the end of each year. The
Fund intends to withhold 30% on taxable dividends and any other payments that
are subject to such withholding and are made to persons who are neither
citizens nor residents of the U.S.
<PAGE>
There is no fixed dividend rate, and there can be no assurance as to the
payment of any dividends or the realization of any gains. All dividends and
capital gains distributions are reinvested in additional shares of the Fund
unless the shareholder requests in writing to receive dividends and/or capital
gains distributions in cash. That request must be received by the Fund prior
to the record date to be effective as to the next dividend. Tax consequences
to shareholders of dividends and distributions are the same if received in
cash or if received in additional shares of the Fund.
No gain or loss will be recognized by Class B investors on the conversion of
their Class B shares into Class A shares. An investor's basis in the Class A
shares acquired will be the same as such investor's basis in the Class B
shares converted, and the holding period of the acquired Class A shares will
include the holding period of the converted Class B shares.
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to
qualify. For a more detailed discussion of the tax status of the Fund, see
"Additional Tax Information" in the Statement of Additional Information.
DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business
trust on August 12, 1992 under a Declaration of Trust. The Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into
one or more classes of shares. A description of the authorized series of
shares of the Trust and classes of such series is contained in the Statement
of Additional Information. Pursuant to its authority under the Declaration of
Trust, the Board of Trustees has authorized the issuance of two classes of
shares (Class A shares and Class B shares) representing equal pro rata
interests in the Fund, except the classes bear different sales charges and
expenses that reflect the differences in services provided to them.
When issued, the shares of each series of the Trust, including the Fund, will
be fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder
meetings for purposes such as changing fundamental policies or electing
Trustees. The Board of Trustees shall promptly call a meeting for the purpose
of electing or removing Trustees when requested in writing to do so by the
record holders of at least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian
or by votes cast in person or by proxy at a meeting called for that purpose.
<PAGE>
Shareholders of the Trust will vote in the aggregate and not by series (fund)
or class, except as otherwise required by the 1940 Act or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of the shareholders of a particular series or class. Matters affecting an
individual series, such as the Fund, include, but are not limited to, the
investment objectives, policies and restrictions of that series. Shares have
no subscription, preemptive or conversion rights. Share certificates will not
be issued. Each share is entitled to one vote (and fractional shares are
entitled to proportionate fractional votes) on all matters submitted for a
vote, and shares have equal voting rights except that only shares of a
particular series or class are entitled to vote on matters affecting only that
series or class. Shares do not have cumulative voting rights. Therefore, the
holders of more than 50% of the aggregate number of shares of all series of
the Trust may elect all the Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of
the Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust
and its shares.
REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders annual
reports which have been audited by the Trust's independent accountants and
semiannual reports which are unaudited. In addition, the Administrator will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares
owned and any dividends or distributions paid.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate
future performance. Total return and yield are computed separately for Class A
and Class B shares. The yield is expected to be higher for Class A shares due
to the higher distribution fees imposed on Class B shares.
The "total return" of the Fund refers to the average annual compounded rates
of return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged
to all shareholder accounts and deducts all nonrecurring charges at the end of
each period, including any contingent deferred sales charge that would be
applicable to a complete redemption of the investment at the end of the
specified period. The calculation further assumes the deduction of the current
maximum sales charge from the initial investment. If the Fund has been
operating less than 1, 5 or 10 years, the time period during which the Fund
has been operating is substituted.
<PAGE>
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same
or different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents a cumulative change in value of an investment in the Fund for
various periods.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses
of the Fund all recurring fees that are charged to all shareholder accounts
and any nonrecurring charges for the period stated.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
INVESTMENT ADVISOR
Amelia Earhart Capital Management, Inc.
One Towne Square
26100 Northwestern Highway, Suite 1913
Southfield, Michigan 48076
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-543-8721
DISTRIBUTOR
Midwest Group Financial Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
BOARD OF TRUSTEES
John P. Boone
Jack E. Brinson
O. James Peterson III
Christopher J. Smith
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
AMELIA EARHART: EAGLE EQUITY FUND
PROSPECTUS
June 20, 1996
AMELIA EARHART:
EAGLE EQUITY FUND
Supplement to Prospectus dated June 20, 1996
The prospectus dated June 20, 1996 of the Amelia Earhart: Eagle Equity
Fund (the Fund) is amended to add the following:
Class B Shares of the Fund will not be available for purchase in your
State until further notice from the Fund. Until such time, investors desiring
to invest in the Fund should purchase Class A Shares.
Please contact the Advisor at (810) 351-4856 to determine if B Shares are
available in your state.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND ACCOUNT NO. _________
ACCOUNT APPLICATION (check appropriate share class) (For Fund Use Only)
o CLASS A SHARES (W7) $_________________
Please mail account application to:
Amelia Earhart: Eagle Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
FOR BROKER/DEALER USE ONLY
Firm Name:________________________________
Home Office Address: _____________________
Branch Address: __________________________
Rep Name & No.: __________________________
Rep Signature: ___________________________
Initial Investment of $_____________ ($2,500 minimum, $2,000 minimum for IRAs)
o Check or draft enclosed payable to the Amelia Earhart: Eagle Equity Fund.
o Bank Wire From: __________________________________________________________
ACCOUNT NAME S.S. #/TAX L.D.#
- - ----------------------------------------------- -----------------------------
Name of Individual, Corporation, Organization, (In case of custodial account
or Minor, etc. minor's S.S.#)
- - ----------------------------------------------- Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other -------------------
ADDRESS PHONE
- - ----------------------------------------------- ( )----------------------
Street or P.O. Box Business Phone
- - ----------------------------------------------- ( )----------------------
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust
o Custodial o Non-Profit o Other
Occupation and Employer Name/Address -----------------------------------------
Are you an associated person of an NASD member? o Yes o No
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. Check
box if appropriate:
o I am exempt from backup withholding under the provisions of section
3406(a)(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends;
or the Internal Revenue Service has notified me that I am no longer
subject to backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option -- Income distributions and short term capital
gains distributions paid in cash, long term capital gains
distributions reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions
paid in cash.
REDUCED SALES CHARGES (CLASS A SHARES ONLY)
RIGHT OF ACCUMULATION: I apply for Right of Accumulation subject to the
Agent's confirmation of the following holdings of the Amelia Earhart:
Eagle Equity Fund.
ACCOUNT NUMBER/NAME ACCOUNT NUMBER/NAME
- - ------------------------------------- -------------------------------------
- - ------------------------------------- -------------------------------------
LETTER OF INTENT: (Complete the Right of Accumulation section if related
accounts are being applied to your Letter of Intent.)
o l agree to the Letter of Intent in the current Prospectus of the Amelia
Earhart: Eagle Equity Fund. 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 ______________________ 19 _______ (Purchase Date of not
more than 90 days prior to this Letter) an aggregate amount in the Fund at
least equal to (check appropriate box):
o $100,000 o $250,000 o $500,000
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints MGF Service Corp. as his agent to enter orders for shares, to receive
dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption
shares held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor. The
investor further agrees that MGF Service Corp. can cease to act as such agent
upon ten days' notice in writing to the investor at the address contained in
this Application. The investor hereby ratifies any instructions given pursuant
to this Application and for himself and his successors and assigns does hereby
release MGF Service Corp., the Amelia Earhart: Eagle Equity Fund, Midwest
Group Financial Services, Inc., and their respective officers, employees,
agents and affiliates from any and all liability in the performance of the
acts instructed herein provided that such entities have exercised due care to
determine that the instructions are genuine. The Internal Revenue Service does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
- - ------------------------------------- -------------------------------------
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
- - ------------------------------------- -------------------------------------
Title of Corporate Officer, Date
Trustee, etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE.
UNLESS OTHERWISE SPECIFIED, EACH JOINT OWNER SHALL HAVE FULL
AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
AUTOMATIC INVESTMENT PLAN (COMPLETE FOR INVESTMENTS INTO THE FUND)
<PAGE>
The Automatic Investment Plan is available for all established accounts of the
Amelia Earhart: Eagle Equity Fund. There is no charge for this service, and it
offers the convenience of automatic investing on a regular basis. The minimum
investment is $50.00 per month. For an account that is opened by using this
Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be
discontinued by the shareholder at any time.
Please invest $ __________ per month in the Amelia Earhart: Eagle Equity Fund.
- - --------------------------------------
Name of Financial Institution (FI)
- - --------------------------------------
City State
X --------------------------------------
(Signature of Depositor EXACTLY as it appears on FI Records)
X --------------------------------------
(Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please
sign exactly as signature appears on your FI's records.)
ABA Routing Number ---------------------------
FI Account Number ----------------------------
o Checking Account o Savings Account
Please make my automatic investment on:
o the last business day of each month
o the 15th day of each month
o both the 15th and last business day
PLEASE ATTACH A VOIDED CHECK FOR THE AUTOMATIC INVESTMENT PLAN.
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which MGF Service Corp.
("MGF") has put into effect, by which amounts, determined by your depositor,
payable to the Amelia Earhart: Eagle Equity Fund, for purchase of shares of
said Fund, are collected by MGF, MGF hereby agrees:
MGF will indemnify and hold you harmless from any liability to any person
or persons whatsoever arising out of the payment by you of any amount drawn by
the Fund to its own order on the account of your depositor or from any
liability to any person whatsoever arising out of the dishonor by you whether
with or without cause or intentionally or inadvertently, of any such checks.
MGF will defend, at its own cost and expense, any action which might be
brought against you by any person or persons whatsoever because of your
actions taken pursuant to the foregoing request or in any manner arising by
reason of your participation in this arrangement. MGF will refund to you any
amount erroneously paid by you to the Fund on any such check if the claim for
the amount of such erroneous payment is made by you within six (6) months from
the date of such erroneous payment; your participation in this arrangement and
that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
AUTOMATIC WITHDRAWAL PLAN (COMPLETE FOR WITHDRAWALS FROM THE FUND)
This is an authorization for you to withdraw $_________ from my mutual fund
account beginning the last business day of the month of __________________.
Please Indicate Withdrawal Schedule (Check One):
o MONTHLY--Withdrawals will be made on the last business day of each month.
o QUARTERLY--Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
o ANNUALLY--Please make withdrawals on the last business day of the month of:
___________.
Please Select Payment Method (Check One):
o CHECK: Please mail a check for my withdrawal proceeds to the mailing address
on this account.
o ACH TRANSFER: Please send my withdrawal proceeds via ACH transfer to my
bank checking or savings account as indicated below. I understand that the
transfer will be completed in two to three business days and that there is
no charge.
o BANK WIRE: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
PLEASE ATTACH A VOIDED
CHECK FOR ACH OR BANK WIRE
- - ------------------------------------ ------------------------------------
Bank Name Bank Address
- - ------------------------------------ ------------------------------------
Bank ABA# Account # Account Name
o SEND TO SPECIAL PAYEE (OTHER THAN APPLICANT): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee_________________________________________________________________
Please send to:_______________________________________________________________
Street address City State Zip
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder
of the Amelia Earhart: Eagle Equity Fund (the Fund) and that
- - ------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf
of the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the
Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is
authorized to sign any documents necessary or appropriate to appoint MGF
Service Corp. as redemption agent of the corporation or organization for
shares of the Fund, to establish or acknowledge terms and conditions governing
the redemption of said shares and to otherwise implement the privileges
elected on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
- - ------------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of______________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on ___________________
at which a quorum was present and acting throughout, and that the same are now
in full force and effect. I further certify that the following is (are) duly
elected officer(s) of the corporation or organization, authorized to act in
accordance with the foregoing resolutions.
NAME TITLE
- - ------------------------------------- -------------------------------------
- - ------------------------------------- -------------------------------------
- - ------------------------------------- -------------------------------------
Witness my hand and seal of the corporation or organization this___________day
of_______________________________________, 19_______
- - ------------------------------------- -------------------------------------
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
PROSPECTUS
June 20, 1996
THE
CAROLINASFUND
- - ------------------------------------------------------------------------------
The investment objective of THE CAROLINASFUND is to provide long-term capital
growth by investing primarily in common stocks of publicly-traded companies
headquartered in North and South Carolina. While there is no assurance that
the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus.
The Fund offers two classes of shares: Investor Shares, which are sold subject
to a maximum 3.5% sales charge and a 12b-1 distribution fee of up to .50% of
average daily net assets, and Institutional Shares, which are not subject to a
sales charge or a 12b-1 distribution fee, but are available only to
institutional investors. Such institutions include banks and trust companies,
savings institutions, corporations, investment bankers and brokers, insurance
companies, pension funds, employee benefit plans and educational, religious
and charitable institutions.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
INVESTMENT ADVISOR
Morehead Capital Advisors LLC
1712 East Boulevard
Charlotte, North Carolina 28203
The CarolinasFund (the "Fund") is a non-diversified, open-end series of
Maplewood Investment Trust (the "Trust"), a registered management investment
company. This Prospectus provides you with the basic information you should
know before investing. You should read it and keep it for future reference.
A Statement of Additional Information, dated June 20, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354,
and its telephone number is 1-800-934-1012. A copy of the Statement of
Additional Information may be obtained at no charge by calling or writing the
Fund.
<PAGE>
TABLE OF CONTENTS
============================================================================
PROSPECTUS SUMMARY..........................................................
SYNOPSIS OF COSTS AND EXPENSES..............................................
FINANCIAL HIGHLIGHTS........................................................
INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS....................................................
HOW TO PURCHASE SHARES.......................................................
HOW TO REDEEM SHARES.........................................................
HOW SHARES ARE VALUED........................................................
MANAGEMENT OF THE FUND.......................................................
DISTRIBUTOR AND DISTRIBUTION PLAN.............................................
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION..........................
- - ----------------------------------------------------------------------------
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>
PROSPECTUS SUMMARY
THE FUND. The CarolinasFund (the "Fund") is a non-diversified, open-end series
of Maplewood Investment Trust (the "Trust"), a registered management
investment company commonly known as a "mutual fund." The Fund's investment
objective is to provide long-term capital growth. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment
objective, the Fund will invest primarily in common stocks of
publicly-traded companies headquartered in North and South Carolina.
Realization of current income is not a significant investment
consideration and any income realized will be incidental to the Fund's
objective. (See "Investment Objective, Investment Policies and Risk
Considerations.")
INVESTMENT ADVISOR. Morehead Capital Advisors LLC (the "Advisor")
serves as investment advisor to the Fund. For its services, the
Advisor receives compensation of 1% of the average daily net assets of
the Fund. (See "Management of the Fund.")
PURCHASE OF SHARES. Two classes of shares of the Fund are offered in this
Prospectus - Investor Shares and Institutional Shares. Investor Shares are
offered to the general public at net asset value plus a maximum 3.5% sales
charge and are subject to 12b-1 distribution fees of up to .50% of average
daily net assets. Investor Shares may be purchased at reduced sales charges or
with no sales charge through purchases described in "How to Purchase Shares"
in this Prospectus. Institutional Shares are offered to institutional
investors at net asset value without a sales charge and are not subject to
12b-1 distribution fees. The minimum initial investment for each class of
shares is $2,500 ($1,000 for IRA accounts). (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions.
Shares may be redeemed at any time in which the Fund is open for
business at the net asset value next determined after receipt of a
redemption request by the Fund. A shareholder who submits written
authorization may redeem shares by telephone. (See "How to Redeem
Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is
distributed quarterly. Net capital gains, if any, are distributed
annually. Shareholders may elect to receive dividends and
distributions in cash or the dividends and distributions may be
reinvested in additional Fund shares. (see "Dividends, Distributions,
Taxes and Other Information.")
- 2 -
<PAGE>
MANAGEMENT. The Fund is a series of Maplewood Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall
management of the Trust and the Fund. The Trust has employed MGF
Service Corp. (the "Administrator") to provide administration,
accounting and transfer agent services. (See "Management of the
Fund.")
DISTRIBUTOR. Midwest Group Financial Services, Inc. (the
"Distributor") serves as distributor of shares of the Fund. For its
services, the Distributor receives commissions on the sale of Investor
Shares consisting of the portion of the sales charge remaining after
the discounts it allows to securities dealers. (See "Distributor and
Distribution Plan.")
- 3 -
<PAGE>
<TABLE>
SYNOPSIS OF COSTS AND EXPENSES
<CAPTION>
INVESTOR INSTITUTIONAL
SHARES SHARES
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price) 3.50% None
Deferred Sales Charge None None
Sales Charge Imposed on Reinvested Dividends None None
Redemption Fee None None
<CAPTION>
INVESTOR INSTITUTIONAL
SHARES SHARES
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
<S> <C> <C>
Management Fees After Waivers(1) .00% .00%
12b-1 Fees(2) .50% None
Other Expenses 1.75% 1.75%
----- -----
Total Fund Operating Expenses After Waivers
and Expense Reimbursements(3) 2.25% 1.75%
===== =====
<FN>
(1) Absent waivers of management fees, such fees would have been
1% for the fiscal period ended February 29, 1996.
(2) Investor Shares may incur 12b-1 fees in an amount up to .50%
of Investor Shares' average net assets. Long-term
shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National
Association of Securities Dealers.
(3) Absent waivers of management fees and expense reimbursements
by the Advisor, total Fund operating expenses would have been
9.45% and 8.40% for Investor Shares and Institutional Shares,
respectively, for the fiscal period ended February 29, 1996.
</FN>
<FN>
EXAMPLE: You would pay the following expenses on a $1,000 investment,
whether or not you redeem at the end of the period, assuming 5% annual
return:
INVESTOR SHARES INSTITUTIONAL SHARES
--------------- --------------------
1 Year $ 57 $ 18
3 Years 103 55
5 Years 151 95
10 Years 284 206
</FN>
<FN>
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees
and costs of operating the Fund. The Annual Fund Operating Expenses shown
above are based on estimated amounts for the current fiscal year. THE EXAMPLE
SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
</FN>
</TABLE>
- 4 -
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
The following audited financial information has been audited by KPMG Peat
Marwick LLP, independent accountants, whose report covering the fiscal year
ended February 29, 1996 is contained in the Statement of Additional
Information. This information should be read in conjunction with the Fund's
latest audited annual financial statements and notes thereto, which are also
contained in the Statement of Additional Information, a copy of which may be
obtained at no charge by calling the Fund.
(For a Share Outstanding Throughout the Period)
<CAPTION>
INVESTOR INVESTOR INSTITUTIONAL
CLASS CLASS CLASS
For the For the
period from period from
January 3, 1995 May 22, 1995
Year (commencement of (commencement of
Ended operations) to operations)to
February 29, February 28, February 29,
1996 1995 1996
<S> <C> <C> <C>
Net asset value, beginning of
period $10.54 $10.00 $10.72
Income from investment operations
Net investment income 0.01(a) 0.04 0.02
Net realized and unrealized
gain on investments 1.95 0.50 1.88
-------- --------- ------
Total from Investment
operations 1.96 0.54 1.90
-------- --------- ------
Distributions to shareholders from
Net investment income (0.03) 0.00 (0.02)
Net realized gain from
investment transactions (0.03) 0.00 (0.03)
-------- -------- ------
Total distributions (0.06) 0.00 (0.05)
-------- -------- ------
Net asset value, end of period $12.44 $10.54 $12.57
======== ======== ======
Total return 18.59% (b) 5.40%(d) 17.68%(c)
======== ======== =======
Ratios/supplemental data
Net assets, end of period $1,897,814 $272,383 $24,576
========== ======== =======
Ratio of expenses to average net assets
Before expense reimbursements
and waived fees 9.45% 37.10%(e) 8.40%(e)
After expense reimbursements
and waived fees 2.17% 2.21%(e) 1.69%(e)
Ratio of net investment income (loss)
to average net assets
Before expense reimbursements
and waived fees (7.21)% (32.27)%(e) (6.07)%(e)
After expense reimbursements
and waived fees 0.06% 2.62%(e) 0.64% (e)
Portfolio turnover rate 16.35% 0.00% 16.35%
- 5 -
<PAGE>
<FN>
(a) Calculation based upon average shares outstanding for the year.
(b) Total return does not reflect payment of a sales charge.
(c) Annualized total return is 23.44%.
(d) Total return does not reflect payment of a sales charge. Annualized
total return was 35.02%.
(e) Annualized.
Further information about the performance of the Fund is contained in the
Annual Report, a copy of which can be obtained at no charge by calling the
Fund.
</FN>
</TABLE>
- 6 -
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide long-term capital growth by
investing primarily in common stocks of publicly-traded companies
headquartered in North and South Carolina ("Carolina Securities"). Realization
of current income will not be a significant investment consideration, and any
such income realized should be considered incidental to the Fund's objective.
Any investment involves risk, and there can be no assurance that the Fund will
achieve its investment objective. The investment objective and fundamental
investment limitations of the Fund may not be altered without the prior
approval of a majority (as defined by the Investment Company Act of 1940) of
the Fund's shares.
The Advisor believes that the demographic and economic characteristics of
North and South Carolina, including population, employment, retail sales,
personal income, bank loans, bank deposits and residential construction are
such that many companies headquartered in the two states have a greater than
average potential for capital appreciation.
INVESTMENT SELECTION. Under normal market conditions, not less than 90% of the
Fund's total assets will be invested in Carolina Securities. The Advisor will
generally focus on common stocks and other equity securities of large
companies headquartered in North and South Carolina. The Fund will generally
remain fully invested at all times. The Advisor intends to limit portfolio
turnover in the Fund, believing that a long-term rather than a short-term
selection of investments is preferable.
Under normal market conditions, the Advisor will generally select Carolina
Securities from the top 50 publicly-traded companies in North and South
Carolina based on market capitalization. Companies will be included in the
Fund according to their market capitalization (number of common shares times
market price). Using this approach, the number of shares purchased by the Fund
in any company, from the largest down, is determined by its market
capitalization. This "indexing" approach enables the Fund to limit the
percentage of larger companies purchased while "overweighting" the stock of
mid and small-cap companies. Companies may periodically move in and out of the
Fund based on changes in market capitalization. The stock allocations in the
Fund are adjusted quarterly, which means the amount of securities purchased in
each company depends on its performance. Companies may move up, down, or out
of the Fund depending on their performance. Stocks are generally purchased for
the long-term, using the Advisor's buy and hold strategy.
The equity securities in which the Fund may invest include common stock,
convertible preferred stock, straight preferred stock and investment grade
convertible bonds. The Fund may also invest up to 5% of its net assets in
warrants or rights to acquire equity securities other than those acquired in
units or attached to other securities. (See "Investment Limitations.")
- 7 -
<PAGE>
The Fund's concentration in companies headquartered in North and South
Carolina generally will tie the performance of the Fund to the economic
environment of the two states and the surrounding area. The economies of the
two states are based historically on agriculture and textiles. Today, they
also embrace banking, varied service sectors, technology and manufacturing.
There is no assurance that the demographic and economic characteristics and
other factors that the Advisor believes favor companies in North and South
Carolina will continue in the future. The prices of stocks of smaller
companies generally are more volatile than those of larger or more mature
companies, their securities are generally less liquid, and they are more
likely to be negatively affected by adverse economic or market conditions.
Moreover, because of its concentration, the Fund's portfolio may be invested
in a smaller number of companies than a general equity mutual fund. This may
result in investments by the Fund in a smaller number of industry sectors.
These limitations may also restrict the Advisor from using certain traditional
analytical measures employed to select investments and also exclude some
strategies that could offer superior performance or reduce fluctuations in the
values of such assets.
Under normal market conditions, at least 90% of the Fund's total assets will
be invested in equity securities. Warrants and rights will be excluded for
purposes of this calculation. As a temporary defensive measure, however, the
Fund may invest up to 100% of its total assets in investment grade bonds, U.S.
Government Securities, repurchase agreements or money market instruments. When
the Fund invests its assets in investment grade bonds, U.S. Government
Securities or money market instruments as a temporary defensive measure, it is
not pursuing its stated investment objective.
U.S. GOVERNMENT SECURITIES. The Fund may invest a portion of its assets in
U.S. Government Securities. "U.S. Government Securities" include U.S.
Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association as well as obligations of U.S. Government authorities, agencies
and instrumentalities such as Federal National Mortgage Association, Federal
Home Loan Mortgage Corporation, Federal Farm Credit Bank, Federal Home Loan
Bank, Resolution Funding Corporation, Financing Corporation, Tennessee
Valley Authority and Student Loan Marketing Association. U.S. Government
Securities may be acquired subject to repurchase agreements. While
obligations of some U.S. Government sponsored entities are supported by the
full faith and credit of the U.S. Government, several are supported by the
right of the issuer to borrow from the U.S. Government, and still others are
supported only by the credit of the issuer itself. The guarantee of the
U.S. Government does not extend to the yield or value of the U.S. Government
Securities held by the Fund or to the Fund's shares.
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes when the Advisor believes that unusually volatile
or unstable economic and market conditions exist. When the Fund assumes a
temporary defensive posture, it may invest up to 100% of its net assets in
money market instruments. Under normal circumstances, money market instruments
will typically represent a portion of the Fund's portfolio, as funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio
securities and to provide for shareholder redemptions
- 8 -
<PAGE>
and operational expenses of the Fund. Money market instruments mature in
thirteen months or less from the date of purchase and include U.S. Government
Securities (defined above) and corporate debt securities (including those
subject to repurchase agreements), bankers' acceptances and certificates of
deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master notes). At the time of purchase, money market
instruments will have a short-term rating in one of the two highest categories
from any nationally recognized statistical rating organization ("NRSRO") or,
if not rated, of equivalent quality in the Advisor's opinion. See the
Statement of Additional Information for a further description of money market
instruments.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
other high-grade debt securities subject to repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an
agreed upon future date. The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate earned by the Fund
effective for the period of time during which the repurchase agreement is in
effect. Delivery pursuant to the resale typically will occur within one to
five days of the purchase. For purposes of the Investment Company Act of 1940
(the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the securities subject to the repurchase agreement. The Fund
will not enter into a repurchase agreement which will cause more than 10% of
its assets to be invested in repurchase agreements which extend beyond seven
days and other illiquid securities.
REAL ESTATE SECURITIES. The Fund may not invest in real estate (including
limited partnership interests), but may invest in readily marketable
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein. The Fund may also invest in
readily marketable interests in real estate investment trusts ("REITs"). REITs
are generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity. Although the
Fund is not limited in the amount of REITs it may acquire, the Fund does not
presently intend to invest more than 5% of its net assets in REITs.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its
investment objective. To the extent that the major portion of the Fund's
portfolio consists of common stocks and other equity securities, it may be
expected that its net asset value will be subject to greater fluctuation than
a portfolio containing mostly fixed income securities. The Fund is a
non-diversified fund and therefore may invest more than 5% of its total assets
in the securities of one or more issuers. However, because the Fund employs a
weighted index formula to the investment selection, there will never be more
than 3% allocated to the securities of any issuer. Because a relatively high
percentage of the assets of the Fund may be invested in the securities of a
limited number of issuers, the value of shares of the Fund
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may be more sensitive to any single economic, business, political or
regulatory occurrence than the value of shares of a diversified investment
company. The Fund may borrow only under certain limited conditions
(including to meet redemption requests), but not to purchase securities.
Borrowing, if done, would tend to exaggerate the effects of market
fluctuations in the Fund's net asset value until repaid. (See "Borrowing.")
PORTFOLIO TURNOVER. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new
investment opportunities. Nevertheless, the Fund's annual portfolio turnover
generally is not expected to exceed 50%. The degree of portfolio activity
affects the brokerage costs of the Fund and may have an impact on the amount
of taxable distributions to shareholders. The portfolio turnover of the Fund
for the fiscal year ended February 29, 1996 was 16%.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 15% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities
when it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make
any additional investments while its outstanding borrowings exceed 5% of the
current value of its total assets.
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to
risk, the Fund has adopted certain investment limitations. The Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets, or
(b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities in amounts not exceeding 15% of
its total assets. The Fund will not make any investment if borrowings exceed
5% of its total assets; (2) make loans of money or securities, except that the
Fund may invest in repurchase agreements (but repurchase agreements having a
maturity of longer than seven days are subject to the limitation on investing
in illiquid securities); (3) invest more than 10% of its net assets in
illiquid securities; (4) invest in securities of issuers which have a record
of less than three years' continuous operation (including predecessors and, in
the case of bonds, guarantors), if more than 5% of its total assets would be
invested in such securities; (5) purchase foreign securities; (6) purchase or
sell commodities, commodities contracts, real estate (including limited
partnership interests, but excluding readily marketable securities secured by
real estate or interests therein, readily marketable interests in real estate
investment trusts, or readily marketable securities issued by companies that
invest in real estate or interests therein) or interests in oil, gas, or other
mineral exploration or development programs or leases; (7) invest more than
10% of its total assets in the securities of other
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investment companies; (8) write, purchase, or sell puts, calls, straddles,
spreads or combinations thereof, or futures contracts or related options; and
(9) invest more than 5% of its net assets in warrants. Investment restrictions
(1),(2),(5),(6), (7) and (9) are deemed fundamental, that is, they may not be
changed without shareholder approval. See "Investment Limitations" in the
Fund's Statement of Additional Information for a complete list of investment
limitations.
If the Board of Trustees determines that the Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment
limitation, the Board can make such change without shareholder approval and
will disclose any such material changes in its Prospectus. Any limitation that
is not specified in the Fund's Prospectus or Statement of Additional
Information as being fundamental is nonfundamental. If a percentage limitation
is satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in the value of the Fund's portfolio
securities will not constitute a violation of such limitation. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
HOW TO PURCHASE SHARES
Assistance in opening accounts may be obtained from the Administrator by
calling 1-800-934-1012, or by writing to the Fund at the address shown below
for regular mail orders. Assistance is also available through any
broker-dealer authorized to sell shares of the Fund. Such broker-dealer may
charge you a fee for its services. Payment for shares purchased may be made
through your account at the broker-dealer processing your application and
order to purchase. Your investment will purchase shares at the public offering
price (net asset value plus any applicable sales charge) next determined after
your order is received by the Fund in proper form as indicated herein. The
minimum initial investment in the Fund is $2,500 ($1,000 for IRAs). The Fund
may, in the Advisor's sole discretion, accept certain accounts with less than
the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable
in U.S. dollars. All orders received by the Administrator, whether by mail,
bank wire or facsimile order, prior to 4:00 p.m. Eastern time will purchase
shares at the next determined public offering price on that business day. If
your order is not received by 4:00 p.m. Eastern time, your order will purchase
shares at the public offering price determined on the next business day.
Broker-dealers are responsible for transmitting properly completed orders so
that they will be received by 4:00 p.m. Eastern time.
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<PAGE>
Under certain circumstances, the Advisor, in its sole discretion, may allow
payment in kind for Fund shares purchased by accepting securities in lieu of
cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for more information on purchases in kind.
Due to Internal Revenue Service ("IRS") regulations, the Fund is required to,
and will, withhold taxes on all distributions and redemption proceeds without
social security or tax identification numbers, if the number is not delivered
to the Fund within 60 days. If, however, you have already applied for a social
security or tax identification number at the time of completing your account
application, the application should so indicate.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating
to the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by
the Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to The
CarolinasFund, and mail it to:
The CarolinasFund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish
a new account or add to an existing account by wire, please call the Fund, at
1-800-934-1012, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and
accurate handling of your investment. Please have your bank use the following
wiring instructions to purchase by wire:
The Fifth Third Bank
ABA# 042000314
For Maplewood Investment Trust #999-36756
For The CarolinasFund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. Once your wire
is sent you should, as soon as possible thereafter, complete and mail your
Account Application to the Fund as described under "Regular Mail Orders,"
above. Investors should be aware that some banks may impose a wire service
fee.
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<PAGE>
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any
time by purchasing shares at the public offering price. Before making
additional investments by bank wire, please call the Fund at 1-800-934-1012 to
alert the Fund that your wire is to be sent. Follow the wire instructions
above to send your wire. When calling for any reason, please have your account
number ready, if known. Mail orders should include, when possible, the "Invest
by Mail" stub which is attached to your Fund confirmation statement.
Otherwise, be sure to identify your account in your letter.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bimonthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum), which will be automatically invested in
shares at net asset value or the public offering price, whichever is
applicable, on or about the fifteenth day and/or the last business day of the
month. The investor may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
INFORMATION REGARDING INVESTOR SHARES
Investor Shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
sales charge as shown in the following table. The Distributor receives the
sales charge and may reallow it in the form of dealer discounts as follows:
SALES CHARGE DEALER
AS % OF: REALLOWANCE
NET PUBLIC AS % OF PUBLIC
AMOUNT OFFERING OFFERING
AMOUNT OF INVESTMENT INVESTED PRICE PRICE
Less than $100,000 3.63% 3.50% 3.00%
$100,000 but less than $250,000 3.09% 3.00% 2.50%
$250,000 but less than $500,000 2.56% 2.50% 2.00%
$500,000 or more None None None
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts from the Distributor may
reallow all or a portion of such dealer discounts to other dealers or brokers.
The dealer discounts shown above apply to all dealers who have agreements with
the Distributor.
REDUCED SALES CHARGES FOR INVESTOR SHARES. An investor may purchase Investor
Shares at a reduced sales charge or without a sales charge by purchasing
shares through one of the methods described below.
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<PAGE>
RIGHT OF ACCUMULATION. Pursuant to the right of accumulation, investors are
permitted to purchase Investor Shares at the public offering price applicable
to the total of (a) the total public offering price of the Investor Shares of
the Fund then being purchased plus (b) an amount equal to the then current net
asset value of the purchaser's current holdings of Fund shares. To receive the
applicable public offering price pursuant to the right of accumulation,
investors must, at the time of purchase, provide sufficient information to
permit confirmation of qualification. The right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.
LETTERS OF INTENT. Investors in Investor Shares may qualify for a lower sales
charge by executing a letter of intent. A letter of intent allows an investor
to purchase Investor Shares of the Fund over a 13 month period at reduced
sales charges based on the total amount intended to be purchased plus an
amount equal to the then current net asset value of the purchaser's current
holdings of Fund shares. Thus, a letter of intent permits an investor to
establish a total investment goal to be achieved by any number of purchases
over a 13 month period. Each investment made during the period receives the
reduced sales charge applicable to the total amount of the intended
investment.
The letter of intent does not obligate the investor to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the
period, the investor must pay the difference between the sales charge
applicable to the purchases made and the charges previously paid. If such
difference is not paid by the investor, the Administrator is authorized by the
investor to liquidate a sufficient number of shares held by the investor to
pay the amount due. On the initial purchase of shares, if required, (or
subsequent purchases, if necessary) shares equal to at least 5% of the amount
indicated in the letter of intent will be held in escrow during the 13 month
period (while remaining registered in the name of the investor) for this
purpose. The value of any shares redeemed or otherwise disposed of by the
investor prior to termination or completion of the letter of intent will be
deducted from the total purchases made under such letter of intent.
A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales
charge). The 13 month period would then begin on the date of the first
purchase during the 90-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the letter of intent. Investors must
notify the Administrator whenever a purchase is being made pursuant to a
letter of intent.
Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Application
contained in this Prospectus or is otherwise available from the Administrator.
The letter of intent option may be modified or eliminated at any time or from
time to time by the Trust without notice.
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<PAGE>
REINVESTMENT. Investors may reinvest proceeds from a redemption of Investor
Shares, without a sales charge, in Investor Shares of the Fund. The amount
that may be so reinvested may not exceed the amount of the redemption
proceeds, and a written order for the purchase of such shares must be received
by the Administrator within 90 days after the effective date of the
redemption.
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number
of shares purchased by reinvestment and the period of time that has elapsed
after the redemption, although for tax purposes the amount disallowed is added
to the cost of the shares acquired upon the reinvestment.
PURCHASES BY RELATED PARTIES AND GROUPS. Reductions in sales charges apply to
purchases by a single "person," including an individual, members of a family
unit, consisting of a husband, wife and children under the age of 21
purchasing securities for their own account, or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate. Reductions
in sales charges also apply to purchases by individual members of a "qualified
group." The reductions are based on the aggregate dollar value of shares
purchased by all members of the qualified group and still owned by the group
plus the shares currently being purchased. For purposes of this paragraph, a
qualified group consists of a "company," as defined in the 1940 Act, which has
been in existence for more than six months and which has a primary purpose
other than acquiring shares of the Fund at a reduced sales charge, and the
"related parties" of such company. For purposes of this paragraph, a "related
party" of a company is: (i) any individual or other company that directly or
indirectly owns, controls, or has the power to vote 5% or more of the
outstanding voting securities of such company; (ii) any other company of which
such company directly or indirectly owns, controls, or has the power to vote
5% or more of its outstanding voting securities; (iii) any other company under
common control with such company; (iv) any executive officer, director or
partner of such company or of a related party; and (v) any partnership of
which such company is a partner.
SALES AT NET ASSET VALUE. The Fund may sell Investor Shares at a purchase
price equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund and the Advisor, and
to employees and principals of related organizations and their families, and
certain parties related thereto, including clients and related accounts of the
Advisor. Clients of investment advisors and financial planners may also
purchase Class A shares of the Fund at net asset value if the investment
advisor or financial planner has made arrangements to permit them to do so
with the Distributor. The public offering price of Investor Shares of the Fund
may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal
holding company or a public or private investment company.
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<PAGE>
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on each day that the Fund is open for
business. The Fund is open for business on each day the New York Stock
Exchange (the "Exchange") is open for business. Any redemption may be for more
or less than the purchase price of your shares depending on the market value
of the Fund's portfolio securities. All redemption orders received in proper
form, as indicated herein, by the Administrator prior to 4:00 p.m. Eastern
time will redeem shares at the net asset value determined as of that business
day's close of trading. Otherwise, your order will redeem shares on the next
business day. There is no charge for redemptions from the Fund. You may also
redeem your shares through a broker-dealer or other institution which may
charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $2,500 (due to redemptions, exchanges or
transfers, but not due to market action) upon 30 days' written notice. If the
shareholder brings his account value up to $2,500 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans
may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-934-1012, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to The
CarolinasFund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for
redemption must include:
1) your letter of instruction specifying the account number, and the
number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they
are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships,
pension or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days
after receipt of your redemption request. However, the Fund may delay
forwarding a redemption check for recently purchased shares while it
determines whether the purchase payment will be honored. Such delay (which may
take up to 15 days) may be reduced or avoided if the purchase is made by wire
transfer. In such cases, the net asset value next determined after receipt of
the request for redemption will be used in processing the redemption and your
redemption proceeds will be mailed to you upon clearance of your check to
purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading
on the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the
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<PAGE>
Fund to dispose of securities owned by it, or to fairly determine the value of
its assets, and (iii) for such other periods as the Commission may permit.
TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option
of redeeming shares by telephone under certain limited conditions. You may
redeem shares, subject to the procedures outlined below, by calling the Fund
at 1-800-934-1012. The Fund will redeem shares when requested by telephone if,
and only if, the shareholder confirms redemption instructions in writing. The
Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX # 513-629-2901). The confirmation instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the
shareholder;
4) Shareholder signature as it appears on the application
then on file with the Fund; and
5) Any required signature guarantees (see "Signature Guarantees").
In such cases, the net asset value used in processing the redemption will be
the net asset value next determined after the telephone request is received.
Redemption proceeds will not be remitted until written confirmation of the
redemption request is received. You can choose to have redemption proceeds
mailed to you at your address of record, your bank, or to any other authorized
person, or you can have the proceeds sent by bank wire to your bank ($1,000
minimum). Shares of the Fund may not be redeemed by wire on days in which your
bank is not open for business. Redemption proceeds will only be sent to the
bank account or person named in your Account Application currently on file
with the Fund. You can change your redemption instructions anytime you wish by
filing a letter including your new redemption instructions with the Fund. (See
"Signature Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any shareholder or all shareholders, without notice, if the
Trustees believe it to be in the best interest of the shareholders to do so.
During drastic economic and market changes, telephone redemption privileges
may be difficult to implement.
Neither the Fund, the Administrator, nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The affected investors will bear the risk of any such loss. The
Fund or the Administrator, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Fund or the
Administrator do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon thirty days' written
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<PAGE>
notice, to make reasonable charges for wire redemptions. All charges will be
deducted from your account by redemption of shares in your account. Your bank
or brokerage firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
SYSTEMATIC WITHDRAWAL PLAN. An investor who owns shares of the Fund valued at
$5,000 or more at the current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $50. Each month or quarter as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The investor may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the investors's bank account by completing the
applicable section on the Account Application form accompanying this
Prospectus, or by calling or writing the Fund. See the Statement of Additional
Information for further details.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your
account. Signature guarantees are required for (1) change of registration
requests, and (2) requests to establish or change redemption services other
than through your initial account application, and (3) requests for
redemptions in excess of $25,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union, registered broker-dealer or a member firm of a U.S. Stock
Exchange, and must appear on the written request for redemption or change of
registration.
HOW SHARES ARE VALUED
The net asset value of Institutional Shares and the public offering price (net
asset value plus applicable sales charge) of Investor Shares of the Fund is
determined on each business day that the Exchange is open for trading, as of
the close of the Exchange (currently 4:00 p.m., Eastern time). Net asset value
per share is determined by dividing the total value of all Fund securities
(valued at market value) and other assets, less liabilities, by the total
number of shares then outstanding. Net asset value includes interest on
fixed-income securities, which is accrued daily. The net asset value of each
class of shares will be affected by the expenses accrued and payable by such
class. Because certain expenses such as distribution fees are attributable
solely to one class of shares, the net income attributable to and the
dividends payable by each class of shares will differ from one another. See
the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale
price, if available, otherwise, at the last quoted bid price. Securities
traded on a securities exchange are valued based upon the closing price on the
valuation date on the principal exchange where the security is traded.
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<PAGE>
Securities that are listed on an exchange and which are not traded on the
valuation date are valued at the mean of the bid and asked prices. Securities
in which market quotations are not readily available may be valued on the
basis of prices provided by an independent pricing service, when such prices
are believed to reflect the fair market value of such securities. Securities
and other assets for which no quotations are readily available will be valued
in good faith at fair value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUND
The Fund is a non-diversified series of Maplewood Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
1992, which was formerly known as The Nottingham Investment Trust. The Board
of Trustees has overall responsibility for management of the Fund under the
laws of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and the Fund and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees,
Morehead Capital Advisors LLC (the "Advisor") provides the Fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement with the Trust. The
Advisor is also responsible for the selection of broker-dealers through which
the Fund executes portfolio transactions, subject to brokerage policies
established by the Trustees.
The Advisor is controlled by Robert B. Thompson. The Advisor's address is
1712 East Boulevard, Charlotte, North Carolina 28203.
William G. Staton, Chief Investment Officer of the Advisor, is primarily
responsible for managing the portfolio of the Fund and has acted in this
capacity since the Fund's inception. In addition to his advisory activities
for the Fund, Mr. Staton publishes a newsletter highlighting America's Finest
Companies, using investment criteria similar to that used in managing the
Fund. Mr. Staton previously was a Director of Research at Interstate/ Johnson
Lane in Charlotte, North Carolina. Mr. Staton has been rendering investment
counsel utilizing investment strategies substantially similar to those of the
Fund to individuals, banks and thrift institutions, pension and profit sharing
plans, trusts, estates, charitable organizations and corporations since 1986.
Under the Investment Advisory Agreement with the Fund, the Advisor receives a
monthly management fee equal to an annual rate of 1% of the average daily net
assets of the Fund. Although the investment advisory fee is higher than that
paid by most other investment companies, the Board of Trustees believes the
fee to be comparable to advisory fees paid by many funds having similar
objectives and policies. The Advisor may periodically voluntarily waive or
reduce its advisory fee to increase the performance of the Fund.
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<PAGE>
The Advisor currently intends to waive its investment advisory fees and
reimburse expenses to the extent necessary to limit total operating expenses
(exclusive of interest, taxes, brokerage commissions, sales charges and
extraordinary expenses) to 2.25% of Investor Shares' average daily net assets
and 1.75% of Institutional Shares' average daily net assets. However, there is
no assurance that any voluntary fee waivers and expense reimbursements will
continue in the current or future fiscal years, and expenses may therefore
exceed 2.25% and 1.75% of the average daily net assets of Investor Shares and
Institutional Shares, respectively.
ADMINISTRATOR. The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying agent
and shareholder service agent. The Administrator is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange Commission and state
securities authorities. The Fund pays the Administrator a fee for these
administrative services at the annual rate of .15% of the average value of its
daily net assets up to $50 million, .125% of the next $50 million of such
assets and .1% of such assets in excess of $100 million; provided, however,
that the minimum fee is $1,000 per month.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives a monthly fee of $3,000 for calculating daily net
asset value per share and maintaining such books and records as are necessary
to enable it to perform its duties. The Administrator also charges the Fund
for certain costs involved with the daily valuation of investment securities
and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank. The
Custodian's mailing address is 38 Fountain Square Plaza, Cincinnati, Ohio
45263. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income, disperses monies at the Fund's
request and maintains records in connection with its duties.
OTHER EXPENSES. The Fund is responsible for the payment of all of its
operating expenses. These include the fees payable to the Advisor, or expenses
otherwise incurred in connection with the management of the investment of the
Fund's assets, the fees and expenses of the Custodian, the fees and expenses
of the Administrator, the fees and expenses of Trustees, outside auditing and
legal expenses, all taxes and corporate fees payable by the Fund, registration
fees, state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders,
costs of shareholder reports and shareholder meetings, and any extraordinary
expenses. The Fund also pays for brokerage commissions and transfer taxes (if
any) in connection with the purchase and sale of portfolio securities.
Expenses attributable to a particular series
- 20 -
<PAGE>
of the Trust, including the Fund, will be charged to that series, and expenses
not readily identifiable as belonging to a particular series will be allocated
by or under procedures approved by the Board of Trustees among one or more
series in such a manner as it deems fair and equitable. Any expenses relating
only to a particular class of shares of the Fund will be borne solely by such
class.
BROKERAGE. In selecting broker-dealers through which to execute brokerage
transactions for the Fund, the Advisor attempts to obtain the best execution
for all such transactions. If it is believed that more than one broker is able
to provide the best execution, the Advisor will consider the receipt of
quotations and other market services, receipt of research, statistical and
other data and the sale of shares of the Fund in selecting a broker. Research
services obtained through the Fund's brokerage transactions may be used by the
Advisor for its other clients; conversely, the Fund may benefit from research
services obtained through the brokerage transactions of the Advisor's other
clients. The Advisor may also utilize a brokerage firm affiliated with the
Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. The Statement of Additional Information
contains more information about the management and brokerage practices of the
Fund.
DISTRIBUTOR AND DISTRIBUTION PLAN
Midwest Group Financial Services, Inc., 312 Walnut Street, Cincinnati, Ohio
45202 (the "Distributor"), is the national distributor for the Fund under an
Underwriting Agreement with the Trust. The Distributor may sell Fund shares to
or through qualified securities dealers or others. The Distributor is a
subsidiary of Leshner Financial, Inc. Robert G. Dorsey, Treasurer of the
Distributor, is Vice President of the Trust. John F. Splain is Secretary of
both the Distributor and the Trust.
The Trust has adopted a Distribution Plan (the "Plan") for Investor Shares of
the Fund pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund
may reimburse any expenditures to finance any activity primarily intended to
result in sale of Investor Shares of the Fund or the servicing of shareholder
accounts, including, but not limited to, the following: (i) payments to the
Distributor, securities dealers, and others for the sale of Investor Shares of
the Fund; (ii) payment of compensation to and expenses of personnel who engage
in or support distribution of Investor Shares or who render shareholder
support services not otherwise provided by the Administrator or Custodian; and
(iii) formulation and implementation of marketing and promotional activities.
The categories of expenses for which reimbursement is made are approved by the
Board of Trustees of the Trust. Expenditures by the Fund pursuant to the Plan
are accrued based on average daily net assets and may not exceed .50% of the
Investor Shares' average net assets for each year elapsed subsequent to
adoption of the Plan. Such expenditures paid as service fees to any person who
sells Investor Shares may not exceed .25% of the average daily net assets of
such shares. During the fiscal year ended February 29, 1996, Investor Shares
incurred $3,791 in distribution expenses.
- 21 -
<PAGE>
Amounts accrued under the Plan in one year but which are not actually paid in
that year, may be paid in subsequent years. Amounts not accrued under the Plan
during a year may not be carried forward to subsequent years. The Plan may not
be amended to increase materially the amount to be spent under the Plan
without shareholder approval. The continuation of the Plan must be approved
annually by the Board of Trustees. At least quarterly the Board of Trustees
will review a written report of amounts expended pursuant to the Plan and the
purposes for which such expenditures were made.
DIVIDENDS, DISTRIBUTIONS, TAXES
AND OTHER INFORMATION
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general
and, particularly, with respect to dividends and distributions and other
matters. The discussion herein of the federal income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently,
investors should seek qualified tax advice.
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed
to them. The Fund intends to declare dividends, if any, quarterly and will
distribute any net short-term or long-term capital gains derived from the sale
of securities at the end of its fiscal year. In addition, the Fund may make a
supplemental distribution of capital gains annually in December. The nature
and amount of all dividends and distributions will be identified separately
when tax information is distributed by the Fund at the end of each year. The
Fund intends to withhold 30% on taxable dividends and any other payments that
are subject to such withholding and are made to persons who are neither
citizens nor residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the
payment of any dividends or the realization of any gains. All dividends and
capital gains distributions are reinvested in additional shares of the Fund
unless the shareholder requests in writing to receive dividends and/or capital
gains distributions in cash. That request must be received by the Fund prior
to the record date to be effective as to the next dividend. Tax consequences
to shareholders of dividends and distributions are the same if received in
cash or if received in additional shares of the Fund.
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to
qualify. For a more detailed discussion of the tax status of the Fund, see
"Additional Tax Information" in the Statement of Additional Information.
- 22 -
<PAGE>
DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business
trust on August 12, 1992 under a Declaration of Trust. The Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into
one or more classes of shares. A description of the authorized series of
shares of the Trust and classes of such series is contained in the Statement
of Additional Information. Pursuant to its authority under the Declaration of
Trust, the Board of Trustees has authorized the issuance of two classes of
shares (Investor Shares and Institutional Shares) representing equal pro rata
interests in the Fund, except the classes bear different expenses that reflect
the differences in services provided to them.
When issued, the shares of each series of the Trust, including the Fund, will
be fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder
meetings for purposes such as changing fundamental policies or electing
Trustees. The Board of Trustees shall promptly call a meeting for the purpose
of electing or removing Trustees when requested in writing to do so by the
record holders of at least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian
or by votes cast in person or by proxy at a meeting called for that purpose.
Shareholders of the Trust will vote in the aggregate and not by series (fund)
or class, except as otherwise required by the 1940 Act or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of the shareholders of a particular series or class. Matters affecting an
individual series, such as the Fund, include, but are not limited to, the
investment objectives, policies and restrictions of that series. Shares have
no subscription, preemptive or conversion rights. Share certificates will not
be issued. Each share is entitled to one vote (and fractional shares are
entitled to proportionate fractional votes) on all matters submitted for a
vote, and shares have equal voting rights except that only shares of a
particular series or class are entitled to vote on matters affecting only that
series or class. Shares do not have cumulative voting rights. Therefore, the
holders of more than 50% of the aggregate number of shares of all series of
the Trust may elect all the Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of
the Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust
and its shares.
As of the date of this Prospectus, International Fund for Capitalist
Development LP, P.O. Box 30036, Charlotte, North Carolina owned of record or
- 23 -
<PAGE>
beneficially more than 25% of the Institutional Shares of the Fund.
Accordingly, this entity may be deemed to be a "controlling person" of
Institutional Shares of the Fund within the meaning of the 1940 Act.
REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders annual
reports which have been audited by independent accountants and semiannual
reports which are unaudited. In addition, the Administrator will send to each
shareholder having an account directly with the Fund a quarterly statement
showing transactions in the account, the total number of shares owned and any
dividends or distributions paid.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate
future performance. Total return and yield are computed separately for
Investor and Institutional Shares. The yield and total return is expected to
be higher for Institutional Shares due to the distribution fees imposed on
Investor Shares.
The "total return" of the Fund refers to the average annual compounded rates
of return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged
to all shareholder accounts and deducts all nonrecurring charges at the end of
each period. The calculation further assumes the deduction of the current
maximum sales load from the initial investment. If the Fund has been operating
less than 1, 5 or 10 years, the time period during which the Fund has been
operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same
or different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in the Fund for
various periods.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses
of the Fund all recurring fees that are charged to all shareholder accounts
and any nonrecurring charges for the period stated.
- 24 -
<PAGE>
THE CAROLINASFUND
INVESTMENT ADVISOR
Morehead Capital Advisors LLC
1712 East Boulevard
Charlotte, North Carolina 28203
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-934-1012
DISTRIBUTOR
Midwest Group Financial Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, OH 45202
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
- 25 -
<PAGE>
THE CAROLINASFUND
ACCOUNT APPLICATION (check appropriate share class)
o INVESTOR SHARES (W2) $_________________
o INSTITUTIONAL SHARES (W1) $_________________
Please mail account application to:
The CarolinasFund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
ACCOUNT NO. ___________________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:______________________________________________________
Home Office Address: _________________________________________________________
Branch Address: ______________________________________________________________
Rep Name & No.: ______________________________________________________________
Rep Signature: _______________________________________________________________
Initial Investment of $_____________ ($2,500 minimum, $1,000 minimum for IRAs)
o Check or draft enclosed payable to The CarolinasFund.
o Bank Wire From: __________________________________________________________
ACCOUNT NAME S.S. #/TAX L.D.#
- - -------------------------------------------- ---------------------------------
Name of Individual, Corporation, (In case of custodial account
Organization, or Minor, etc. please list minor's S.S.#)
____________________________________________ Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other__________
ADDRESS PHONE
- - -------------------------------------------- ( )-----------------
Street or P.O. Box Business Phone
- - -------------------------------------------- ( )-----------------
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust o Custodial
o Non-Profit o Other
Occupation and Employer Name/Address__________________________________________
Are you an associated person of an NASD member? o Yes o No
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. Check
box if appropriate:
o I am exempt from backup withholding under the provisions of section 3406(a)
(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to
backup withholding as a result of a failure to report all interest or
dividends; or the Internal Revenue Service has notified me that I am no
longer subject to backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option -- Income distributions and short term capital
gains distributions paid in cash, long term capital gains
distributions reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions
paid in cash.
REDUCED SALES CHARGES (INVESTOR SHARES ONLY)
RIGHT OF ACCUMULATION: I apply for Right of Accumulation subject to the
Agent's confirmation of the following holdings of The CarolinasFund.
ACCOUNT NUMBER/NAME ACCOUNT NUMBER/NAME
- - ------------------------------------ ------------------------------------
- - ------------------------------------ ------------------------------------
LETTER OF INTENT: (Complete the Right of Accumulation section if related
accounts are being applied to your Letter of Intent.)
o l agree to the Letter of Intent in the current Prospectus of The
CarolinasFund. 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
______________________ 19 _______ (Purchase Date of not more than 90 days
prior to this Letter) an aggregate amount in the Fund at least equal to
(check appropriate box):
o $100,000 o $250,000 o $500,000
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints MGF Service Corp. as his agent to enter orders for shares, to receive
dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption
shares held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor. The
investor further agrees that MGF Service Corp. can cease to act as such agent
upon ten days' notice in writing to the investor at the address contained in
this Application. The investor hereby ratifies any instructions given pursuant
to this Application and for himself and his successors and assigns does hereby
release MGF Service Corp., The CarolinasFund, Midwest Group Financial
Services, Inc., and their respective officers, employees, agents and
affiliates from any and all liability in the performance of the acts
instructed herein provided that such entities have exercised due care to
determine that the instructions are genuine. The Internal Revenue Service does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
- - ------------------------------------ ------------------------------------
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
- - ------------------------------------ ------------------------------------
Title of Corporate Officer, Trustee, etc. Date
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST
COMPLETE THE RESOLUTION FORM ON THE REVERSE SIDE. UNLESS
OTHERWISE SPECIFIED, EACH JOINT OWNER SHALL HAVE FULL
AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
AUTOMATIC INVESTMENT PLAN (COMPLETE FOR INVESTMENTS INTO THE FUND)
The Automatic Investment Plan is available for all established accounts of The
CarolinasFund. There is no charge for this service, and it offers the
convenience of automatic investing on a regular basis. The minimum investment
is $50.00 per month. For an account that is opened by using this Plan, the
minimum initial and subsequent investments must be $50.00. Though a continuous
program of 12 monthly investments is recommended, the Plan may be discontinued
by the shareholder at any time.
Please invest $ _________________per month in The CarolinasFund.
ABA Routing Number__________________________________________
FI Account Number___________________________________________
o Checking Account o Savings Account
- - ----------------------------------------------------------------------
Name of Financial Institution (FI)
- - ----------------------------------------------------------------------
City State
Please make my automatic investment on:
o the last business day of each month
o the 15th day of each month
o both the 15th and last business day
X_____________________________________________________________________
(Signature of Depositor EXACTLY as it appears on FI Records)
X_____________________________________________________________________
(Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please
sign exactly as signature appears on your FI's records.)
PLEASE ATTACH A VOIDED CHECK FOR THE AUTOMATIC INVESTMENT PLAN.
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which MGF Service Corp.
("MGF") has put into effect, by which amounts, determined by your depositor,
payable to The CarolinasFund, for purchase of shares of said Fund, are
collected by MGF, MGF hereby agrees:
MGF will indemnify and hold you harmless from any liability to any person
or persons whatsoever arising out of the payment by you of any amount drawn by
the Fund to its own order on the account of your depositor or from any
liability to any person whatsoever arising out of the dishonor by you whether
with or without cause or intentionally or inadvertently, of any such checks.
MGF will defend, at its own cost and expense, any action which might be
brought against you by any person or persons whatsoever because of your
actions taken pursuant to the foregoing request or in any manner arising by
reason of your participation in this arrangement. MGF will refund to you any
amount erroneously paid by you to the Fund on any such check if the claim for
the amount of such erroneous payment is made by you within six (6) months from
the date of such erroneous payment; your participation in this arrangement and
that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
AUTOMATIC WITHDRAWAL PLAN (COMPLETE FOR WITHDRAWALS FROM THE FUND)
This is an authorization for you to withdraw $_________ from my mutual fund
account beginning the last business day of the month of
.
Please Indicate Withdrawal Schedule (Check One):
o MONTHLY--Withdrawals will be made on the last business day of each month.
o QUARTERLY--Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
o ANNUALLY--Please make withdrawals on the last business day of the month of:.
Please Select Payment Method (Check One):
o CHECK: Please mail a check for my withdrawal proceeds to the mailing address
on this account.
o ACH TRANSFER: Please send my withdrawal proceeds via ACH transfer to my bank
checking or savings account as indicated below. I understand that the transfer
will be completed in two to three
_______________________________________________________ business days and that
there is no charge.
o BANK WIRE: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
PLEASE ATTACH A VOIDED
CHECK FOR ACH OR BANK WIRE
______________________________________________________________________________
Bank Name Bank Address
- - ------------------------------------------------------------------------------
Bank ABA# Account # Account Name
o SEND TO SPECIAL PAYEE (OTHER THAN APPLICANT): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee_________________________________________________________________
Please send to:_______________________________________________________________
Street address City State Zip
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of The
CarolinasFund (the Fund) and that
- - ------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf
of the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the
Fund, and it is FURTHER RESOLVED: That any one of the above noted officers is
authorized to sign any documents necessary or appropriate to appoint MGF
Service Corp. as redemption agent of the corporation or organization for
shares of the Fund, to establish or acknowledge terms and conditions governing
the redemption of said shares and to otherwise implement the privileges
elected on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
- - ----------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of____________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on at which a quorum was
present and acting throughout, and that the same are now in full force and
effect. I further certify that the following is (are) duly elected officer(s)
of the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
NAME TITLE
- - ----------------------------------- -----------------------------------------
- - ----------------------------------- -----------------------------------------
- - ----------------------------------- -----------------------------------------
Witness my hand and seal of the corporation or organization this___________day
of_______________________________________, 19_______
- - ----------------------------------- -----------------------------------------
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
PROSPECTUS
June 20, 1996
LEGACY EQUITY FUND
==============================================================================
The investment objective of the LEGACY EQUITY FUND is to provide long-term
capital growth by investing primarily in common stocks. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
INVESTMENT ADVISOR
LEGACY ADVISORS, INC.
2911 TURTLE CREEK BOULEVARD, SUITE 450
DALLAS, TEXAS 75219
The Legacy Equity Fund (the "Fund") is a diversified, open-end series of
Maplewood Investment Trust, a registered management investment company. This
Prospectus provides you with the basic information you should know before
investing. You should read it and keep it for future reference.
A Statement of Additional Information, dated June 20, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354,
and its telephone number is 1-800-580-4799. A copy of the Statement of
Additional Information may be obtained at no charge by calling or writing the
Fund.
TABLE OF CONTENTS
==============================================================================
Prospectus Summary................................................... 2
Synopsis of Costs and Expenses....................................... 3
Financial Highlights................................................. 4
Investment Objective, Investment Policies and Risk Considerations.... 5
How to Purchase Shares............................................... 10
How to Redeem Shares................................................. 12
How Shares are Valued................................................ 14
Management of the Fund............................................... 14
Distributor and Distribution Plan.................................... 16
Dividends, Distributions, Taxes and Other Information................ 17
- - ------------------------------------------------------------------------------
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>
- - ------------------------------------------------------------------------------
PROSPECTUS SUMMARY
==============================================================================
THE FUND. The Legacy Equity Fund (the "Fund") is a diversified, open-end
series of Maplewood Investment Trust, a registered management investment
company commonly known as a "mutual fund." The Fund's investment objective is
to provide long-term capital growth by investing primarily in common stocks.
While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment
objective, the Fund will invest primarily in common stocks traded in U.S.
securities markets. The Fund may also invest in foreign securities, illiquid
securities, securities purchased subject to a repurchase agreement or on a
when-issued basis, each of which involve certain risks. Realization of current
income is not a significant investment consideration, and any income realized
will be incidental to the Fund's objective. (See "Investment Objective,
Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. Legacy Advisors, Inc. (the "Advisor") serves as
investment advisor to the Fund. Forum Securities, Inc., doing business as
Crestwood Asset Management (the "Sub-Advisor"), an affiliate of the Advisor,
has been selected by the Advisor to manage the Fund's investments. For its
services, the Advisor receives compensation of 1% of the average daily net
assets of the Fund. The Advisor compensates the Sub-Advisor from the
compensation paid to the Advisor. The Advisor, the Subadvisor and their
affiliates currently manage over $250 million in assets. (See "Management of
the Fund.")
PURCHASE OF SHARES. Shares are offered at net asset value plus a 3% sales
charge and are subject to 12b-1 distribution fees of up to .50% of the Fund's
average daily net assets. The minimum initial investment for the Fund is
$100,000. (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions.
Shares may be redeemed at any time in which the Fund is open for business at
the net asset value next determined after receipt of a redemption request by
the Fund. A shareholder who submits written authorization may redeem shares by
telephone. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income and net capital gains,
if any, are distributed at least annually. Investors may elect to receive
dividends and distributions in cash or the dividends and distributions may be
reinvested in additional Fund shares. (See "Dividends, Distributions, Taxes
and Other Information.")
<PAGE>
MANAGEMENT. The Fund is a series of Maplewood Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed MGF Service Corp. (the
"Administrator") to provide administration, accounting and transfer agent
services. (See "Management of the Fund.")
DISTRIBUTOR. Midwest Group Financial Services, Inc. (the "Distributor")
serves as distributor of shares of the Fund. For its services, the Distributor
receives commissions consisting of the portion of the sales charge remaining
after the discounts it allows to securities dealers. Under the Fund's
Distribution Plan, expenditures by the Fund for distribution activities and
service fees may not exceed .50% of average daily net assets. (See
"Distributor and Distribution Plan.")
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
==============================================================================
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price)........................... 3%
Deferred Sales Charge......................................... None
Sales Charge Imposed on Reinvested Dividends.................. None
Redemption Fee................................................ None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Investment Advisory Fees After Waivers....................... .00% (A)
12b-1 Fees.................................................... .50% (B)
Other Expenses................................................ 1.50%
--------
Total Fund Operating Expenses After Waivers
and Expense Reimbursements................................ 2.00% (C)
========
(A) Absent waivers of management fees, such fees would have been 1% for
the fiscal year ended February 29, 1996.
(B) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association of
Securities Dealers.
(C) Absent waivers of management fees and expense reimbursements by the
Advisor, total Fund operating expenses would have been 8.60% for the fiscal
year ended February 29, 1996.
EXAMPLE: You would pay the following expenses on a $1,000 investment, whether
or not you redeem at the end of the period, assuming 5% annual return:
1 YEAR $ 50
3 YEARS 91
5 YEARS 135
10 YEARS 256
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees
and costs of operating the Fund. The Annual Fund Operating Expenses shown
above are based upon estimated expenses for the current fiscal year. THE
EXAMPLE SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE
SHOWN.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
=============================================================================
The following audited financial information has been audited by KPMG Peat
Marwick LLP, independent accountants, whose report covering the fiscal year
ended February 29, 1996 is contained in the Statement of Additional
Information. This information should be read in conjunction with the Fund's
latest audited annual financial statements and notes thereto, which are also
contained in the Statement of Additional Information, a copy of which may be
obtained at no charge by calling the Fund.
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- - ---------------------------------------------------------------------------------------------
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 2, 1995
YEAR (COMMENCEMENT OF
ENDED OPERATIONS) TO
FEBRUARY 29, 1996 FEBRUARY 28, 1995
- - ---------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period................... $ 10.36 $ 10.00
Income from investment operations
Net investment income............................. 0.28 0.01
Net realized and unrealized gain on investments... 2.46 0.35
-------------- -------------
Total from investment operations.............. 2.74 0.36
-------------- -------------
Distributions to shareholders from
Net investment income............................... (0.29) 0.00
-------------- -------------
Net asset value, end of period......................... $ 12.81 $ 10.36
============== =============
Total return(A) ....................................... 26.47% 3.60% (B)
-------------- -------------
Ratios/supplemental data
Net assets, end of period........................... $ 1,614,479 $ 621,568
============== =============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees....... 8.60% 19.58% (C)
After expense reimbursements and waived fees........ 0.00% 1.47% (C)
Ratio of net investment income (loss) to average
net assets
Before expense reimbursements and waived fees....... (6.59%) (17.14%) (C)
After expense reimbursements and waived fees........ 2.02% 0.98% (C)
Portfolio turnover rate................................ 43.22% 8.53% (C)
- - -----------------------------------------------------------------------------------------------
<FN>
(A)Total return does not reflect payment of a sales charge.
(B)Annualized total return was 23.05%.
(C)Annualized.
</FN>
Further information about the performance of the Fund is contained in the
Annual Report, a copy of which can be obtained at no charge by calling the
Fund.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
==============================================================================
The investment objective of the Fund is to provide long-term capital
growth by investing primarily in common stocks. Realization of current income
will not be a significant investment consideration, and any such income
realized should be considered incidental to the Fund's objective. Any
investment involves risk, and there can be no assurance that the Fund will
achieve its investment objective. The investment objective and fundamental
investment limitations of the Fund may not be altered without the prior
approval of a majority (as defined by the Investment Company Act of 1940) of
the Fund's shares.
In seeking to achieve its investment objective, the Fund will invest in a
diversified portfolio of equity securities based on the Advisor's belief that
(i) equity ownership of rapidly-growing, well-managed businesses will generate
superior investment returns over time and (ii) due to market imperfections,
opportunities will periodically arise to invest in such companies at prices
that are less than their true value to a disciplined, well-informed investor.
The Fund will invest in shares of businesses well known to the Advisor. The
focus will be toward companies demonstrating above-average earnings growth,
high returns on invested capital, and dominant positions in growing markets.
Efforts will be concentrated in areas where value can be added through
independent fact-finding and seasoned judgment.
To increase the probability that superior business values will be translated
into superior market performance, attention will be placed on acquiring and
retaining investments at prices which, in the Advisor's opinion, are less than
the true value of their potential earning power and future cash flows.
The purpose of these efforts will be to position the Fund to benefit from two
sources of investment attraction: equity participation in solid business
fundamentals with above-average growth, and a more positive market appraisal
as this underlying value is eventually reflected in market price. This
strategy should succeed if (1) the fundamental analysis is correct, (2) a very
strong price sensitivity is maintained, (3) management keeps the patience of a
long-term investor, and (4) over time the market price of a company's shares
is a rational reflection of underlying investment value.
INVESTMENT SELECTION. Through fundamental analysis the Advisor will attempt to
identify undervalued securities and groups of securities. Such analysis will
be approached from the standpoint of a well-informed investor interested in
buying all of a company. Three questions will be asked on any prospective
investment: (1) Is this a good business?, (2) Is it well managed?, and (3)
Would management be willing to buy all of this company at its current price
versus other equity and non-equity alternatives?
<PAGE>
The Fund will maintain a long-term or secular perspective. Business cycle
analysis and economic forecasting will be deemphasized in favor of an effort
to understand longer lasting structural developments and trends unique to
particular companies and industries.
In the search for unrecognized growth, the Advisor will look for opportunities
that are created by the lack of insight or perception by other investors. The
best allies in this process are hard work, knowledge, discipline, and
long-term perspective. The worst enemies are impulsiveness, the comfort of
consensus judgments and short-term horizons.
The initial focus on any potential investment will be its current price and
what this conveys about risk, true investment value, and future return. Market
price is the easiest obtainable and often the most ignored piece of
information on a stock.
Portfolio construction will emphasize individual issues and selected
investment themes. The intention is to build a portfolio that is truly
different from the standard market indices.
The Advisor will act as a flexible, responsive investor dedicated to
minimizing the time between awareness, evaluation and portfolio execution of
an investment idea. When an issue does not perform as contemplated, or the
Fund holds an issue that becomes overvalued, such as when price increases
produce relatively less attractive valuations, the Advisor will not hesitate
to liquidate such an investment and reposition the proceeds in issues with
greater investment attraction.
The Advisor will manage risk by investing in a diversified list of stocks over
a broad spectrum of industries, primarily investing in mid-to-large
capitalization companies, and remaining fully invested to the extent
practicable. The Fund's portfolio will be comprised of common stocks traded on
the New York Stock Exchange, American Stock Exchange or on the
over-the-counter market. Foreign securities, if held, will generally be traded
on foreign securities exchanges. Foreign securities may be held in the form of
American Depository Receipts ("ADRs"). ADRs are foreign securities denominated
in U.S. dollars and traded on U.S. securities markets.
The equity securities in which the Fund may invest include common stock,
convertible preferred stock, straight preferred stock, and investment grade
convertible bonds. The Fund may also invest up to 5% of its net assets in
warrants or rights to acquire equity securities other than those acquired in
units or attached to other securities. (See "Investment Limitations.")
<PAGE>
Under normal conditions, at least 90% of the Fund's total assets will be
invested in equity securities. Warrants and rights will be excluded for
purposes of this calculation. As a temporary defensive measure, however, the
Fund may invest up to 100% of its total assets in investment grade bonds, U.S.
Government Securities, repurchase agreements, or money market instruments.
When the Fund invests its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements, or money market instruments as a temporary
defensive measure, it is not pursuing its stated investment objective.
U.S. GOVERNMENT SECURITIES. The Fund may invest a portion of its assets
in U.S. Government Securities. "U.S. Government Securities" include U.S.
Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association as well as obligations of U.S. Government authorities, agencies
and instrumentalities such as Federal National Mortgage Association, Federal
Home Loan Mortgage Corporation, Federal Home Administration, Federal Farm
Credit Bank, Federal Home Loan Bank, Resolution Funding Corporation, Financing
Corporation, Tennessee Valley Authority and Student Loan Marketing
Association. U.S. Government Securities may be acquired subject to repurchase
agreements. While obligations of some U.S. Government sponsored entities are
supported by the full faith and credit of the U.S. Government, several are
supported by the right of the issuer to borrow from the U.S. Government, and
still others are supported only by the credit of the issuer itself. The
guarantee of the U.S. Government does not extend to the yield or value of the
U.S. Government Securities held by the Fund or to the Fund's shares.
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes when the Advisor believes that unusually volatile
or unstable economic and market conditions exist. When the Fund assumes a
temporary defensive posture, it may invest up to 100% of its net assets in
money market instruments. Under normal circumstances, money market instruments
will typically represent a portion of the Fund's portfolio, as funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio
securities and to provide for shareholder redemptions and operational expenses
of the Fund. Money market instruments mature in thirteen months or less from
the date of purchase and include U.S. Government Securities (defined above)
and corporate debt securities (including those subject to repurchase
agreements), bankers' acceptances and certificates of deposit of domestic
branches of U.S. banks, and commercial paper (including variable amount demand
master notes). At the time of purchase, money market instruments will have a
short-term rating in one of the two highest categories from any nationally
recognized statistical rating organization ("NRSRO") or, if not rated, of
equivalent quality in the Advisor's opinion. See the Statement of Additional
Information for a further description of money market instruments.
<PAGE>
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
other high-grade debt securities subject to repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an
agreed upon future date. The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate earned by the Fund
effective for the period of time during which the repurchase agreement is in
effect. Delivery pursuant to the resale typically will occur within one to
five days of the purchase. For purposes of the Investment Company Act of 1940
(the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the securities subject to the repurchase agreement. The Fund
will not enter into a repurchase agreement which will cause more than 10% of
its assets to be invested in repurchase agreements which extend beyond seven
days and other illiquid securities.
INVESTMENT COMPANIES. In order to achieve its investment objective, the Fund
may invest in the securities of open-end investment companies which are
generally authorized to invest in securities eligible for purchase by the
Fund. To the extent the Fund does so, Fund shareholders would indirectly pay a
portion of the operating costs of the underlying investment companies. These
costs include management, brokerage, shareholder servicing and other
operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly. The Fund will only invest in other investment companies by purchase
of such securities on the open market where no commission or profit to a
sponsor or dealer results from the purchase other than the customary broker's
commissions or when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition. The Advisor will waive its advisory fee for
that portion of the Fund's assets invested in other investment companies,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
The Fund may invest up to 10% of its total assets in securities of other
investment companies. In addition, the Fund will not invest more than 5% of
its total assets in securities of any single investment company, nor will it
purchase more than 3% of the outstanding voting securities of any investment
company.
FOREIGN SECURITIES. The Fund may invest in the securities of foreign private
issuers. Foreign securities investment presents special considerations not
typically associated with investments in domestic securities. Foreign taxes
may reduce income. Currency exchange rates and regulations may cause
fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining
service of process on foreign issuers and difficulties in enforcing judgments
with respect to claims under the U.S. securities laws against such issuers.
Favorable or unfavorable differences between U.S. and foreign economies could
affect foreign securities values. The U.S. Government has, in the past,
discouraged certain foreign investments by U.S. investors through taxation or
other restrictions and it is possible that such restrictions could be imposed
again. Because of the inherent risk of foreign securities over domestic
issues, the Fund will generally limit foreign investments to those traded
domestically as American Depository Receipts (ADRs). ADRs are receipts issued
by a U.S. bank or trust company evidencing ownership of securities of a
foreign issuer. ADRs may be listed on a national securities exchange or may
trade in the over-the-counter market. The prices of ADRs are denominated in
U.S. dollars while the underlying security may be denominated in a foreign
currency. To the extent the Fund invests in other foreign securities, it will
generally limit such investments to foreign securities traded on foreign
securities exchanges. Although there are no limitations on the amount of
foreign securities that the Fund may acquire, the Fund does not presently
intend to invest more than 10% of its total assets in foreign securities that
are not publicly traded in the United States.
<PAGE>
REAL ESTATE SECURITIES. The Fund will not invest in real estate (including
limited partnership interests), but may invest in readily marketable
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein. The Fund may also invest in
readily marketable interests in real estate investment trusts ("REITs"). REITs
are generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity. Although the
Fund is not limited in the amount of REITs it may acquire, the Fund does not
presently intend to invest more than 5% of its net assets in REITs.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its
investment objective. To the extent that the major portion of the Fund's
portfolio consists of common stocks and other equity securities, it may be
expected that its net asset value will be subject to greater fluctuation than
a portfolio containing mostly fixed income securities. The Fund may borrow
only under certain limited conditions (including to meet redemption requests),
but not to purchase securities. Borrowing, if done, would tend to exaggerate
the effects of market fluctuations on the Fund's net asset value until repaid.
(See "Borrowing.")
PORTFOLIO TURNOVER. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new
investment opportunities. Nevertheless, the Fund's annual portfolio turnover
generally is not expected to exceed 100%. The degree of portfolio activity
affects the brokerage costs of the Fund and may have an impact on the amount
of taxable distributions to shareholders. The portfolio turnover of the Fund
for the fiscal year ended February 29, 1996 was 43%.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 15% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities
when it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make
any additional investments while its outstanding borrowings exceed 5% of the
current value of its total assets.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
securities before maturity may be time consuming and expensive, and it may be
difficult or impossible for the Fund to sell illiquid investments promptly at
an acceptable price. Included within the category of illiquid securities are
restricted securities, which cannot be sold to the public without registration
under the federal securities laws. Unless registered for sale, these
securities can only be sold in privately negotiated transactions or pursuant
to an exemption from registration.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at
a future date beyond customary settlement time. The Fund is required to hold
and maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient
to meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no
income accrues to the purchaser of when-issued securities during the period
prior to issuance. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of acquiring
securities for its portfolio, the Fund may dispose of a when-issued security
or forward commitment prior to settlement if the Advisor deems it appropriate
to do so. The Fund may realize short-term gains or losses upon such sales.
<PAGE>
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to
risk, the Fund has adopted certain investment limitations. The Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets, or
(b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities in amounts not exceeding 15% of
its total assets (the Fund will not make any investments if borrowings exceed
5% of its total assets); (2) make loans of money or securities, except that
the Fund may invest in repurchase agreements (but repurchase agreements having
a maturity of longer than seven days are subject to the limitation on
investing in illiquid securities); (3) invest more than 10% of its net assets
in illiquid securities; (4) invest in securities of issuers which have a
record of less than three years' continuous operation (including predecessors
and, in the case of bonds, guarantors) if more than 5% of its total assets
would be invested in such securities; (5) purchase or sell commodities,
commodities contracts, real estate (including limited partnership interests,
but excluding readily marketable securities secured by real estate or
interests therein, readily marketable interests in real estate investment
trusts, or readily marketable securities issued by companies that invest in
real estate or interests therein) or interests in oil, gas, or other mineral
exploration or development programs or leases (although it may invest in
readily marketable securities of issuers that invest in or sponsor such
programs or leases); (6) with respect to 75% of its assets, invest more than
5% of its total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting stock of any one issuer; (7) invest more
than 10% of its total assets in the securities of other investment companies;
(8) write, purchase, or sell puts, calls, straddles, spreads or combinations
thereof, or futures contracts or related options; and (9) invest more than 5%
of its net assets in warrants. Investment restrictions (1),(2),(5),(6), (7)
and (9) are deemed fundamental, that is, they may not be changed without
shareholder approval. See "Investment Limitations" in the Fund's Statement of
Additional Information for a complete list of investment limitations.
If the Board of Trustees determines that the Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment
limitation, the Board can make such change without shareholder approval and
will disclose any such material changes in its Prospectus. Any limitation that
is not specified in the Fund's Prospectus or Statement of Additional
Information as being fundamental is nonfundamental. If a percentage limitation
is satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in the value of the Fund's portfolio
securities will not constitute a violation of such limitation. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
<PAGE>
HOW TO PURCHASE SHARES
==============================================================================
Assistance in opening accounts may be obtained from the Administrator by
calling 1-800-580-4799, or by writing to the Fund at the address shown below
for regular mail orders. Assistance is also available through any
broker-dealer authorized to sell shares of the Fund. Such broker-dealer may
charge you a fee for its services. Payment for shares purchased may be made
through your account at the broker-dealer processing your application and
order to purchase. Your investment will purchase shares at the Fund's public
offering price (net asset value plus any applicable sales charge) next
determined after your order is received by the Fund in proper form as
indicated herein. The minimum initial investment in the Fund is $100,000. The
Fund may, in the Advisor's sole discretion, accept certain accounts with less
than the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable
in U.S. dollars. All orders received by the Administrator, whether by mail,
bank wire or facsimile order, prior to 4:00 p.m. Eastern time will purchase
shares at the next determined public offering price on that business day. If
your order is not received by 4:00 p.m. Eastern time, your order will purchase
shares at the public offering price determined on the next business day.
Broker-dealers are responsible for transmitting properly completed orders so
that they will be received by 4:00 p.m. Eastern time.
Shares of the Fund are purchased at the public offering price. The public
offering price is the next determined net asset value per share plus a 3%
sales charge. The Distributor receives the sales charge and may reallow it in
the form of dealer discounts as follows:
<PAGE>
SALES CHARGE AS % OF: DEALER REALLOWANCE
PUBLIC NET AS % OF
OFFERING AMOUNT PUBLIC OFFERING
PRICE INVESTED PRICE
--------- -------- -------------------
3.00% 3.09% 2.90%
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts from the Distributor may
reallow all or a portion of such dealer discounts and brokerage commissions to
other dealers or brokers. The dealer discounts shown above apply to all
dealers who have agreements with the Distributor.
Under certain circumstances, the Advisor, in its sole discretion, may allow
payment in kind for Fund shares purchased by accepting securities in lieu of
cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for more information on purchases in kind.
Due to Internal Revenue Service ("IRS") regulations, the Fund is required to,
and will, withhold taxes on all distributions and redemption proceeds without
social security or tax identification numbers, if the number is not delivered
to the Fund within 60 days. If, however, you have already applied for a social
security or tax identification number at the time of completing your account
application, the application should so indicate.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating
to the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by
the Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
Legacy Equity Fund, and mail it to:
Legacy Equity Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
<PAGE>
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish
a new account or add to an existing account by wire, please call the Fund, at
1-800-580-4799, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and
accurate handling of your investment. Please have your bank use the following
wiring instructions to purchase by wire:
The Fifth Third Bank
ABA# 042000314
For Maplewood Investment Trust #999-36756
For Legacy Equity Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. Once your wire
is sent you should, as soon as possible thereafter, complete and mail your
Account Application to the Fund as described under "Regular Mail Orders,"
above. Investors should be aware that some banks may impose a wire service
fee.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any
time by purchasing shares at the public offering price. Before making
additional investments by bank wire, please call the Fund at 1-800-580-4799 to
alert the Fund that your wire is to be sent. Follow the wire instructions
above to send your wire. When calling for any reason, please have your account
number ready, if known. Mail orders should include, when possible, the "Invest
by Mail" stub which is attached to your Fund confirmation statement.
Otherwise, be sure to identify your account in your letter.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
SALES AT NET ASSET VALUE. The Fund may sell shares at a purchase price equal
to the net asset value of such shares, without a sales charge, to Trustees,
officers, and employees of the Trust, the Fund, the Advisor and the
Sub-Advisor, and to employees and principals of related organizations and
their families and certain parties related thereto, including clients and
related accounts of the Advisor. Clients of investment advisors and financial
planners may also purchase Class A shares of the Fund at net asset value if
the investment advisor or financial planner has made arrangements to permit
them to do so with the Distributor. Shares of the Fund may also be sold at net
asset value, without a sales charge, to (a) sales representatives of the
Advisor, the Sub-Advisor, the Administrator, the Distributor, or their
respective subsidiaries or affiliates; (b) officers, partners, employees, or
registered representatives of broker-dealers that have entered into sales
agreements with the Distributor; (c) clients and related accounts of fee-based
financial planners; (d) employee benefit plans qualified under Section 401 or
403 of the Internal Revenue Code; and (e) tax exempt organizations under
Section 501(c)(3-13) of the Code. The public offering price of shares of the
Fund may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal
holding company or a public or private investment company.
<PAGE>
HOW TO REDEEM SHARES
=============================================================================
Shares of the Fund may be redeemed on each day that the Fund is open for
business. The Fund is open for business on each day the New York Stock
Exchange (the "Exchange") is open for business. Any redemption may be for more
or less than the purchase price of your shares depending on the market value
of the Fund's portfolio securities. All redemption orders received in proper
form, as indicated herein, by the Administrator prior to 4:00 p.m. Eastern
time will redeem shares at the net asset value determined as of that business
day's close of trading. Otherwise, your order will redeem shares on the next
business day. There is no charge for redemptions from the Fund. You may also
redeem your shares through a broker-dealer or other institution which may
charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $100,000 (due to redemptions, exchanges
or transfers, but not due to market action) upon 30 days' written notice. If
the shareholder brings his account value up to $100,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-580-4799, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to the Legacy
Equity Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your request for
redemption must include:
1) your letter of instruction specifying the account number, and the
number of shares or dollar amount to be redeemed. This request must
be signed by all registered shareholders in the exact names in which
they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of
estates, trusts, guardianships, custodianships, corporations,
partnerships, pension or profit sharing plans, and other organizations.
<PAGE>
Your redemption proceeds will be mailed to you within three business days
after receipt of your redemption request. However, the Fund may delay
forwarding a redemption check for recently purchased shares while it
determines whether the purchase payment will be honored. Such delay (which may
take up to 15 days) may be reduced or avoided if the purchase is made by wire
transfer. In such cases, the net asset value next determined after receipt of
the request for redemption will be used in processing the redemption and your
redemption proceeds will be mailed to you upon clearance of your check to
purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading
on the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
to fairly determine the value of its assets, and (iii) for such other periods
as the Commission may permit.
TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option
of redeeming shares by telephone under certain limited conditions. You may
redeem shares, subject to the procedures outlined below, by calling the Fund
at 1-800-580-4799. The Fund will redeem shares when requested by telephone if,
and only if, the shareholder confirms redemption instructions in writing. The
Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX # 513-629-2901). The confirmation instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder;
4) Shareholder signature as it appears on the application then on file with
the Fund; and
5) Any required signature guarantees (see "Signature Guarantees").
In such cases, the net asset value used in processing the redemption will be
the net asset value next determined after the telephone request is received.
Redemption proceeds will not be remitted until written confirmation of the
redemption request is received. You can choose to have redemption proceeds
mailed to you at your address of record, your bank, or to any other authorized
person, or you can have the proceeds sent by bank wire to your bank ($1,000
minimum). Shares of the Fund may not be redeemed by wire on days in which your
bank is not open for business. Redemption proceeds will only be sent to the
bank account or person named in your Account Application currently on file
with the Fund. You can change your redemption instructions anytime you wish by
filing a letter including your new redemption instructions with the Fund. (See
"Signature Guarantees.")
<PAGE>
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any shareholder or all shareholders, without notice, if the
Trustees believe it to be in the best interest of the shareholders to do so.
During drastic economic and market changes, telephone redemption privileges
may be difficult to implement.
Neither the Fund, the Administrator, nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The affected investors will bear the risk of any such loss. The
Fund or the Administrator, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Fund and/or the
Administrator do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon thirty days' written
notice, to make reasonable charges for wire redemptions. All charges will be
deducted from your account by redemption of shares in your account. Your bank
or brokerage firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your
account. Signature guarantees are required for (1) change of registration
requests, and (2) requests to establish or change redemption services other
than through your initial account application, and (3) requests for
redemptions in excess of $25,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union, registered broker-dealer or a member firm of a U.S. Stock
Exchange, and must appear on the written request for redemption or change of
registration.
REINVESTMENT. Investors may reinvest proceeds from a redemption of shares of
the Fund, without a sales charge, in shares of the Fund. The amount that may
be so reinvested may not exceed the amount of the redemption proceeds, and a
written order for the purchase of such shares must be received by the
Administrator within 90 days after the effective date of the redemption.
<PAGE>
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number
of shares purchased by reinvestment and the period of time that has elapsed
after the redemption, although for tax purposes the amount disallowed is added
to the cost of the shares acquired upon the reinvestment.
HOW SHARES ARE VALUED
=============================================================================
The public offering price (net asset value plus sales charge) of the Fund is
determined on each business day that the Exchange is open for trading, as of
the close of the Exchange (currently 4:00 p.m., Eastern time). Net asset value
per share is determined by dividing the total value of all Fund securities
(valued at market value) and other assets, less liabilities, by the total
number of shares then outstanding. Net asset value includes interest on fixed
income securities, which is accrued daily. See the Statement of Additional
Information for further details.
Securities which are traded over-the-counter are priced at the last sale
price, if available, otherwise, at the last quoted bid price. Securities
traded on a securities exchange are valued based upon the closing price on the
valuation date on the principal exchange where the security is traded. Common
stocks will ordinarily be traded on a national securities exchange, but may
also be traded in the over-the-counter market. Securities in which market
quotations are not readily available may be valued on the basis of prices
provided by an independent pricing service, when such prices are believed to
reflect the fair market value of such securities. Securities and other assets
for which no quotations are readily available will be valued in good faith at
fair value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUND
==============================================================================
The Fund is a diversified series of Maplewood Investment Trust (the "Trust"),
an investment company organized as a Massachusetts business trust in 1992,
which was formerly known as The Nottingham Investment Trust. The Board of
Trustees has overall responsibility for management of the Fund under the laws
of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Legacy
Advisors, Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement with the Trust. The Investment Advisory
Agreement permits the Advisor to delegate investment responsibilities to one
or more other investment advisors. The Advisor has selected Forum Securities,
Inc., doing business as Crestwood Asset Management (the "Sub-Advisor"), an
affiliate of the Advisor, to serve as Sub-Advisor to the Fund. The Sub-Advisor
has full authority to manage the portfolio assets in a manner consistent with
the investment objective and policies of the Fund. The Sub-Advisor is also
responsible for the selection of broker-dealers through which the Fund
executes portfolio transactions, subject to brokerage policies established by
the Board of Trustees.
<PAGE>
The Advisor, Sub-Advisor and their affiliates currently provide investment
advice to accounts with over $250 million in assets. The Advisor and
Sub-Advisor have been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Fund, to individuals, banks
and thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations and corporations since their respective inceptions in
1990 and 1986. The Advisor's address is 2911 Turtle Creek Boulevard, Suite
450, Dallas, Texas 75219-6244. The Sub-Advisor's address is 2911 Turtle Creek
Boulevard, Suite 400, Dallas, Texas 75219-6244.
The Advisor is controlled by John P. Boone, who is President and controlling
shareholder of the Advisor. Mr. Boone, who is also the Executive Vice
President of the Sub-Advisor, is a Trustee of the Trust and President of
the Fund. Timothy C. Wheeler, Senior Vice President and Assistant Secretary of
the Advisor, is Vice President of the Sub-Advisor and Vice President of the
Fund.
David E. Hoener, a director of the Sub-Advisor, is responsible for the
day-to-day management of the Fund's portfolio and has been managing the Fund
since its inception. He has been employed by the Sub-Advisor since February
1994 and previously was a Senior Portfolio Manager at Wertheim Schroder & Co.
Incorporated.
Under the Investment Advisory Agreement with the Fund, the Advisor receives a
monthly management fee equal to an annual rate of 1% of the average daily net
assets of the Fund. The Advisor, in turn, pays a subadvisory fee to the
Sub-Advisor at an annual rate of .60% of the average daily net assets of the
Fund. The Advisor is solely responsible for compensation of the Sub-Advisor.
Although the investment advisory fee is higher than that paid by most other
investment companies, the Board of Trustees believes the fee to be comparable
to advisory fees paid by many funds having similar objectives and policies.
<PAGE>
The Advisor currently intends to waive its advisory fees and reimburse
expenses to the extent necessary to limit the total operating expenses of the
Fund (exclusive of interest, taxes, brokerage commissions, sales charges and
extraordinary expenses) to 2% per annum of its average daily net assets.
However, there is no assurance that any voluntary fee waivers or expense
reimbursements will continue in the current or future fiscal years, and
expenses of the Fund may therefore exceed 2% of its average daily net assets.
ADMINISTRATOR. The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying agent
and shareholder service agent. The Administrator is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange Commission and state
securities authorities. The Fund pays the Administrator a fee for these
administrative services at the annual rate of .15% of the average value of its
daily net assets up to $50 million, .125% of the next $50 million of such
assets and .10% of such assets in excess of $100 million.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives a monthly fee of $2,000 for calculating daily net
asset value per share and maintaining such books and records as are necessary
to enable it to perform its duties. The Administrator also charges the Fund
for certain costs involved with the daily valuation of investment securities
and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank. The
Custodian's mailing address is 38 Fountain Square Plaza, Cincinnati, Ohio
45263. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties.
<PAGE>
OTHER EXPENSES. The Fund is responsible for the payment of all of its
operating expenses. These include the fees payable to the Advisor, or expenses
otherwise incurred in connection with the management of the investment of the
Fund's assets, the fees and expenses of the Custodian, the fees and expenses
of the Administrator, the fees and expenses of Trustees, outside auditing and
legal expenses, all taxes and corporate fees payable by the Fund, registration
fees, state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders,
costs of shareholder reports and shareholder meetings, and any extraordinary
expenses. The Fund also pays for brokerage commissions and transfer taxes (if
any) in connection with the purchase and sale of portfolio securities.
Expenses attributable to a particular series of the Trust, including the Fund,
will be charged to that series, and expenses not readily identifiable as
belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable.
BROKERAGE. In selecting broker-dealers through which to execute brokerage
transactions for the Fund, the Sub-Advisor attempts to obtain the best
execution for all such transactions. If it is believed that more than one
broker is able to provide the best execution, the Advisor will consider the
receipt of quotations and other market services, receipt of research,
statistical and other data and the sale of shares of the Fund in selecting a
broker. Research services obtained through the Fund's brokerage transactions
may be used by the Advisor and the Sub-Advisor for their other clients;
conversely, the Fund may benefit from research services obtained through the
brokerage transactions of the Advisor and the Sub-Advisor's other clients. The
Sub-Advisor may also utilize a brokerage firm affiliated with the Trust, the
Advisor or the Sub-Advisor if it believes it can obtain the best execution of
transactions from such broker. The Statement of Additional Information
contains more information about the management and brokerage practices of the
Fund.
DISTRIBUTOR AND DISTRIBUTION PLAN
=============================================================================
Midwest Group Financial Services, Inc., 312 Walnut Street, Cincinnati, Ohio
45202 (the "Distributor"), is the national distributor for the Fund under an
Underwriting Agreement with the Trust. The Distributor may sell Fund shares to
or through qualified securities dealers or others. The Distributor is a
subsidiary of Leshner Financial, Inc. Robert G. Dorsey, Treasurer of the
Distributor, is Vice President of the Trust. John F. Splain is Secretary of
both the Distributor and the Trust.
The Trust has adopted a Distribution Plan (the "Plan") for the Fund pursuant
to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may reimburse any
expenditures to finance any activity primarily intended to result in the sale
of shares of the Fund or the servicing of shareholder accounts, including, but
not limited to, the following: (i) payments to the Distributor, securities
dealers, and others for the sale of shares of the Fund; (ii) payment of
compensation to and expenses of personnel who engage in or support
distribution of shares of the Fund or who render shareholder support services
not otherwise provided by the Administrator or Custodian; and (iii)
formulation and implementation of marketing and promotional activities. The
categories of expenses for which reimbursement is made are approved by the
Board of Trustees of the Trust. Expenditures by the Fund pursuant to the Plan
are accrued based on the average daily net assets of the Fund and may not
exceed .50% of average net assets for each year elapsed subsequent to adoption
of the Plan. Such expenditures paid as service fees to any person who sells
Fund shares may not exceed .25% of the average daily net assets of such
shares. For the fiscal year ended February 29, 1996, the Fund incurred $93 in
distribution fees.
Amounts accrued under the Plan in one year but which are not actually paid in
that year, may be paid in subsequent years. Amounts not accrued under the Plan
during a year may not be carried forward to subsequent years. The Plan may not
be amended to increase materially the amount to be spent under the Plan
without shareholder approval. The continuation of the Plan must be approved
annually by the Board of Trustees. At least quarterly, the Board of Trustees
will review a written report of amounts expended pursuant to the Plan and the
purposes for which such expenditures were made.
<PAGE>
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
==============================================================================
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general
and, particularly, with respect to dividends and distributions and other
matters. The discussion herein of the federal income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently,
investors should seek qualified tax advice.
==============================================================================
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed
to them. The Fund intends to declare dividends, if any, at least annually. In
addition, distributions may be made annually in December out of any net
short-term or long-term capital gains derived from the sale of securities
realized through October 31 of that year. The Fund may make a supplemental
distribution of capital gains at the end of its fiscal year. The nature and
amount of all dividends and distributions will be identified separately when
tax information is distributed by the Fund at the end of each year. The Fund
intends to withhold 30% on taxable dividends and any other payments that are
subject to such withholding and are made to persons who are neither citizens
nor residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the
payment of any dividends or the realization of any gains. All dividends and
capital gains distributions are reinvested in additional shares of the Fund
unless the shareholder requests in writing to receive dividends and/or capital
gains distributions in cash. That request must be received by the Fund prior
to the record date to be effective as to the next dividend. Tax consequences
to shareholders of dividends and distributions are the same if received in
cash or if received in additional shares of the Fund.
<PAGE>
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to
qualify. For a more detailed discussion of the tax status of the Fund, see
"Additional Tax Information" in the Statement of Additional Information.
DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business
trust on August 12, 1992 under a Declaration of Trust. The Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into
one or more classes of shares. A description of the authorized series of
shares of the Trust and classes of such series is contained in the Statement
of Additional Information.
When issued, the shares of each series of the Trust, including the Fund, will
be fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder
meetings for purposes such as changing fundamental policies or electing
Trustees. The Board of Trustees shall promptly call a meeting for the purpose
of electing or removing Trustees when requested in writing to do so by the
record holders of at least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian
or by votes cast in person or by proxy at a meeting called for that purpose.
<PAGE>
Shareholders of the Trust will vote in the aggregate and not by series (fund)
or class, except as otherwise required by the 1940 Act or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of the shareholders of a particular series or class. Matters affecting an
individual series, such as the Fund, include, but are not limited to, the
investment objectives, policies and restrictions of that series. Shares have
no subscription, preemptive or conversion rights. Share certificates will not
be issued. Each share is entitled to one vote (and fractional shares are
entitled to proportionate fractional votes) on all matters submitted for a
vote, and shares have equal voting rights except that only shares of a
particular series are entitled to vote on matters affecting only that series.
Shares do not have cumulative voting rights. Therefore, the holders of more
than 50% of the aggregate number of shares of all series of the Trust may
elect all the Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of
the Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust
and its shares.
As of the date of this Prospectus, Belmont Ventures, Inc., 2911 Turtle Creek
Boulevard, Dallas, Texas 75219 owned of record or beneficially more than 25%
of the shares of the Fund. Accordingly, this entity may be deemed to be a
"controlling person" of the Fund within the meaning of the 1940 Act.
REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders annual
reports which have been audited by the Trust's independent accountants and
semiannual reports which are unaudited. In addition, the Administrator will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares
owned and any dividends or distributions paid.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate
future performance.
The "total return" of the Fund refers to the average annual compounded rates
of return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged
to all shareholder accounts and deducts all nonrecurring charges at the end of
each period. The calculation further assumes the deduction of the current
maximum sales load from the initial investment. If the Fund has been operating
less than 1, 5 or 10 years, the time period during which the Fund has been
operating is substituted.
<PAGE>
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandarized Return may be quoted for the same
or different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in the Fund for
various periods.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses
of the Fund all recurring fees that are charged to all shareholder accounts
and any nonrecurring charges for the period stated.
<PAGE>
LEGACY EQUITY FUND
INVESTMENT ADVISOR
Legacy Advisors, Inc.
2911 Turtle Creek Boulevard
Suite 450
Dallas, Texas 75219-6244
INVESTMENT SUB-ADVISOR
Crestwood Asset Management
2911 Turtle Creek Boulevard
Suite 400
Dallas, Texas 75219-6244
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-543-8721
DISTRIBUTOR
Midwest Group Financial Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
BOARD OF TRUSTEES
John P. Boone
Jack E. Brinson
O. James Peterson III
Christopher J. Smith
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
LEGACY EQUITY FUND
PROSPECTUS
June 20, 1996
<PAGE>
LEGACY EQUITY FUND
ACCOUNT APPLICATION
Please mail account application to:
Legacy Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
ACCOUNT NO. W3- ___________________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________________
Home Office Address:___________________________
Branch Address:________________________________
Rep Name & No.:________________________________
Rep Signature:_________________________________
Initial Investment of $____________________ ($100,000 minimum)
o Check or draft enclosed payable to the Legacy Equity Fund.
o Bank Wire From: __________________________________________________________
ACCOUNT NAME S.S. #/TAX L.D.#
- - ---------------------------------------------- ------------------------
Name of Individual, Corporation, Organization, (In case of custodial
or Minor, etc. account please list
minor's S.S.#)
Citizenship: o U.S.
- - ---------------------------------------------- o Other ___________
Name of Joint Tenant, Partner, Custodian
ADDRESS PHONE
- - ---------------------------------------------- ( )-----------------
Street or P.O. Box Business Phone
- - ---------------------------------------------- ( )-----------------
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust o Custodial o Non-Profit o Other
Occupation and Employer Name/Address__________________________________________
Are you an associated person of an NASD member? o Yes o No
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. Check
box if appropriate:
o I am exempt from backup withholding under the provisions of section 3406(a)
(1)(c) of the Internal Revenue Code; or I am not subject to backup withholding
because I have not been notified that I am subject to backup withholding as a
result of a failure to report all interest or dividends; or the Internal
Revenue Service has notified me that I am no longer subject to backup
withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option--Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option--Income distributions and short term capital gains
distributions paid in cash, long term capital gains distributions reinvested
in additional shares.
o Cash Option--Income distributions and capital gains distributions paid in
cash.
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints MGF Service Corp. as his agent to enter orders for shares, to receive
dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption
shares held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor. The
investor further agrees that MGF Service Corp. can cease to act as such agent
upon ten days' notice in writing to the investor at the address contained in
this Application. The investor hereby ratifies any instructions given pursuant
to this Application and for himself and his successors and assigns does hereby
release MGF Service Corp., the Legacy Equity Fund, Midwest Group Financial
Services, Inc., and their respective officers, employees, agents and
affiliates from any and all liability in the performance of the acts
instructed herein provided that such entities have exercised due care to
determine that the instructions are genuine. The Internal Revenue Service does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
- - ------------------------------------ ------------------------------------
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
- - ------------------------------------ ------------------------------------
Title of Corporate Officer, Date
Trustee, etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE.
UNLESS OTHERWISE SPECIFIED, EACH JOINT OWNER SHALL HAVE FULL
AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
<PAGE>
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder of
the Legacy Equity Fund (the Fund) and that
- - ------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf
of the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the
Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to
sign any documents necessary or appropriate to appoint MGF Service Corp. as
redemption agent of the corporation or organization for shares of the Fund,
to establish or acknowledge terms and conditions governing the redemption of
said shares and to otherwise implement the privileges elected on the
Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
- - ------------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of______________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on___________________at which
a quorum was present and acting throughout, and that the same are now
in full force and effect. I further certify that the following is (are) duly
elected officer(s) of the corporation or organization, authorized to act in
accordance with the foregoing resolutions.
NAME TITLE
- - ------------------------------------ ------------------------------------
- - ------------------------------------ ------------------------------------
- - ------------------------------------ ------------------------------------
Witness my hand and seal of the corporation or organization this__________day
of__________, 19_______
- - ------------------------------------ ------------------------------------
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
PROSPECTUS
June 20, 1996
MISSISSIPPI OPPORTUNITY FUND
==============================================================================
The investment objective of the MISSISSIPPI OPPORTUNITY FUND is to provide
long-term capital growth by investing primarily in the common stocks and other
equity securities of publicly-traded companies headquartered in Mississippi,
and those companies having a significant presence in the state. While there is
no assurance that the Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this Prospectus.
The Fund offers two classes of shares: Class A shares, sold subject to a
maximum 3.5% sales charge and a 12b-1 distribution fee of up to .50% of
average daily net assets, and Class C shares, sold without a sales charge and
subject to a 12b-1 distribution fee of up to 1% of average daily net assets.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
INVESTMENT ADVISOR
VECTOR MONEY MANAGEMENT, INC.
4266 I-55 NORTH, SUITE 102
JACKSON, MISSISSIPPI 39211
The Mississippi Opportunity Fund (the "Fund") is a non-diversified, open-end
series of Maplewood Investment Trust, a registered management investment
company. This Prospectus provides you with the basic information you should
know before investing. You should read it and keep it for future reference.
A Statement of Additional Information, dated June 20, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354,
and its telephone number is 1-800-580-4820. A copy of the Statement of
Additional Information may be obtained at no charge by calling or writing the
Fund.
<PAGE>
TABLE OF CONTENTS
==============================================================================
Prospectus Summary........................................................ 2
Synopsis of Costs and Expenses............................................ 3
Financial Highlights...................................................... 4
Investment Objective, Investment Policies and Risk Considerations......... 5
How to Purchase Shares.................................................... 8
How to Redeem Shares...................................................... 12
How Shares are Valued..................................................... 14
Management of the Fund.................................................... 14
Distributor and Distributions Plans....................................... 16
Dividends, Distributions, Taxes and Other Information..................... 16
- - ------------------------------------------------------------------------------
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>
PROSPECTUS SUMMARY
==============================================================================
THE FUND. The Mississippi Opportunity Fund (the "Fund") is a non-diversified,
open-end series of Maplewood Investment Trust, a registered management
investment company commonly known as a "mutual fund." The Fund's investment
objective is to provide long-term capital growth. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment
objective, the Fund will invest primarily in the common stocks and other
equity securities of publicly-traded companies headquartered in Mississippi,
and those companies having a significant presence in the state. Realization of
current income is not a significant investment consideration and any income
realized will be incidental to the Fund's objective. (See "Investment
Objective, Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. Vector Money Management, Inc. (the "Advisor") serves
as investment advisor to the Fund. For its services, the Advisor receives
compensation of .875% of the average daily net assets of the Fund. (See
"Management of the Fund.")
PURCHASE OF SHARES. Two classes of shares of the Fund are offered in this
Prospectus - Class A and Class C shares. Class A shares are offered at net
asset value plus a maximum 3.5% sales charge and are subject to 12b-1
distribution fees of up to .50% of average daily net assets. Class A shares
may be purchased at reduced sales charges or with no sales charge through
purchases described in "How to Purchase Shares" in this Prospectus. Class C
shares are offered at net asset value without a sales charge but are subject
to 12b-1 distribution fees of up to 1% of average daily net assets. The
minimum initial investment for each class of shares is $2,000 ($1,000 for IRA
accounts). (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions.
Shares may be redeemed at any time in which the Fund is open for business at
the net asset value next determined after receipt of a redemption request by
the Fund. A shareholder who submits written authorization may redeem shares by
telephone. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is
distributed quarterly. Net capital gains, if any, are distributed annually.
Investors may elect to receive dividends and distributions in cash or the
dividends and distributions may be reinvested in additional Fund shares. (See
"Dividends, Distributions, Taxes and Other Information.")
<PAGE>
MANAGEMENT. The Fund is a series of Maplewood Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed MGF Service Corp. (the
"Administrator") to provide administration, accounting and transfer agent
services. (See "Management of the Fund.")
DISTRIBUTOR. Midwest Group Financial Services, Inc. (the "Distributor")
serves as distributor of shares of the Fund. For its services, the Distributor
receives commissions on the sale of Class A shares consisting of the portion
of the sales charge remaining after the discounts it allows to securities
dealers. (See "Distributor and Distribution Plans.")
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
==============================================================================
SHAREHOLDER TRANSACTION EXPENSES:
CLASS A CLASS C
SHARES SHARES
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price)............ 3.50% None
Deferred Sales Charge............................ None None
Sales Charge Imposed on Reinvested Dividends..... None None
Redemption Fee................................... None None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets) CLASS A CLASS C
SHARES SHARES
Management Fees After Waivers(1) ................... .00% .00%
12b-1 Fees(2) ...................................... .50% 1.00%
Other Expenses...................................... 1.62% 1.62%
-------- ---------
Total Fund Operating Expenses After Waivers
and Expense Reimbursements(3) .................... 2.12% 2.62%
======== =========
(1) Absent waivers of management fees, such fees would have been .875% for
the fiscal period ended February 29, 1996.
(2) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association of
Securities Dealers.
(3)Absent waivers of management fees and expense reimbursements by the
Advisor, total Fund operating expenses would have been 6.90% and 7.40% for
Class A shares and Class C shares, respectively, for the fiscal period
ended February 29, 1996.
EXAMPLE: You would pay the following expenses on a $1,000 investment,
whether or not you redeem at the end of the period, assuming 5% annual return:
CLASS A CLASS C
SHARES SHARES
1 Year $ 56 $ 27
3 Years 99 82
5 Years 145 139
10 Years 272 296
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees
and costs of operating the Fund. The Annual Fund Operating Expenses shown
above are based upon estimated amounts for the current fiscal year. THE
EXAMPLE SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE
SHOWN.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
==============================================================================
The following audited financial information has been audited by KPMG Peat
Marwick LLP, independent accountants, whose report covering the fiscal period
ended February 29, 1996 is contained in the Statement of Additional
Information. This information should be read in conjunction with the Fund's
latest audited annual financial statements and notes thereto, which are also
contained in the Statement of Additional Information, a copy of which may be
obtained at no charge by calling the Fund.
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- - -------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS A CLASS C
FOR THE FOR THE
PERIOD FROM PERIOD FROM
APR. 4, 1995 APR. 4, 1995
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO
FEB. 29, 1996 FEB. 29, 1996
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period (initial offering price)............. $ 10.00 $ 10.00
Income (loss) from investment operations:
Net investment loss.................................................. ( 0.03 ) ( 0.05 )
Net realized and unrealized gain on investments...................... 1.27 1.24
--------------- ---------------
Total from investment operations................................... 1.24 1.19
--------------- ---------------
Distributions to shareholders from
Net realized gain from investment transactions....................... ( 0.02 ) ( 0.02 )
--------------- ---------------
Net asset value, end of period............................................ $ 11.22 $ 11.17
=============== ===============
Total return ............................................................. 12.41%(A) 11.86%(B)
=============== ===============
Ratios/supplemental data
Net assets, end of period.............................................. $ 1,448,527 $ 514,090
=============== ===============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees.......................... 6.90%(C) 7.40%(C)
After expense reimbursements and waived fees........................... 2.12%(C) 2.49%(C)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees.......................... (5.20%)(C) (5.60%)(C)
After expense reimbursements and waived fees........................... (0.42%)(C) (0.69%)(C)
Portfolio turnover rate................................................... 7.11% 7.11%
- - -------------------------------------------------------------------------------------------------------------------
<FN>
(A) Total return does not reflect payment of a sales charge. Annualized total return is 13.77%.
(B) Annualized total return is 13.15%.
(C) Annualized.
Further information about the performance of the Fund is contained in the
Annual Report, a copy of which can be obtained at no charge by calling the
Fund.
</FN>
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
==============================================================================
The investment objective of the Fund is to provide long-term capital
growth by investing primarily in common stocks and other equity securities of
publicly-traded companies headquartered in Mississippi, and those companies
having a significant presence in the state ("Mississippi Securities").
Realization of current income will not be a significant investment
consideration, and any such income realized should be considered incidental to
the Fund's objective. Any investment involves risk, and there can be no
assurance that the Fund will achieve its investment objective. The investment
objective and fundamental investment limitations of the Fund may not be
altered without the prior approval of a majority (as defined by the Investment
Company Act of 1940) of the Fund's shares.
==============================================================================
The Advisor believes that the demographic and economic characteristics of
Mississippi, including population, employment, retail sales, personal income,
bank loans, bank deposits and residential construction are such that many
companies headquartered in the state, or having a significant presence in the
area by virtue of having a significant portion of their corporate earnings
generated from operations in the state and/or a significant number of
employees in the state, have a greater than average potential for capital
appreciation. If a company is not headquartered in Mississippi, the Advisor
will consider such company as having a "significant presence" in the state if
25% or more of its profits are generated from operations (including plants,
offices or a sales force) based in Mississippi, or if such company employs 400
or more in its operations within the State of Mississippi.
INVESTMENT SELECTION. Through fundamental analysis the Advisor will attempt to
identify securities and groups of securities with potential for capital
appreciation. Under normal market conditions, not less than 75% of the Fund's
total assets will be invested in Mississippi Securities. The Advisor will
generally focus on common stocks and other equity securities of companies
headquartered or having a significant presence in Mississippi. The Fund will
generally remain fully invested at all times. The Advisor intends to limit
portfolio turnover in the Fund, believing that a long-term rather than a
short- term selection of investments is preferable.
The equity securities in which the Fund may invest include common stock,
convertible preferred stock, straight preferred stock and convertible bonds.
The Fund may also invest up to 5% of its net assets in warrants or rights to
acquire equity securities other than those acquired in units or attached to
other securities. (See "Investment Limitations.")
<PAGE>
The Fund's concentration in companies headquartered in or having a significant
presence in Mississippi generally will tie the performance of the Fund to the
economic environment of the state and the surrounding area. There is no
assurance that the demographic and economic characteristics and other factors
that the Advisor believes favor companies in Mississippi will continue in the
future. Moreover, the Fund's portfolio may include securities of smaller
companies and companies that are not nationally recognized. The prices of
stocks of such companies generally are more volatile than those of larger or
more mature companies, their securities are generally less liquid, and they
are more likely to be negatively affected by adverse economic or market
conditions. Moreover, because of its concentration, the Fund's portfolio may
be invested in a smaller number of companies than a general equity mutual
fund. This may result in investments by the Fund in a smaller number of
industry sectors. These limitations may also restrict the Advisor from using
certain traditional analytical measures employed to select investments and
also exclude some strategies that could offer superior performance or reduce
fluctuations in the values of such assets.
Under normal market conditions, at least 90% of the Fund's total assets will
be invested in equity securities (with at least 75% of the Fund's total assets
invested in Mississippi Securities). Warrants and rights will be excluded for
purposes of this calculation. As a temporary defensive measure, however, the
Fund may invest up to 100% of its total assets in investment grade bonds, U.S.
Government Securities, repurchase agreements or money market instruments. When
the Fund invests in investment grade bonds, U.S. Government Securities or
money market instruments as a temporary defensive measure, it is not pursuing
its stated investment objective.
U.S. GOVERNMENT SECURITIES. The Fund may invest a portion of its assets
in U.S. Government Securities. "U.S. Government Securities" include U.S.
Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association as well as obligations of U.S. Government authorities, agencies
and instrumentalities such as Federal National Mortgage Association, Federal
Home Loan Mortgage Corporation, Federal Farm Credit Bank, Federal Home Loan
Bank, Resolution Funding Corporation, Financing Corporation, Tennessee Valley
Authority and Student Loan Marketing Association. U.S. Government Securities
may be acquired subject to repurchase agreements. While obligations of some
U.S. Government sponsored entities are supported by the full faith and credit
of the U.S. Government, several are supported by the right of the issuer to
borrow from the U.S. Government, and still others are supported only by the
credit of the issuer itself. The guarantee of the U.S. Government does not
extend to the yield or value of the U.S. Government Securities held by the
Fund or to the Fund's shares.
<PAGE>
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes when the Advisor believes that unusually volatile
or unstable economic and market conditions exist. When the Fund assumes a
temporary defensive posture, it may invest up to 100% of its net assets in
money market instruments. Under normal circumstances, money market instruments
will typically represent a portion of the Fund's portfolio, as funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio
securities and to provide for shareholder redemptions and operational expenses
of the Fund. Money market instruments mature in thirteen months or less from
the date of purchase and include U.S. Government Securities (defined above)
and corporate debt securities (including those subject to repurchase
agreements), bankers' acceptances and certificates of deposit of domestic
branches of U.S. banks, and commercial paper (including variable amount demand
master notes). At the time of purchase, money market instruments will have a
short-term rating in one of the two highest categories by any nationally
recognized statistical rating organization ("NRSRO") or, if not rated, of
equivalent quality in the Advisor's opinion. See the Statement of Additional
Information for a further description of money market instruments.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
other high-grade debt securities subject to repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an
agreed upon future date. The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate earned by the Fund
effective for the period of time during which the repurchase agreement is in
effect. Delivery pursuant to the resale typically will occur within one to
five days of the purchase. For purposes of the Investment Company Act of 1940
(the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the securities subject to the repurchase agreement. The Fund
will not enter into a repurchase agreement which will cause more than 10% of
its assets to be invested in repurchase agreements which extend beyond seven
days and other illiquid securities.
INVESTMENT COMPANIES. In order to achieve its investment objective, the Fund
may invest in the securities of open-end investment companies which are
generally authorized to invest in securities eligible for purchase by the
Fund. To the extent the Fund does so, Fund shareholders would indirectly pay a
portion of the operating costs of the underlying investment companies. These
costs include management, brokerage, shareholder servicing and other
operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly. The Fund will only invest in other investment companies by purchase
of such securities on the open market where no commission or profit to a
sponsor or dealer results from the purchase other than the customary broker's
commissions or when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition. The Advisor will waive its advisory fee for
that portion of the Fund's assets invested in other investment companies,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
<PAGE>
The Fund may invest up to 10% of its total assets in securities of other
investment companies. In addition, the Fund will not invest more than 5% of
its total assets in securities of any single investment company, nor will it
purchase more than 3% of the outstanding voting securities of any investment
company.
REAL ESTATE SECURITIES. The Fund may not invest in real estate (including
limited partnership interests), but may invest in readily marketable
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein. The Fund may also invest in
readily marketable interests in real estate investment trusts ("REITs"). REITs
are generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity. Although the
Fund is not limited in the amount of REITs it may acquire, the Fund does not
presently intend to invest more than 5% of its net assets in REITs.
OPTIONS. When the Advisor believes that individual portfolio securities are
approaching the top of the Advisor's growth and price expectations, covered
call options (calls) may be written (sold) against such securities in a
disciplined approach to selling portfolio securities. The Fund writes options
only for hedging purposes and not for speculation. If the Advisor is incorrect
in its expectations and the market price of a stock subject to a call option
rises above the exercise price of the option, the Fund will lose the
opportunity for further appreciation of that security. Additional information
on writing covered call options is contained in the Statement of Additional
Information.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its
investment objective. To the extent that the major portion of the Fund's
portfolio consists of common stocks and other equity securities, it may be
expected that its net asset value will be subject to greater fluctuation than
a portfolio containing mostly fixed income securities. The Fund is a
non-diversified fund and therefore may invest more than 5% of its total assets
in the securities of one or more issuers. Because a relatively high percentage
of the assets of the Fund may be invested in the securities of a limited
number of issuers, the value of shares of the Fund may be more sensitive to
any single economic, business, political or regulatory occurrence than the
value of shares of a diversified investment company. The Fund may borrow only
under certain limited conditions (including to meet redemption requests), but
not to purchase securities. Borrowing, if done, would tend to exaggerate the
effects of market fluctuations in the Fund's net asset value until repaid.
(See "Borrowing.")
<PAGE>
PORTFOLIO TURNOVER. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new
investment opportunities. Nevertheless, the Fund's annual portfolio turnover
generally is not expected to exceed 50%. The degree of portfolio activity
affects the brokerage costs of the Fund and may have an impact on the amount
of taxable distributions to shareholders. The annualized portfolio turnover of
the Fund for the fiscal period ended February 29, 1996 was 7%.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 15% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities
when it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make
any additional investments while its outstanding borrowings exceed 5% of the
current value of its total assets.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
securities before maturity may be time consuming and expensive, and it may be
difficult or impossible for the Fund to sell illiquid investments promptly at
an acceptable price. Included within the category of illiquid securities are
restricted securities, which cannot be resold to the public without
registration under the federal securities laws. Unless registered for sale,
these securities can only be sold in privately negotiated transactions or
pursuant to an exemption from registration.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at
a future date beyond customary settlement time. The Fund is required to hold
and maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient
to meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no
income accrues to the purchaser of when-issued securities during the period
prior to issuance. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of acquiring
securities for its portfolio, the Fund may dispose of a when-issued security
or forward commitment prior to settlement if the Advisor deems it appropriate
to do so. The Fund may realize short-term gains or losses upon such sales.
<PAGE>
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to
risk, the Fund has adopted certain investment limitations. The Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets, or
(b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities in amounts not exceeding 15% of
its total assets (the Fund will not make any investment if borrowings exceed
5% of its total assets); (2) make loans of money or securities, except that
the Fund may invest in repurchase agreements (but repurchase agreements having
a maturity of longer than seven days are subject to the limitation on
investing in illiquid securities); (3) invest more than 10% of its net assets
in illiquid securities; (4) invest in securities of issuers which have a
record of less than three years' continuous operation (including predecessors
and, in the case of bonds, guarantors), if more than 5% of its total assets
would be invested in such securities; (5) purchase foreign securities; (6)
purchase or sell commodities, commodities contracts, real estate (including
limited partnership interests, but excluding readily marketable securities
secured by real estate or interests therein, readily marketable interests in
real estate investment trusts, or readily marketable securities issued by
companies that invest in real estate or interests therein) or interests in
oil, gas, or other mineral exploration or development programs or leases
(although it may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases); (7) invest more than 10% of its
total assets in the securities of other investment companies; (8) write,
purchase, or sell call or put straddles, spreads or combinations thereof, or
futures contracts or related options (but the Fund may write covered call
options as described in this Prospectus); and (9) invest more than 5% of its
net assets in warrants. Investment restrictions (1),(2),(5),(6),(7),(8) and
(9) are deemed fundamental, that is, they may not be changed without
shareholder approval. See "Investment Limitations" in the Fund's Statement of
Additional Information for a complete list of investment limitations.
If the Board of Trustees determines that the Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment
limitation, the Board can make such change without shareholder approval and
will disclose any such material changes in its Prospectus. Any limitation that
is not specified in the Fund's Prospectus or Statement of Additional
Information as being fundamental is nonfundamental. If a percentage limitation
is satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in the value of the Fund's portfolio
securities will not constitute a violation of such limitation. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
<PAGE>
HOW TO PURCHASE SHARES
==============================================================================
Assistance in opening accounts may be obtained from the Administrator by
calling 1-800-580-4820, or by writing to the Fund at the address shown below
for regular mail orders. Assistance is also available through any
broker-dealer authorized to sell shares of the Fund. Such broker-dealer may
charge you a fee for its services. Payment for shares purchased may be made
through your account at the broker-dealer processing your application and
order to purchase. Your investment will purchase shares at the public offering
price (net asset value plus any applicable sales charge) next determined after
your order is received by the Fund in proper form as indicated herein. The
minimum initial investment in the Fund is $2,000 ($1,000 for IRAs). The Fund
may, in the Advisor's sole discretion, accept certain accounts with less than
the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable
in U.S. dollars. All orders received by the Administrator, whether by mail,
bank wire or facsimile order, prior to 4:00 p.m. Eastern time will purchase
shares at the next determined public offering price on that business day. If
your order is not received by 4:00 p.m. Eastern time, your order will purchase
shares at the public offering price determined on the next business day.
Broker-dealers are responsible for transmitting properly completed orders so
that they will be received by 4:00 p.m. Eastern time.
Under certain circumstances, the Advisor, in its sole discretion, may allow
payment in kind for Fund shares purchased by accepting securities in lieu of
cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for more information on purchases in kind.
Due to Internal Revenue Service ("IRS") regulations, the Fund is required to,
and will, withhold taxes on all distributions and redemption proceeds without
social security or tax identification numbers, if the number is not delivered
to the Fund within 60 days. If, however, you have already applied for a social
security or tax identification number at the time of completing your account
application, the application should so indicate.
<PAGE>
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating
to the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by
the Fund or the Administrator in the transaction.
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
Mississippi Opportunity Fund, and mail it to:
Mississippi Opportunity Fund
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish
a new account or add to an existing account by wire, please call the Fund, at
1-800-580-4820, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and
accurate handling of your investment. Please have your bank use the following
wiring instructions to purchase by wire:
The Fifth Third Bank
ABA# 042000314
For Maplewood Investment Trust #999-36756
For Mississippi Opportunity Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. Once your wire
is sent you should, as soon as possible thereafter, complete and mail your
Account Application to the Fund as described under "Regular Mail Orders,"
above. Investors should be aware that some banks may impose a wire service
fee.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any
time by purchasing shares at the then current public offering price. Before
making additional investments by bank wire, please call the Fund at
1-800-580-4820 to alert the Fund that your wire is to be sent. Follow the wire
instructions above to send your wire. When calling for any reason, please have
your account number ready, if known. Mail orders should include, when
possible, the "Invest by Mail" stub which is attached to your Fund
confirmation statement. Otherwise, be sure to identify your account in your
letter.
<PAGE>
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bimonthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum), which will be automatically invested in
shares at the net asset value or public offering price, whichever is
applicable, on or about the fifteenth day and/or the last business day of the
month. The investor may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
CHOOSING BETWEEN CLASSES OF SHARES
Investors must specify at the time of purchase whether they are purchasing
Class A or Class C shares. Investors should understand the differences between
each class of shares. Class A shares are sold subject to a maximum sales
charge of 3.5%, as compared to no sales charge for Class C shares. The sales
charge for Class A shares may be reduced or eliminated in some cases. Class A
shares bear potential distribution fees of up to .50% of the Class A shares'
average daily net assets, as compared to potential distribution fees for Class
C shares of up to 1% of the Class C shares' average daily net assets. See
"Distribution Plans."
When deciding between the two classes of shares, an investor should carefully
consider the amount and intended length of his or her investment in the Fund.
Specifically, an investor should consider whether the accumulated distribution
fees applicable to Class C shares would be less than the sales charge and
accumulated distribution fees applicable to Class A shares purchased at the
same time and held for the same period, and the extent to which the
differences between those amounts would be offset by the higher returns
associated with Class A shares. Because the operating expenses of Class C
shares generally will be greater than those of Class A shares, the dividends
on Class A shares will generally be higher than the dividends on Class C
shares. However, since the sales charge is deducted at the time of purchase of
Class A shares, not all of the purchase amount will purchase Class A shares.
Consequently, the same initial investment will purchase more Class C shares
than Class A shares.
Because of reductions in the sales charge for purchases of Class A shares
aggregating $100,000 or more, it may be advantageous for investors purchasing
large quantities of shares to purchase Class A shares. Investors who may
qualify for an elimination of the sales charge payable for purchases of Class
A shares should purchase Class A shares. In addition, because the accumulated
higher operating expenses of Class C shares may exceed the amount of the sales
charge and distribution fees associated with Class A shares, investors who
intend to hold their shares for an extended period of time should consider
purchasing Class A shares. Investors who would not qualify for a reduction in
or elimination of the sales charge for purchases of Class A shares may decide
that it is more advantageous to have the entire purchase amount invested
immediately in Class C shares notwithstanding the higher operating expenses
associated with Class C shares. These higher operating expenses may be offset
by any return an investor receives from the additional Class C shares received
as a result of not having to pay a sales charge. However, an investor should
understand that the Fund's future return cannot be predicted, and that there
is no assurance that such return, if any, would compensate for the higher
operating expenses associated with Class C shares.
<PAGE>
INFORMATION REGARDING CLASS A SHARES
Class A shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
sales charge as shown in the following table. The Distributor receives the
sales charge and may reallow it in the form of dealer discounts as follows:
SALES SALES DEALER
CHARGE AS CHARGE AS REALLOWANCE AS
% OF NET % OF PUBLIC % OF PUBLIC
AMOUNT OFFERING OFFERING
AMOUNT OF INVESTMENT INVESTED PRICE PRICE
Less than $100,000 3.63% 3.50% 3.00%
$100,000 but less than $250,000 3.09 3.00 2.50
$250,000 but less than $500,000 2.56 2.50 2.00
$500,000 or more None None None
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts from the Distributor may
reallow all or a portion of such dealer discounts to other dealers or brokers.
The dealer discounts shown above apply to all dealers who have agreements with
the Distributor.
REDUCED SALES CHARGES FOR CLASS A SHARES. An investor may purchase Class A
shares at a reduced sales charge or without a sales charge by purchasing
shares through one of the methods described below.
RIGHT OF ACCUMULATION. Pursuant to the right of accumulation, investors are
permitted to purchase Class A shares at the public offering price applicable
to the total of (a) the total public offering price of the Class A shares of
the Fund then being purchased plus (b) an amount equal to the then current net
asset value of the purchaser's current holdings of Fund shares. To receive the
applicable public offering price pursuant to the right of accumulation,
investors must, at the time of purchase, provide sufficient information to
permit confirmation of qualification. The right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.
<PAGE>
LETTERS OF INTENT. Investors in Class A shares may qualify for a lower sales
charge by executing a letter of intent. A letter of intent allows an investor
to purchase Class A shares of the Fund over a 13 month period at reduced sales
charges based on the total amount intended to be purchased plus an amount
equal to the then current net asset value of the purchaser's current holdings
of Fund shares. Thus, a letter of intent permits an investor to establish a
total investment goal to be achieved by any number of purchases over a 13
month period. Each investment made during the period receives the reduced
sales charge applicable to the total amount of the intended investment.
The letter of intent does not obligate the investor to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the
period, the investor must pay the difference between the sales charge
applicable to the purchases made and the charges previously paid. If such
difference is not paid by the investor, the Administrator is authorized by the
investor to liquidate a sufficient number of shares held by the investor to
pay the amount due. On the initial purchase of shares, if required (or
subsequent purchases, if necessary), shares equal to at least 5% of the amount
indicated in the letter of intent will be held in escrow during the 13 month
period (while remaining registered in the name of the investor) for this
purpose. The value of any shares redeemed or otherwise disposed of by the
investor prior to termination or completion of the letter of intent will be
deducted from the total purchases made under such letter of intent.
A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales
charge). The 13 month period would then begin on the date of the first
purchase during the 90-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the letter of intent. Investors must
notify the Administrator whenever a purchase is being made pursuant to a
letter of intent.
Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Application
contained in this Prospectus or is otherwise available from the Administrator.
The letter of intent option may be modified or eliminated at any time or from
time to time by the Trust without notice.
REINVESTMENT. Investors may reinvest proceeds from a redemption of Class A
shares, without a sales charge, in Class A shares of the Fund. The amount that
may be so reinvested may not exceed the amount of the redemption proceeds, and
a written order for the purchase of such shares must be received by the
Administrator within 90 days after the effective date of the redemption.
<PAGE>
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number
of shares purchased by reinvestment and the period of time that has elapsed
after the redemption, although for tax purposes the amount disallowed is added
to the cost of the shares acquired upon the reinvestment.
PURCHASES BY RELATED PARTIES AND GROUPS. Reductions in sales charges apply to
purchases by a single "person," including an individual, members of a family
unit, consisting of a husband, wife and children under the age of 21
purchasing securities for their own account, or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate.
Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of this
paragraph, a qualified group consists of a "company," as defined in the 1940
Act, which has been in existence for more than six months and which has a
primary purpose other than acquiring shares of the Fund at a reduced sales
charge, and the "related parties" of such company. For purposes of this
paragraph, a "related party" of a company is: (i) any individual or other
company that directly or indirectly owns, controls, or has the power to vote
5% or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls, or
has the power to vote 5% or more of its outstanding voting securities; (iii)
any other company under common control with such company; (iv) any executive
officer, director or partner of such company or of a related party; and (v)
any partnership of which such company is a partner.
SALES AT NET ASSET VALUE. The Fund may sell Class A shares at a purchase price
equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund and the Advisor, and
to employees and principals of related organizations and their families, and
certain parties related thereto, including clients and related accounts of the
Advisor. Clients of investment advisors and financial planners may also
purchase Class A shares of the Fund at net asset value if the investment
advisor or financial planner has made arrangments to permit them to do so with
the Distributor. The public offering price of Class A shares of the Fund may
also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal
holding company or a public or private investment company.
<PAGE>
HOW TO REDEEM SHARES
==============================================================================
Shares of the Fund may be redeemed on each day that the Fund is open for
business. The Fund is open for business on each day the New York Stock
Exchange (the "Exchange") is open for business. Any redemption may be for more
or less than the purchase price of your shares depending on the market value
of the Fund's portfolio securities. All redemption orders received in proper
form, as indicated herein, by the Administrator prior to 4:00 p.m. Eastern
time will redeem shares at the net asset value determined as of that business
day's close of trading. Otherwise, your order will redeem shares on the next
business day. There is no charge for redemptions from the Fund. You may also
redeem your shares through a broker-dealer or other institution which may
charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $2,000 (due to redemptions, exchanges or
transfers, but not due to market action) upon 30 days' written notice. If the
shareholder brings his account value up to $2,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans
may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-580-4820, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to the
Mississippi Opportunity Fund, P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your
request for redemption must include:
1) your letter of instruction specifying the account number, and the
number of shares or dollar amount to be redeemed. This request must be signed
by all registered shareholders in the exact names in which they are
registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension or
profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days
after receipt of your redemption request. However, the Fund may delay
forwarding a redemption check for recently purchased shares while it
determines whether the purchase payment will be honored. Such delay (which may
take up to 15 days) may be reduced or avoided if the purchase is made by wire
transfer. In such cases, the net asset value next determined after receipt of
the request for redemption will be used in processing the redemption and your
redemption proceeds will be mailed to you upon clearance of your check to
purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading
on the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
to fairly determine the value of its assets, and (iii) for such other periods
as the Commission may permit.
<PAGE>
TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option
of redeeming shares by telephone under certain limited conditions. You may
redeem shares, subject to the procedures outlined below, by calling the Fund
at 1-800-580-4820. The Fund will redeem shares when requested by telephone if,
and only if, the shareholder confirms redemption instructions in writing. The
Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX # 513-629-2901). The confirmation instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder;
4) Shareholder signature as it appears on the application then on file
with the Fund; and
5) Any required signature guarantees (see "Signature Guarantees").
In such cases, the net asset value used in processing the redemption will be
the net asset value next determined after the telephone request is received.
Redemption proceeds will not be remitted until written confirmation of the
redemption request is received. You can choose to have redemption proceeds
mailed to you at your address of record, your bank, or to any other authorized
person, or you can have the proceeds sent by bank wire to your bank ($1000
minimum). Shares of the Fund may not be redeemed by wire on days in which your
bank is not open for business. Redemption proceeds will only be sent to the
bank account or person named in your Account Application currently on file
with the Fund. You can change your redemption instructions anytime you wish by
filing a letter including your new redemption instructions with the Fund. (See
"Signature Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any shareholder or all shareholders, without notice, if the
Trustees believe it to be in the best interest of the shareholders to do so.
During drastic economic and market changes, telephone redemption privileges
may be difficult to implement.
<PAGE>
Neither the Fund, the Administrator, nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The affected investors will bear the risk of any such loss. The
Fund or the Administrator, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Fund or the
Administrator do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon thirty days' written
notice, to make reasonable charges for wire redemptions. All charges will be
deducted from your account by redemption of shares in your account. Your bank
or brokerage firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
SYSTEMATIC WITHDRAWAL PLAN. An investor who owns shares of the Fund valued at
$5,000 or more at the current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount not
less than $50. Each month or quarter as specified, the Fund will automatically
redeem sufficient shares from your account to meet the specified withdrawal
amount. The investor may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the investors's bank account by completing the
applicable section on the Account Application form accompanying this
Prospectus, or by calling or writing the Fund. See the Statement of Additional
Information for further details.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your
account. Signature guarantees are required for (1) change of registration
requests, and (2) requests to establish or change redemption services other
than through your initial account application, and (3) requests for
redemptions in excess of $25,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union, registered broker-dealer or a member firm of a U.S. Stock
Exchange, and must appear on the written request for redemption or change of
registration.
HOW SHARES ARE VALUED
==============================================================================
The net asset value of Class C shares and the public offering price (net asset
value plus applicable sales charge) of Class A shares of the Fund is
determined on each business day that the Exchange is open for trading, as of
the close of the Exchange (currently 4:00 p.m., Eastern time). Net asset value
per share is determined by dividing the total value of all Fund securities
(valued at market value) and other assets, less liabilities, by the total
number of shares then outstanding. Net asset value includes interest on
fixed-income securities, which is accrued daily. The net asset value of each
class of shares will be affected by the expenses accrued and payable by such
class. Because certain expenses such as distribution fees are attributable
solely to one class of shares, the net income attributable to and the
dividends payable by each class of shares will differ from one another. See
the Statement of Additional Information for further details.
<PAGE>
Securities which are traded over-the-counter are priced at the last sale
price, if available, otherwise, at the last quoted bid price. Securities
traded on a securities exchange are valued based upon the closing price on the
valuation date on the principal exchange where the security is traded.
Securities that are listed on an exchange and which are not traded on the
valuation date are valued at the mean of the bid and asked prices. Securities
in which market quotations are not readily available may be valued on the
basis of prices provided by an independent pricing service, when such prices
are believed to reflect the fair market value of such securities. Securities
and other assets for which no quotations are readily available will be valued
in good faith at fair value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUND
==============================================================================
The Fund is a non-diversified series of Maplewood Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
1992, which was formerly known as The Nottingham Investment Trust. The Board
of Trustees has overall responsibility for management of the Fund under the
laws of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees, Vector
Money Management, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities,
pursuant to an Investment Advisory Agreement with the Trust. The Advisor is
also responsible for the selection of broker-dealers through which the Fund
executes portfolio transactions, subject to brokerage policies established by
the Trustees.
The Advisor is controlled by Ashby M. Foote III. The Advisor and its
affiliates currently serve as investment manager to over $75 million in
assets. The Advisor has been rendering investment counsel, utilizing
investment strategies substantially similar to those of the Fund, to
individuals, banks and thrift institutions, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since its inception
in 1988. The Advisor's address is 4266 I-55 North, Suite 102, Jackson,
Mississippi 39211.
<PAGE>
Ashby M. Foote III, President of the Advisor and Vice President of the Fund,
is primarily responsible for managing the portfolio of the Fund and has acted
in this capacity since the Fund's inception. Mr. Foote has been employed by
the Advisor since its inception and previously was a Senior Investment Officer
manager at Sunburst Bank in Jackson, Mississippi.
Under the Investment Advisory Agreement with the Fund, the Advisor receives a
monthly management fee equal to an annual rate of .875% of the average daily
net assets of the Fund. Although the investment advisory fee is higher than
that paid by most other investment companies, the Board of Trustees believes
the fee to be comparable to advisory fees paid by many funds having similar
objectives and policies. The Advisor may periodically voluntarily waive or
reduce its advisory fee to increase the performance of the Fund.
The Advisor currently intends to waive its investment advisory fees and
reimburse expenses to the extent necessary to limit total operating expenses
(exclusive of interest, taxes, brokerage commissions, sales charges and
extraordinary expenses) to 2.125% per annum of Class A shares' average daily
net assets and 2.625% per annum of Class C shares' average daily net assets.
However, there is no assurance that any voluntary fee waivers and expense
reimbursements will continue in the current or future fiscal years, and
expenses may therefore exceed 2.125% and 2.625% of the average daily net
assets of Class A shares and Class C shares, respectively.
ADMINISTRATOR. The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying agent
and shareholder service agent. The Administrator is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange Commission and state
securities authorities. The Fund pays the Administrator a fee for these
administrative services at the annual rate of .15% of the average value of its
daily net assets up to $50 million, .125% of the next $50 million of such
assets and .1% of such assets in excess of $100 million.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives a monthly fee of $3,000 for calculating daily net
asset value per share and maintaining such books and records as are necessary
to enable it to perform its duties. The Administrator also charges the Fund
for certain costs involved with the daily valuation of investment securities
and is reimbursed for out-of-pocket expenses.
<PAGE>
CUSTODIAN. The Custodian of the Fund's assets is Trustmark National Bank. The
Custodian's mailing address is P.O. Box 291, Jackson, Mississippi 39205. The
Custodian acts as the depository for the Fund, safekeeps its portfolio
securities, collects all income, disperses monies at the Fund's request and
maintains records in connection with its duties.
OTHER EXPENSES. The Fund is responsible for the payment of all of its
operating expenses. These include the fees payable to the Advisor, or expenses
otherwise incurred in connection with the management of the investment of the
Fund's assets, the fees and expenses of the Custodian, the fees and expenses
of the Administrator, the fees and expenses of Trustees, outside auditing and
legal expenses, all taxes and corporate fees payable by the Fund, registration
fees, state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders,
costs of shareholder reports and shareholder meetings, and any extraordinary
expenses. The Fund also pays for brokerage commissions and transfer taxes (if
any) in connection with the purchase and sale of portfolio securities.
Expenses attributable to a particular series of the Trust, including the Fund,
will be charged to that series, and expenses not readily identifiable as
belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular class
of shares of the Fund will be borne solely by such class.
BROKERAGE. In selecting broker-dealers through which to execute brokerage
transactions for the Fund, the Advisor attempts to obtain the best execution
for all such transactions. If it is believed that more than one broker is able
to provide the best execution, the Advisor will consider the receipt of
quotations and other market services, receipt of research, statistical and
other data and the sale of shares of the Fund in selecting a broker. Research
services obtained through the Fund's brokerage transactions may be used by the
Advisor for its other clients; conversely, the Fund may benefit from research
services obtained through the brokerage transactions of the Advisor's other
clients. The Advisor may also utilize a brokerage firm affiliated with the
Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. The Statement of Additional Information
contains more information about the management and brokerage practices of the
Fund.
DISTRIBUTOR AND DISTRIBUTION PLANS
==============================================================================
Midwest Group Financial Services, Inc., 312 Walnut Street, Cincinnati, Ohio
45202 (the "Distributor"), is the national distributor for the Fund under an
Underwriting Agreement with the Trust. The Distributor may sell Fund shares to
or through qualified securities dealers or others. The Distributor is a
subsidiary of Leshner Financial, Inc. Robert G. Dorsey, Treasurer of the
Distributor, is Vice President of the Trust. John F. Splain is Secretary of
both the Distributor and the Trust.
<PAGE>
The Trust has adopted a Distribution Plan for Class A shares of the Fund (the
"Class A Plan") and a Distribution Plan for Class C shares of the Fund (the
"Class C Plan") (collectively, the "Plans") pursuant to Rule 12b-1 under the
1940 Act. Under the Plans, the Fund may reimburse any expenditures to finance
any activity primarily intended to result in the sale of the applicable class
of shares of the Fund or the servicing of shareholder accounts, including, but
not limited to, the following: (i) payments to the Distributor, securities
dealers, and others for the sale of shares of the Fund; (ii) payment of
compensation to and expenses of personnel who engage in or support
distribution of shares of the Fund or who render shareholder support services
not otherwise provided by the Administrator or Custodian; and (iii)
formulation and implementation of marketing and promotional activities. The
categories of expenses for which reimbursement is made are approved by the
Board of Trustees of the Trust. Expenditures by the Fund pursuant to the Class
A Plan are accrued based on average daily net assets and may not exceed .50%
of the Class A shares' average net assets for each year elapsed subsequent to
the adoption of the Class A Plan. Such expenditures paid as service fees to
any person who sells Class A shares may not exceed .25% of the average daily
net assets of Class A shares. Expenditures by the Fund pursuant to the Class C
Plan are accrued based on average daily net assets and may not exceed 1% of
the Class C shares' average net assets for each year elapsed subsequent to the
adoption of the Class C Plan. Such expenditures paid as service fees to any
person who sells Class C shares of the Fund may not exceed .25% of the average
daily net assets of Class C shares; such expenditures paid for distribution
activities as an asset-based sales charge under the Class C Plan may not
exceed .75% of the average daily net assets of Class C shares.
Amounts accrued by each class under the Plans in one year but which are not
actually paid in that year, may be paid in subsequent years. Amounts not
accrued by each class under the Plans during a year may not be carried forward
to subsequent years. The Plans may not be amended to increase materially the
amount to be spent under the Plans without shareholder approval. The
continuation of the Plans must be approved annually by the Board of Trustees.
At least quarterly the Board of Trustees will review a written report of
amounts expended pursuant to the Plans and the purposes for which such
expenditures were made.
<PAGE>
For the fiscal period ended February 29, 1996, Class A shares and Class C
shares of the Fund paid $4,891 and $3,437, respectively, for distribution
expenses.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
==============================================================================
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general
and, particularly, with respect to dividends and distributions and other
matters. The discussion herein of the federal income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently,
investors should seek qualified tax advice.
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed
to them. The Fund intends to declare dividends, if any, quarterly and will
distribute any net short-term or long-term capital gains derived from the sale
of securities at the end of its fiscal year. In addition, the Fund may make a
supplemental distribution of capital gains annually in December. The nature
and amount of all dividends and distributions will be identified separately
when tax information is distributed by the Fund at the end of each year. The
Fund intends to withhold 30% on taxable dividends and any other payments that
are subject to such withholding and are made to persons who are neither
citizens nor residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the
payment of any dividends or the realization of any gains. All dividends and
capital gains distributions are reinvested in additional shares of the Fund
unless the shareholder requests in writing to receive dividends and/or capital
gains distributions in cash. That request must be received by the Fund prior
to the record date to be effective as to the next dividend. Tax consequences
to shareholders of dividends and distributions are the same if received in
cash or if received in additional shares of the Fund.
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to
qualify. For a more detailed discussion of the tax status of the Fund, see
"Additional Tax Information" in the Statement of Additional Information.
DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business
trust on August 12, 1992 under a Declaration of Trust. The Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into
one or more classes of shares. A description of the authorized series of
shares of the Trust and classes of such series is contained in the Statement
of Additional Information. Pursuant to its authority under the Declaration of
Trust, the Board of Trustees has authorized the issuance of two classes of
shares (Class A shares and Class C shares) representing equal pro rata
interests in the Fund, except the classes bear different expenses that reflect
the differences in the services provided to them.
<PAGE>
When issued, the shares of each series of the Trust, including the Fund, will
be fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder
meetings for purposes such as changing fundamental policies or electing
Trustees. The Board of Trustees shall promptly call a meeting for the purpose
of electing or removing Trustees when requested in writing to do so by the
record holders of at least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian
or by votes cast in person or by proxy at a meeting called for that purpose.
Shareholders of the Trust will vote in the aggregate and not by series (fund)
or class, except as otherwise required by the 1940 Act or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of the shareholders of a particular series or class. Matters affecting an
individual series, such as the Fund, include, but are not limited to, the
investment objectives, policies and restrictions of that series. Shares have
no subscription, preemptive or conversion rights. Share certificates will not
be issued. Each share is entitled to one vote (and fractional shares are
entitled to proportionate fractional votes) on all matters submitted for a
vote, and shares have equal voting rights except that only shares of a
particular series or class are entitled to vote on matters affecting only that
series or class. Shares do not have cumulative voting rights. Therefore, the
holders of more than 50% of the aggregate number of shares of all series of
the Trust may elect all the Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of
the Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust
and its shares.
As of the date of this Prospectus, Harmon & Co., c/o Trustmark National Bank
Trust Department, P.O. Box 291, Jackson, Mississippi owned of record or
beneficially more than 25% of the Class C shares of the Fund. Accordingly,
this entity may be deemed to be a "controlling person" of Class C shares of
the Fund within the meaning of the 1940 Act.
<PAGE>
REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders annual
reports which have been audited by the Trust's independent accountants and
semiannual reports which are unaudited. In addition, the Administrator will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares
owned and any dividends or distributions paid.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate
future performance. Total return and yield are computed separately for Class A
and Class C shares. The yield is expected to be higher for Class A shares due
to the higher distribution fees imposed on Class C shares.
The "total return" of the Fund refers to the average annual compounded rates
of return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged
to all shareholder accounts and deducts all nonrecurring charges at the end of
each period. The calculation further assumes the deduction of the current
maximum sales load from the initial investment. If the Fund has been operating
less than 1, 5 or 10 years, the time period during which the Fund has been
operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same
or different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in the Fund for
various periods.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses
of the Fund all recurring fees that are charged to all shareholder accounts
and any nonrecurring charges for the period stated.
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
INVESTMENT ADVISOR
Vector Money Management, Inc.
4266 I-55 North
Suite 102
Jackson, Mississippi 39211
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-580-4820
DISTRIBUTOR
Midwest Group Financial Services, Inc.
312 Walnut Street
Cincinnati, Ohio 45202-4094
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
BOARD OF TRUSTEES
John P. Boone
Jack E. Brinson
O. James Peterson III
Christopher J. Smith
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
THE MISSISSIPPI OPPORTUNITY FUND
PROSPECTUS
June 20, 1996
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
ACCOUNT APPLICATION (check appropriate share class)
o CLASS A SHARES (W8) $_________________
o CLASS C SHARES (W9) $_________________
Please mail account application to:
Mississippi Opportunity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
ACCOUNT NO. ____________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:_______________________________________
Home Office Address: ____________________________
Branch Address: _________________________________
Rep Name & No.: _________________________________
Rep Signature: __________________________________
Initial Investment of $_____________ ($2,000 minimum, $1,000 minimum for IRAs)
o Check or draft enclosed payable to the Mississippi Opportunity Fund.
o Bank Wire From: __________________________________________________________
ACCOUNT NAME S.S. #/TAX L.D.#
- - ---------------------------------------------- ----------------------------
Name of Individual, Corporation, Organization, (In case of custodial account
or Minor, etc. please list minor's S.S.#)
- - ---------------------------------------------- Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other __________
ADDRESS PHONE
- - ---------------------------------------------- ( )---------------------
Street or P.O. Box Business Phone
- - ---------------------------------------------- ( )---------------------
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust o Custodial o Non-Profit o Other
Occupation and Employer Name/Address__________________________________________
Are you an associated person of an NASD member? o Yes o No
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. Check
box if appropriate:
o I am exempt from backup withholding under the provisions of section 3406(a)
(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option--Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option--Income distributions and short term capital gains
distributions paid in cash, long term capital gains distributions reinvested
in additional shares.
o Cash Option--Income distributions and capital gains distributions paid in
cash.
REDUCED SALES CHARGES (CLASS A SHARES ONLY)
RIGHT OF ACCUMULATION: I apply for Right of Accumulation subject to the
Agent's confirmation of the following holdings of the Mississippi
Opportunity Fund.
ACCOUNT NUMBER/NAME ACCOUNT NUMBER/NAME
- - -------------------------------------- --------------------------------------
- - -------------------------------------- --------------------------------------
LETTER OF INTENT: (Complete the Right of Accumulation section if related
accounts are being applied to your Letter of Intent.)
o l agree to the Letter of Intent in the current Prospectus of the
Mississippi Opportunity Fund. 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 ______________________ 19 _______ (Purchase Date of not
more than 90 days prior to this Letter) an aggregate amount in the Fund at
least equal to (check appropriate box):
o $100,000 o $250,000 o $500,000
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints MGF Service Corp. as his agent to enter orders for shares, to receive
dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption
shares held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor. The
investor further agrees that MGF Service Corp. can cease to act as such agent
upon ten days' notice in writing to the investor at the address contained in
this Application. The investor hereby ratifies any instructions given pursuant
to this Application and for himself and his successors and assigns does hereby
release MGF Service Corp., the Mississippi Opportunity Fund, Midwest Group
Financial Services, Inc., and their respective officers, employees, agents and
affiliates from any and all liability in the performance of the acts
instructed herein provided that such entities have exercised due care to
determine that the instructions are genuine. The Internal Revenue Service does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
- - -------------------------------------- --------------------------------------
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
- - -------------------------------------- --------------------------------------
Title of Corporate Officer, Trustee, Date
etc.
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE. UNLESS OTHERWISE SPECIFIED, EACH JOINT
OWNER SHALL HAVE FULL AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
<PAGE>
AUTOMATIC INVESTMENT PLAN (COMPLETE FOR INVESTMENTS INTO THE FUND)
The Automatic Investment Plan is available for all established accounts of the
Mississippi Opportunity Fund. There is no charge for this service, and it
offers the convenience of automatic investing on a regular basis. The minimum
investment is $50.00 per month. For an account that is opened by using this
Plan, the minimum initial and subsequent investments must be $50.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be
discontinued by the shareholder at any time.
Please invest $ _________per month in the Mississippi Opportunity Fund.
- - ----------------------------------------------------------------------
Name of Financial Institution (FI)
- - ----------------------------------------------------------------------
City State
X---------------------------------------------------------------------
(Signature of Depositor EXACTLY as it appears on FI Records)
ABA Routing Number__________________________________________
FI Account Number___________________________________________
o Checking Account o Savings Account
Please make my automatic investment on:
o the last business day of each month
o the 15th day of each month
o both the 15th and last business day
X---------------------------------------------------------------------
(Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names.
Please sign exactly as signature appears on your FI's records.)
PLEASE ATTACH A VOIDED CHECK FOR THE AUTOMATIC INVESTMENT PLAN.
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which MGF Service Corp.
("MGF") has put into effect, by which amounts, determined by your depositor,
payable to the Mississippi Opportunity Fund, for purchase of shares of said
Fund, are collected by MGF, MGF hereby agrees:
MGF will indemnify and hold you harmless from any liability to any person
or persons whatsoever arising out of the payment by you of any amount drawn by
the Fund to its own order on the account of your depositor or from any
liability to any person whatsoever arising out of the dishonor by you whether
with or without cause or intentionally or inadvertently, of any such checks.
MGF will defend, at its own cost and expense, any action which might be
brought against you by any person or persons whatsoever because of your
actions taken pursuant to the foregoing request or in any manner arising by
reason of your participation in this arrangement. MGF will refund to you any
amount erroneously paid by you to the Fund on any such check if the claim for
the amount of such erroneous payment is made by you within six (6) months from
the date of such erroneous payment; your participation in this arrangement and
that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
AUTOMATIC WITHDRAWAL PLAN (COMPLETE FOR WITHDRAWALS FROM THE FUND)
This is an authorization for you to withdraw $_________ from my mutual fund
account beginning the last business day of the month of ______________.
Please Indicate Withdrawal Schedule (Check One):
o MONTHLY--Withdrawals will be made on the last business day of each month.
o QUARTERLY--Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
o ANNUALLY--Please make withdrawals on the last business day of the month of:.
Please Select Payment Method (Check One):
o CHECK: Please mail a check for my withdrawal proceeds to the mailing address
on this account.
o ACH TRANSFER: Please send my withdrawal proceeds via ACH transfer to my
bank checking or savings account as indicated below. I understand that the
transfer will be completed in two to three _______________ business days and
that there is no charge.
o BANK WIRE: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
PLEASE ATTACH A VOIDED --------------------------------------------------
CHECK FOR ACH OR BANK WIRE Bank Name Bank Address
--------------------------------------------------
Bank ABA# Account # Account Name
o SEND TO SPECIAL PAYEE (OTHER THAN APPLICANT): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee ----------------------------------------------------------------
Please send to: --------------------------------------------------------------
Street address City State Zip
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder of the
Mississippi Opportunity Fund (the Fund) and that
- - ------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf
of the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the
Fund, and it is FURTHER RESOLVED: That any one of the above noted officers is
authorized to sign any documents necessary or appropriate to appoint MGF
Service Corp. as redemption agent of the corporation or organization for
shares of the Fund, to establish or acknowledge terms and conditions governing
the redemption of said shares and to otherwise implement the privileges
elected on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
- - ------------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of______________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on _________________________
at which a quorum was present and acting throughout, and that the same are now
in full force and effect. I further certify that the following is (are) duly
elected officer(s) of the corporation or organization, authorized to act in
accordance with the foregoing resolutions.
NAME TITLE
- - -------------------------------------- --------------------------------------
- - -------------------------------------- --------------------------------------
- - -------------------------------------- --------------------------------------
Witness my hand and seal of the corporation or organization this__________day
of_______________________________________, 19_______
- - -------------------------------------- --------------------------------------
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>
PROSPECTUS
June 20, 1996
REGIONAL OPPORTUNITY FUND:
OHIO INDIANA KENTUCKY
==============================================================================
The investment objective of the REGIONAL OPPORTUNITY FUND: OHIO INDIANA
KENTUCKY (formerly the Greater Cincinnati Fund) is to provide long-term
capital growth by investing primarily in common stocks and other equity
securities of publicly-traded companies headquartered in Greater Cincinnati
and the Cincinnati tri-state region, and those companies having a significant
presence in the region. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this Prospectus.
The Fund offers two classes of shares: Class A shares, sold subject to a
maximum 4% sales charge and a 12b-1 distribution fee of up to .25% of average
daily net assets, and Class B shares, sold subject to a maximum 5% contingent
deferred sales charge and a 12b-1 distribution fee of up to 1% of average
daily net assets.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
INVESTMENT ADVISOR
CITYFUND ADVISORY, INC.
P.O. BOX 54944
CINCINNATI, OHIO 45254-0944
The Regional Opportunity Fund: Ohio Indiana Kentucky (the "Fund") is a
non-diversified, open-end series of Maplewood Investment Trust, a registered
management investment company. This Prospectus provides you with the basic
information you should know before investing. You should read it and keep it
for future reference.
A Statement of Additional Information, dated June 20, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. The Fund's address is P.O. Box 5354, Cincinnati, Ohio 45201-5354,
and its telephone number is 1-888-289-6465. A copy of the Statement of
Additional Information may be obtained at no charge by calling or writing the
Fund.
TABLE OF CONTENTS
==============================================================================
Prospectus Summary....................................................... 2
Synopsis of Costs and Expenses........................................... 3
Financial Highlights..................................................... 4
Investment Objective, Investment Policies and Risk Considerations........ 5
How to Purchase Shares................................................... 8
How to Redeem Shares..................................................... 15
How Shares are Valued.................................................... 17
Management of the Fund................................................... 17
Distributor and Distributions Plans...................................... 18
Dividends, Distributions, Taxes and Other Information.................... 20
- - ------------------------------------------------------------------------------
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.
- - ------------------------------------------------------------------------------
PROSPECTUS SUMMARY
==============================================================================
THE FUND. The Regional Opportunity Fund: Ohio Indiana Kentucky (the "Fund") is
a non-diversified, open-end series of Maplewood Investment Trust, a registered
management investment company commonly known as a "mutual fund." The Fund's
investment objective is to provide long-term capital growth. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this Prospectus.
<PAGE>
INVESTMENT APPROACH. In seeking to achieve the Fund's investment objective,
the Fund will invest primarily in common stocks and other equity securities of
publicly-traded companies headquartered in the Cincinnati tri-state region,
and those companies having a significant presence in the tri-state region.
Realization of current income is not a significant investment consideration
and any income realized will be incidental to the Fund's objective. (See
"Investment Objective, Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. CityFund Advisory, Inc. (the "Advisor") serves as
investment advisor to the Fund. Affiliates of the Advisor currently manage
over $75 million in assets. For its services, the Advisor receives
compensation of 1.25% of the average daily net assets of the Fund. (See
"Management of the Fund.")
PURCHASE OF SHARES. Two classes of shares of the Fund are offered in this
Prospectus - Class A and Class B shares. The classification of shares of the
Fund permits an investor to choose the method of purchasing shares that the
investor believes is most beneficial, given the amount of purchase, the length
of time the investor expects to hold the shares, and other relevant
circumstances. Class A shares are offered at net asset value plus a maximum 4%
front-end sales charge and are subject to 12b-1 distribution fees of up to
.25% of average daily net assets. Class B Shares are offered at net asset
value and are subject to a maximum 5% contingent deferred sales charge and
12b-1 distribution fees of up to 1% of average daily net assets. The front-end
sales charge on Class A shares and the contingent deferred sales charge on
Class B shares may be reduced or eliminated as described in this Prospectus.
Class B shares will convert to Class A shares after eight years from their
date of purchase and will then be subject to the lower distribution fees of
Class A shares. The minimum initial investment for each class of shares is
$1,000 ($250 for IRA accounts). (See "How to Purchase Shares.")
REDEMPTION OF SHARES. There is currently no charge for redemptions of Class A
shares. Redemptions of Class B shares may be subject to a contingent deferred
sales charge as described in this Prospectus. Shares may be redeemed at any
time in which the Fund is open for business at the net asset value next
determined after receipt of a redemption request by the Fund, less any
applicable contingent deferred sales charge. A shareholder who submits written
authorization may redeem shares by telephone. (See "How to Redeem Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income of the Fund is
distributed quarterly. Net capital gains, if any, are distributed annually.
Investors may elect to receive dividends and distributions in cash or the
dividends and distributions may be reinvested in additional Fund shares. (See
"Dividends, Distributions, Taxes and Other Information.")
MANAGEMENT. The Fund is a series of Maplewood Investment Trust (the
"Trust"), the Board of Trustees of which is responsible for overall management
of the Trust and the Fund. The Trust has employed MGF Service Corp. (the
"Administrator") to provide administration, accounting and transfer agent
services. (See "Management of the Fund.")
DISTRIBUTOR. Midwest Group Financial Services, Inc. (the "Distributor") serves
as distributor of shares of the Fund. For its services, the Distributor
receives commissions on the sale of Class A shares consisting of the portion
of the front-end sales charge remaining after the discounts it allows to
securities dealers. (See "Distributor and Distribution Plans.")
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
<TABLE>
==============================================================================
SHAREHOLDER TRANSACTION EXPENSES:
<CAPTION>
CLASS A CLASS B
SHARES SHARES
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price)................................... 4.00% None
Maximum Contingent Deferred Sales Charge
(As a percentage of original purchase price or
redemption proceeds, whichever is lower).............................. None 5.00%
Sales Charge Imposed on Reinvested Dividends............................ None None
Redemption Fee.......................................................... None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets) CLASS A CLASS B
SHARES SHARES
<S> <C> <C>
Management Fees After Waivers(1) .......................................... .00% .00%
12b-1 Fees(2) ............................................................. .25% 1.00%
Other Expenses............................................................. 1.70% 1.70%
-------- --------
Total Fund Operating Expenses After Waivers and Expense Reimbursements(3) 1.95% 2.70%
======== ========
<FN>
(1) Absent waivers of management fees, such fees would have been 1.25% for the
fiscal year ended February 29, 1996.
(2)Class A shares may incur 12b-1 fees in an amount up to .25% of average net
assets and Class B shares may incur 12b-1 fees in an amount up to 1% of
average net assets. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by the National
Association of Securities Dealers.
(3)Absent waivers of management fees and expense reimbursements by the
Advisor, total Fund operating expenses would have been 18.26% and 18.27%
for Class A shares and Class B shares, respectively, for the fiscal year
ended February 29, 1996.
EXAMPLE:
You would pay the following expenses on a $1,000 You would pay the following expenses on Class B
investment, assuming 5% annual return and shares on the same $1,000 investment, assuming
redemption at the end of the period: no redemption at the end of the period:
Class A Class B Class B
SHARES SHARES SHARES
1 Year $ 59 $ 67 1 Year $ 27
3 Years 99 104 3 Years 84
5 Years 141 143 5 Years 143
10 Years 258 285* 10 Years 285*
*Based on the conversion of Class B shares to Class A shares after eight
years.
The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees
and costs of operating the Fund. The Annual Fund Operating Expenses shown
above are based upon estimated expenses for the current fiscal year. THE
EXAMPLES SHOWN SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES IN THE FUTURE MAY BE GREATER OR LESS THAN THOSE
SHOWN.
</FN>
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
==============================================================================
The following audited financial information has been audited by KPMG Peat
Marwick LLP, independent accountants, whose report covering the fiscal year
ended February 29, 1996 is contained in the Statement of Additional
Information. This information should be read in conjunction with the Fund's
latest audited annual financial statements and notes thereto, which are also
contained in the Statement of Additional Information, a copy of which may be
obtained at no charge by calling the Fund.
<CAPTION>
===================================================================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
- - -------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
FOR THE FOR THE
PERIOD FROM PERIOD FROM
YEAR JAN. 3, 1995 APRIL 10, 1995
ENDED (COMMENCEMENT (COMMENCEMENT
FEBRUARY 29, OF OPERATIONS) OF OPERATIONS)
1996 TO FEB. 28, 1995 TO FEB. 29, 1996
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.00 $ 10.00 $ 10.08
Income (loss) from investment operations
Net investment income.................................. 0.10 0.01 0.19
Net realized and unrealized gain (loss)
from investment transactions........................ 1.74 ( 0.01 ) 1.68
---------------- -------------- --------------
Total from investment operations..................... 1.84 0.00 1.87
---------------- -------------- --------------
Distributions to shareholders from
Net investment income.................................. ( 0.09 ) 0.00 ( 0.13 )
Net realized gain from investment transactions......... ( 0.64 ) 0.00 ( 0.64 )
---------------- -------------- --------------
Total distributions.................................. ( 0.73 ) 0.00 ( 0.77 )
---------------- -------------- --------------
Net asset value, end of period.............................. $ 11.11 $ 10.00 $ 11.18
================ ============== ==============
Total return................................................ 18.41% (A) 0.00% 18.55% (B)
================ ============== ==============
Ratios/supplemental data
Net assets, end of period................................... $ 759,366 $ 232,998 $ 118
================ ============== ==============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees............ 18.26% 80.88% (C) 18.27% (C)
After expense reimbursements and waived fees............. 2.23% 2.05% (C) 1.75% (C)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees............ (15.08%) (77.35%) (C) (14.54%)(C)
After expense reimbursements and waived fees............. 0.96% 1.54% (C) 1.92% (C)
Portfolio turnover rate..................................... 108.06% 0.00% 108.06%
- - -------------------------------------------------------------------------------------------------------------------
<FN>
(A) Total return does not reflect payment of a sales charge.
(B) Annualized total return is 21.06%.
(C) Annualized.
Further information about the performance of the Fund is contained in the
Annual Report, a copy of which can be obtained at no charge by calling the
Fund.
</FN>
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE, INVESTMENT POLICIES AND RISK CONSIDERATIONS
==============================================================================
The investment objective of the Fund is to provide long-term capital growth by
investing primarily in common stocks and other equity securities of
publicly-traded companies headquartered in Greater Cincinnati and the
Cincinnati tri-state region, and those companies having a significant presence
in the Cincinnati tri-state region ("Tri-State Regional Securities").
Realization of current income will not be a significant investment
consideration, and any such income realized should be considered incidental to
the Fund's objective. Any investment involves risk, and there can be no
assurance that the Fund will achieve its investment objective. The investment
objective and fundamental investment limitations of the Fund may not be
altered without the prior approval of a majority (as defined by the Investment
Company Act of 1940) of the Fund's shares.
The Advisor believes that the demographic and economic characteristics of
Greater Cincinnati and the Cincinnati tri-state region, including population,
employment, retail sales, personal income, bank loans, bank deposits and
residential construction are such that many companies headquartered in the
Cincinnati tri-state region, or having a significant presence in the region by
virtue of having a significant portion of their corporate earnings generated
from operations in the region, have a greater than average potential for
capital appreciation. For these purposes, the Advisor defines the Cincinnati
tri-state region to be Greater Cincinnati and its surrounding area, including
all of Ohio, Kentucky and Indiana. If a company is not headquartered in the
Cincinnati tri-state region, the Advisor will consider such company as having
a "significant presence" in the Cincinnati tri-state region if 50% or more of
its profits are generated from operations (including plants, offices or a
sales force) based in the region and/or the company employs 500 or more in its
operations within the region.
INVESTMENT SELECTION. Through fundamental analysis the Advisor will attempt to
identify securities and groups of securities with potential for capital
appreciation. Under normal market conditions, not less than 65% of the Fund's
total assets will be invested in Tri-State Regional Securities. The Advisor
will generally focus on common stocks and other equity securities of large
companies headquartered or having a significant presence in the Cincinnati
tri-state region that have exhibited a history of ten years or more of
increased earnings and/or dividend distribution per share. The Fund will
generally remain fully invested at all times. The Advisor intends to limit
portfolio turnover in the Fund, believing that a long-term rather than a
short-term selection of investments is preferable.
The equity securities in which the Fund may invest include common stock,
convertible preferred stock, straight preferred stock and investment grade
convertible bonds. The Fund may also invest up to 5% of its net assets in
warrants or rights to acquire equity securities other than those acquired in
units or attached to other securities. (See "Investment Limitations.")
The Fund's concentration in companies headquartered in or having a significant
presence in the Cincinnati tri-state region generally will tie the performance
of the Fund to the economic environment of Cincinnati and the surrounding
area. There is no assurance that the demographic and economic characteristics
and other factors that the Advisor believes favor companies in the Cincinnati
tri-state region will continue in the future. Moreover, the Fund's portfolio
may include securities of smaller companies and companies that are not
nationally recognized. The prices of stocks of such companies generally are
more volatile than those of larger or more mature companies, their securities
are generally less liquid, and they are more likely to be negatively affected
by adverse economic or market conditions. Moreover, because of its
concentration, the Fund's portfolio may be invested in a smaller number of
companies than a general equity mutual fund. This may result in imbalances
relative to diversification by industry sector. These limitations may also
restrict the Advisor from using certain traditional analytical measures
employed to select investments and also exclude some strategies that could
offer superior performance or reduce fluctuations in the values of such
assets.
Under normal market conditions, at least 90% of the Fund's total assets will
be invested in equity securities (with at least 65% of the Fund's total assets
invested in Tri-State Regional Securities). Warrants and rights will be
excluded for purposes of this calculation. As a temporary defensive measure,
however, the Fund may invest up to 100% of its total assets in investment
grade bonds, U.S. Government Securities, repurchase agreements or money market
instruments. When the Fund invests its assets in investment grade bonds, U.S.
Government Securities or money market instruments as a temporary defensive
measure, it is not pursuing its stated investment objective.
U.S. GOVERNMENT SECURITIES. The Fund may invest a portion of its assets in
U.S. Government Securities. "U.S. Government Securities" include U.S. Treasury
notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations guaranteed by
the U.S. Government such as Government National Mortgage Association as well
as obligations of U.S. Government authorities, agencies and instrumentalities
such as Federal National Mortgage Association, Federal Home Loan Mortgage
Corporation, Federal Farm Credit Bank, Federal Home Loan Bank, Resolution
Funding Corporation, Financing Corporation, Tennessee Valley Authority and
Student Loan Marketing Association. U.S. Government Securities may be acquired
subject to repurchase agreements. While obligations of some U.S. Government
sponsored entities are supported by the full faith and credit of the U.S.
Government, several are supported by the right of the issuer to borrow from
the U.S. Government, and still others are supported only by the credit of the
issuer itself. The guarantee of the U.S. Government does not extend to the
yield or value of the U.S. Government Securities held by the Fund or to the
Fund's shares.
<PAGE>
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes when the Advisor believes that unusually volatile
or unstable economic and market conditions exist. When the Fund assumes a
temporary defensive posture, it may invest up to 100% of its net assets in
money market instruments. Under normal circumstances, money market instruments
will typically represent a portion of the Fund's portfolio, as funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio
securities and to provide for shareholder redemptions and operational expenses
of the Fund. Money market instruments mature in thirteen months or less from
the date of purchase and include U.S. Government Securities (defined above)
and corporate debt securities (including those subject to repurchase
agreements), bankers' acceptances and certificates of deposit of domestic
branches of U.S. banks, and commercial paper (including variable amount demand
master notes). At the time of purchase, money market instruments will have a
short-term rating in one of the two highest categories by any nationally
recognized statistical rating organization ("NRSRO") or, if not rated, of
equivalent quality in the Advisor's opinion. See the Statement of Additional
Information for a further description of money market instruments.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
other high-grade debt securities subject to repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an
agreed upon future date. The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate earned by the Fund
effective for the period of time during which the repurchase agreement is in
effect. Delivery pursuant to the resale typically will occur within one to
five days of the purchase. For purposes of the Investment Company Act of 1940
(the "1940 Act"), a repurchase agreement is considered to be a loan
collateralized by the securities subject to the repurchase agreement. The Fund
will not enter into a repurchase agreement which will cause more than 10% of
its assets to be invested in repurchase agreements which extend beyond seven
days and other illiquid securities.
INVESTMENT COMPANIES. In order to achieve its investment objective, the Fund
may invest in the securities of open-end investment companies which are
generally authorized to invest in securities eligible for purchase by the
Fund. To the extent the Fund does so, Fund shareholders would indirectly pay a
portion of the operating costs of the underlying investment companies. These
costs include management, brokerage, shareholder servicing and other
operational expenses. Indirectly, then, shareholders may pay higher
operational costs than if they owned the underlying investment companies
directly. The Fund will only invest in other investment companies by purchase
of such securities on the open market where no commission or profit to a
sponsor or dealer results from the purchase other than the customary broker's
commissions or when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition. The Advisor will waive its advisory fee for
that portion of the Fund's assets invested in other investment companies,
except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
The Fund may invest up to 10% of its total assets in securities of other
investment companies. In addition, the Fund will not invest more than 5% of
its total assets in securities of any single investment company, nor will it
purchase more than 3% of the outstanding voting securities of any investment
company.
<PAGE>
REAL ESTATE SECURITIES. The Fund may not invest in real estate (including
limited partnership interests), but may invest in readily marketable
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein. The Fund may also invest in
readily marketable interests in real estate investment trusts ("REITs"). REITs
are generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity. Although the
Fund is not limited in the amount of REITs it may acquire, the Fund does not
presently intend to invest more than 5% of its net assets in REITs.
OPTIONS ON PORTFOLIO SECURITIES. When the Advisor believes that individual
portfolio securities are approaching the top of the Advisor's growth and price
expectations, covered call options (calls) may be written (sold) against such
securities in a disciplined approach to selling portfolio securities. The Fund
writes options only for hedging purposes and not for speculation. If the
Advisor is incorrect in its expectations and the market price of a stock
subject to a call option rises above the exercise price of the option, the
Fund will lose the opportunity for further appreciation of that security.
Additional information on writing covered call options is contained in the
Statement of Additional Information.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its
investment objective. To the extent that a major portion of the Fund's
portfolio consists of common stocks and other equity securities, it may be
expected that its net asset value will be subject to greater fluctuation than
a portfolio containing mostly fixed income securities. The Fund is a
non-diversified fund and therefore may invest more than 5% of its total assets
in the securities of one or more issuers. Because a relatively high percentage
of the assets of the Fund may be invested in the securities of a limited
number of issuers, the value of shares of the Fund may be more sensitive to
any single economic, business, political or regulatory occurrence than the
value of shares of a diversified investment company. The Fund may borrow only
under certain limited conditions (including to meet redemption requests), but
not to purchase securities. Borrowing, if done, would tend to exaggerate the
effects of market fluctuations in the Fund's net asset value until repaid.
(See "Borrowing").
PORTFOLIO TURNOVER. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new
investment opportunities. The Fund's annual portfolio turnover generally is
not expected to exceed 100%. Market conditions may dictate, however, a higher
rate of portfolio turnover in a particular year. The degree of portfolio
activity affects the brokerage costs of the Fund and may have an impact on the
amount of taxable distributions to shareholders. The portfolio turnover of the
Fund for the fiscal year ended February 29, 1996 was 108%.
<PAGE>
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 15% of its total assets
to meet redemption requests which might otherwise require untimely disposition
of portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities
when it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make
any additional investments while its outstanding borrowings exceed 5% of the
current value of its total assets.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of illiquid
securities before maturity may be time consuming and expensive, and it may be
difficult or impossible for the Fund to sell illiquid investments promptly at
an acceptable price. Included within the category of illiquid securities are
restricted securities, which cannot be resold to the public without
registration under the federal securities laws. Unless registered for sale,
these securities can only be sold in privately negotiated transactions or
pursuant to an exemption from registration.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at
a future date beyond customary settlement time. The Fund is required to hold
and maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient
to meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no
income accrues to the purchaser of when-issued securities during the period
prior to issuance. Although the Fund would generally purchase securities on a
when-issued or forward commitment basis with the intention of acquiring
securities for its portfolio, the Fund may dispose of a when-issued security
or forward commitment prior to settlement if the Advisor deems it appropriate
to do so. The Fund may realize short-term gains or losses upon such sales.
<PAGE>
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to
risk, the Fund has adopted certain investment limitations. The Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets, or
(b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities in amounts not exceeding 15% of
its total assets (the Fund will not make any investment if borrowings exceed
5% of its total assets); (2) make loans of money or securities, except that
the Fund may invest in repurchase agreements (but repurchase agreements having
a maturity of longer than seven days are subject to the limitation on
investing in illiquid securities); (3) invest more than 10% of its net assets
in illiquid securities; (4) invest in securities of issuers which have a
record of less than three years' continuous operation (including predecessors
and, in the case of bonds, guarantors), if more than 5% of its total assets
would be invested in such securities; (5) purchase foreign securities; (6)
purchase or sell commodities, commodities contracts, real estate (including
limited partnership interests, but excluding readily marketable securities
secured by real estate or interests therein, readily marketable interests in
real estate investment trusts, or readily marketable securities issued by
companies that invest in real estate or interests therein) or interests in
oil, gas, or other mineral exploration or development programs or leases
(although it may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases); (7) invest more than 10% of its
total assets in the securities of other investment companies; (8) write,
purchase, or sell puts, calls, straddles, spreads or combinations thereof, or
futures contracts or related options (but the Fund may write covered call
options as described in this Prospectus); and (9) invest more than 5% of its
net assets in warrants. Investment restrictions (1),(2),(5),(6), (7) and (9)
are deemed fundamental, that is, they may not be changed without shareholder
approval. See "Investment Limitations" in the Fund's Statement of Additional
Information for a complete list of investment limitations.
<PAGE>
If the Board of Trustees determines that the Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment
limitation, the Board can make such change without shareholder approval and
will disclose any such material changes in its Prospectus. Any limitation that
is not specified in the Fund's Prospectus or Statement of Additional
Information as being fundamental is nonfundamental. If a percentage limitation
is satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in the value of the Fund's portfolio
securities will not constitute a violation of such limitation. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments that are more restrictive than the investment policies and
limitations described above and in the Statement of Additional Information.
Such commitments may have an effect on the investment performance of the Fund.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund, it may revoke the commitment and terminate sales of its
shares in the state involved.
<PAGE>
HOW TO PURCHASE SHARES
==============================================================================
Assistance in opening accounts may be obtained from the Administrator by
calling 1-888-289-6465, or by writing to the Fund at the address shown below
for regular mail orders. Assistance is also available through any
broker-dealer authorized to sell shares of the Fund. Such broker-dealer may
charge you a fee for its services. Payment for shares purchased may be made
through your account at the broker-dealer processing your application and
order to purchase. Your investment will purchase shares at the public offering
price (net asset value plus any applicable sales charge) next determined after
your order is received by the Fund in proper form as indicated herein. The
minimum initial investment in the Fund is $1,000 ($250 for IRAs). The Fund
may, in the Advisor's sole discretion, accept certain accounts with less than
the stated minimum initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable
in U.S. dollars. All orders received by the Administrator, whether by mail,
bank wire or facsimile order, prior to 4:00 p.m. Eastern time will purchase
shares at the next determined public offering price on that business day. If
your order is not received by 4:00 p.m. Eastern time, your order will purchase
shares at the public offering price determined on the next business day.
Broker-dealers are responsible for transmitting properly completed orders so
that they will be received by 4:00 p.m. Eastern time.
Under certain circumstances, the Advisor, in its sole discretion, may allow
payment in kind for Fund shares purchased by accepting securities in lieu of
cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for more information on purchases in kind.
Due to Internal Revenue Service ("IRS") regulations, the Fund is required to,
and will, withhold taxes on all distributions and redemption proceeds without
social security or tax identification numbers, if the number is not delivered
to the Fund within 60 days. If, however, you have already applied for a social
security or tax identification number at the time of completing your account
application, the application should so indicate.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Administrator and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating
to the various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by
the Fund or the Administrator in the transaction.
<PAGE>
REGULAR MAIL ORDERS. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
Regional Opportunity Fund: Ohio Indiana Kentucky, and mail it to:
Regional Opportunity Fund: Ohio Indiana Kentucky
c/o Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
BANK WIRE ORDERS. Investments can be made directly by bank wire. To establish
a new account or add to an existing account by wire, please call the Fund, at
1-888-289-6465, before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and
accurate handling of your investment. Please have your bank use the following
wiring instructions to purchase by wire:
The Fifth Third Bank
ABA# 042000314
For Maplewood Investment Trust #999-36756
For the Regional Opportunity Fund: Ohio Indiana Kentucky
(Shareholder name and account number)
It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. Once your wire
is sent you should, as soon as possible thereafter, complete and mail your
Account Application to the Fund as described under "Regular Mail Orders,"
above. Investors should be aware that some banks may impose a wire service
fee.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any
time by purchasing shares at the then current net asset value or public
offering price as aforementioned. Before making additional investments by bank
wire, please call the Fund at 1-888-289-6465 to alert the Fund that your wire
is to be sent. Follow the wire instructions above to send your wire. When
calling for any reason, please have your account number ready, if known. Mail
orders should include, when possible, the "Invest by Mail" stub which is
attached to your Fund confirmation statement. Otherwise, be sure to identify
your account in your letter.
<PAGE>
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bimonthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum), which will be automatically invested in
shares at net asset value or the public offering price, whichever is
applicable, on or about the fifteenth day and/or the last business day of the
month. The investor may change the amount of the investment or discontinue the
plan at any time by writing to the Administrator.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
CHOOSING BETWEEN CLASSES OF SHARES
Class A shares are sold at net asset value plus the applicable front-end sales
charge. This front-end sales charge may be reduced or eliminated in some
cases. Class A shares are subject to 12b-1 fees at an annual rate not to
exceed .25% of the average daily net assets of such shares. Class B shares are
sold at net asset value but may be subject to a contingent deferred sales
charge. A deferred sales charge is imposed if Class B shares are redeemed
within five years of initial purchase. The deferred sales charge imposed upon
the redemption of Class B shares decreases over time. Class B shares are
subject to 12b-1 fees at an annual rate not to exceed 1% of the average daily
net assets of such shares. If the maximum amount of 12b-1 fees for Class A and
Class B shares are imposed on such shares, Class B shares will have higher
operating expenses and will pay lower dividends than Class A shares of the
Fund.
Eight years after the date of purchase, Class B shares will automatically
convert to Class A shares. The purpose of the conversion is to relieve the
holders of Class B shares of the higher operating expenses charged to Class B
shares. The conversion from Class B shares to Class A shares will take place
at the net asset value of each class of shares at the time of the conversion.
Upon such conversion, an investor would hold Class A shares subject to the
operating expenses for Class A shares discussed above. Upon each conversion of
Class B shares that were not acquired through reinvestment of dividends or
distributions, a proportionate amount of Class B shares that were acquired
through reinvestment of dividends or distributions will likewise automatically
convert to Class A shares.
Classification of shares of the Fund is intended to permit each investor to
choose the method of purchasing shares that is most beneficial given the
amount of purchase, the length of time the investor expects to hold the shares
and other relevant circumstances. Investors should determine whether under
their particular circumstances it is more advantageous to incur an initial
front-end sales charge or to have the entire purchase price invested in the
Fund with the investment thereafter being subject to a contingent deferred
sales charge and higher ongoing distribution fees. Before deciding between
Class A and Class B shares of the Fund, an investor should carefully consider
the amount and intended length of his investment. Specifically, an investor
should consider whether the accumulated distribution fees and the contingent
deferred sales charge applicable to Class B shares would be less than the
front-end sales charge and accumulated distribution fees applicable to Class A
shares purchased at the same time and held for the same period, and the extent
to which the difference between those amounts would be offset by the higher
returns associated with Class A shares. Because the operating expenses of
Class B shares are greater than those of Class A shares, the dividends on
Class A shares will be higher that the dividends on Class B shares. However,
since a front-end sales charge is deducted at the time of purchase of Class A
shares, not all of the purchase amount will purchase Class A shares.
Consequently, the same initial investment will purchase more Class B shares
than Class A shares.
<PAGE>
Because of reductions in the front-end sales charge for purchases of Class A
shares aggregating $100,000 or more, it may be advantageous for investors
purchasing large quantities of shares to purchase Class A shares. Similar
sales charge reductions are not available with respect to the contingent
deferred sales charge imposed in connection with Class B shares. In any event,
the Fund will not accept any purchase order for $250,000 or more of Class B
shares. In addition, because the accumulated higher operating expenses of
Class B shares may eventually exceed the amount of the front-end sales charge
and distribution fees associated with Class A shares, investors who intend to
hold their shares for an extended period of time should consider purchasing
Class A shares.
Investors who would qualify for a reduction in the front-end sales charge for
purchases of Class A shares may decide that it is more advantageous to have
the entire purchase amount invested immediately in Class B shares
notwithstanding the higher operating expenses associated with Class B shares.
These higher operating expenses may be offset by any return an investor
receives from the additional shares received as a result of not having to pay
a front-end sales charge. However, investors should understand that the Fund's
future return cannot be predicted, and that there is no assurance that such
return, if any, would compensate for the higher operating expenses associated
with Class B shares. Class B shares will convert into Class A shares
automatically after a conversion period of eight years, and thereafter
investors will be subject to lower ongoing distribution fees. Investors in
Class B shares should take into account whether they intend to redeem their
shares within the five year period during which the contingent deferred sales
charge will be imposed.
The Advisor currently expects to pay sales commissions to dealers at the time
of sale of up to 4.5% of the purchase price of the Class B shares sold by such
dealer. An additional 0.5% of the purchase price of such shares will be paid
by the Advisor to the Distributor. The Advisor will use its own funds or funds
facilitated by the Advisor (which may be borrowed or otherwise financed) to
pay such sales commission.
<PAGE>
<TABLE>
CLASS A SHARES
Class A shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
front-end sales charge as shown in the following table. The Distributor
receives the sales charge and may reallow it in the form of dealer discounts
and brokerage commissions as follows:
DEALER
REALLOWANCE
SALES CHARGE AS % OF: AS % OF
NET PUBLIC PUBLIC
AMOUNT OFFERING OFFERING
Amount of Investment INVESTED PRICE PRICE
<S> <C> <C> <C>
Less than $100,000 4.17% 4.00% 3.60%
$100,000 but less than $250,000 3.63 3.50 3.30
$250,000 but less than $500,000 2.56 2.50 2.30
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more None None None
</TABLE>
At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts from the Distributor may
reallow all or a portion of such dealer discounts to other dealers or brokers.
The dealer discounts shown above apply to all dealers who have agreements with
the Distributor.
<PAGE>
REDUCED SALES CHARGES FOR CLASS A SHARES
An investor may purchase Class A shares at a reduced sales charge or without a
sales charge by purchasing shares through one of the methods described below.
RIGHT OF ACCUMULATION. Pursuant to the right of accumulation, investors are
permitted to purchase Class A shares at the public offering price applicable
to the total of (a) the total public offering price of the Class A shares of
the Fund then being purchased plus (b) an amount equal to the then current net
asset value of the purchaser's current holdings of Fund shares. To receive the
applicable public offering price pursuant to the right of accumulation,
investors must, at the time of purchase, provide sufficient information to
permit confirmation of qualification. The right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.
LETTERS OF INTENT. Investors in Class A shares may qualify for a lower sales
charge by executing a letter of intent. A letter of intent allows an investor
to purchase Class A shares of the Fund over a 13 month period at reduced sales
charges based on the total amount intended to be purchased plus an amount
equal to the then current net asset value of the purchaser's current holdings
of Fund shares. Thus, a letter of intent permits an investor to establish a
total investment goal to be achieved by any number of purchases over a 13
month period. Each investment made during the period receives the reduced
sales charge applicable to the total amount of the intended investment.
The letter of intent does not obligate the investor to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the
period, the investor must pay the difference between the sales charge
applicable to the purchases made and the charges previously paid. If such
difference is not paid by the investor, the Administrator is authorized by the
investor to liquidate a sufficient number of shares held by the investor to
pay the amount due. On the initial purchase of shares, if required (or
subsequent purchases, if necessary), shares equal to at least 5% of the amount
indicated in the letter of intent will be held in escrow during the 13 month
period (while remaining registered in the name of the investor) for this
purpose. The value of any shares redeemed or otherwise disposed of by the
investor prior to termination or completion of the letter of intent will be
deducted from the total purchases made under such letter of intent.
A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales
charge). The 13 month period would then begin on the date of the first
purchase during the 90-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the letter of intent. Investors must
notify the Administrator whenever a purchase is being made pursuant to a
letter of intent.
<PAGE>
Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Application
contained in this Prospectus or is otherwise available from the Administrator.
The letter of intent option may be modified or eliminated at any time or from
time to time by the Trust without notice.
REINVESTMENT. Investors may reinvest proceeds from a redemption of Class A
shares, without a sales charge, in Class A shares of the Fund. The amount that
may be so reinvested may not exceed the amount of the redemption proceeds, and
a written order for the purchase of such shares must be received by the
Administrator within 90 days after the effective date of the redemption.
If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number
of shares purchased by reinvestment and the period of time that has elapsed
after the redemption, although for tax purposes the amount disallowed is added
to the cost of the shares acquired upon the reinvestment.
PURCHASES BY RELATED PARTIES AND GROUPS. Reductions in sales charges apply to
purchases by a single "person," including an individual, members of a family
unit, consisting of a husband, wife and children under the age of 21
purchasing securities for their own account, or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate.
Reductions in front-end sales charges also apply to purchases by individual
members of a "qualified group." The reductions are based on the aggregate
dollar value of shares purchased by all members of the qualified group and
still owned by the group plus the shares currently being purchased. For
purposes of this paragraph, a qualified group consists of a "company," as
defined in the 1940 Act, which has been in existence for more than six months
and which has a primary purpose other than acquiring shares of the Fund at a
reduced sales charge, and the "related parties" of such company. For purposes
of this paragraph, a "related party" of a company is: (i) any individual or
other company that directly or indirectly owns, controls, or has the power to
vote 5% or more of the outstanding voting securities of such company; (ii) any
other company of which such company directly or indirectly owns, controls, or
has the power to vote 5% or more of its outstanding voting securities; (iii)
any other company under common control with such company; (iv) any executive
officer, director or partner of such company or of a related party; and (v)
any partnership of which such company is a partner.
SALES AT NET ASSET VALUE. The Fund may sell Class A shares at a purchase price
equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund and the Advisor, and
to employees and principals of related organizations and their families, and
certain parties related thereto, including clients and related accounts of the
Advisor. Clients of investment advisors and financial planners may also
purchase Class A shares of the Fund at net asset value if their investment
advisor or financial planner has made arrangements to permit them to do so
with the Distributor. The public offering price of Class A shares of the Fund
may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal
holding company or a public or private investment company.
<PAGE>
CLASS B SHARES
Class B shares are sold at net asset value and are subject to a contingent
deferred sales charge at the rates set forth in the chart below if they are
redeemed within five years of their date of purchase. Class B shares are sold
without a front-end sales charge so that the Fund will receive the full amount
of the investor's purchase payment. Dealers, however, will receive commissions
from the Advisor in connection with sales of Class B shares. These
commissions, which will be paid from the Advisor's own funds, may be different
than the reallowances paid to dealers in connection with sales of Class A
shares.
Proceeds from the contingent deferred sales charge and the distribution fees
payable under the Fund's Class B Plan (up to 1% of the Class B shares' average
net assets) will be paid to the Advisor and are used in whole or in part by
the Advisor to defray the expenses of dealers and sales personnel related to
providing distribution-related expenses to the Fund in connection with the
sale of Class B shares, such as the payment of commissions to dealers and
sales personnel for selling Class B shares. The combination of the contingent
deferred sales charge and the ongoing distribution fees facilitates the
ability of the Fund to sell the Class B shares without a front-end sales
charge. After eight years from their date of purchase, Class B shares will
convert automatically into Class A shares of the Fund, which are subject to
lower distribution fees.
CONTINGENT DEFERRED SALES CHARGES. A contingent deferred sales charge ("CDSC")
applies if a redemption of Class B shares is made during the five years since
the purchase of such shares. The charge declines from 5% to zero over a five
year period. The CDSC will be deducted from the redemption proceeds and will
reduce the amount paid to the redeeming investor. A CDSC will be applied to
the lesser of the original purchase price or the current value of the shares
being redeemed. Accordingly, no CDSC will be imposed on increases in net asset
value above the initial purchase price. In addition, no CDSC will be imposed
on shares issued through reinvested dividends or capital gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of initial purchase of Class B shares until the time the shares
are redeemed in accordance with the following schedule.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
YEARS SINCE PURCHASE CHARGE AS A PERCENTAGE
PAYMENT MADE OF DOLLAR AMOUNT
<S> <C> <C>
First 5.00%
Second 4.00
Third 3.00
Fourth 2.00
Fifth 1.00
Sixth and Thereafter None
</TABLE>
In determining whether a CDSC is applicable to a redemption, the calculation
will be determined in the manner that results in the lowest applicable rate
being charged. Therefore, it will be assumed that the redemption is first of
shares held for over five years or shares acquired pursuant to reinvestment of
dividends or distributions and then of shares held longest during the
five-year period. The charge will not be applied to dollar amounts
representing an increase in net asset value since the time of purchase.
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the third year after purchase, the net
asset value per share is $12 and, during such time, the investor has acquired
10 additional shares upon dividend reinvestment. If at such time the investor
makes his first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to the deferred sales charge because of dividend reinvestment. With
respect to the remaining 40 shares, the deferred sales charge is applied only
to the original cost of $10 per share and not to the increase in net asset
value of $2 per share. Therefore, $400 of the $600 redemption proceeds will be
charged at a rate of 3% (the applicable rate in the third year after
purchase).
CONTINGENT DEFERRED SALES CHARGE WAIVERS. The Fund offers the following waiver
policies, which are designed to eliminate the CDSC when an investor's state of
affairs unexpectedly changes or under the other limited circumstances
described below. For the waiver to become effective, the investor or
investor's estate must meet all the conditions of the waiver policy. Please
note that additional documentation may be required depending on the policy
requirements.
1. DEATH. The CDSC is waived when death occurs on an individual account if the
beneficiary redeems all or part of the investment within one year of death. A
letter of instruction to redeem from the estate administrator must accompany a
certified certificate of death and a copy of the instrument appointing the
administrator. Class B shares transferred to a beneficiary's account retain
the same CDSC status as the original account.
Death of fewer than all shareholders in a joint account will not qualify a
Class B share redemption for the waiver at any time during the period in which
the CDSC applies. The remaining shareholder(s) retain the same CDSC status had
the death not occurred.
2. DISABILITY. The CDSC is waived when an individual becomes disabled at any
age. Disability is defined using the definition contained in the Internal
Revenue Code. A person is generally considered disabled if he cannot do any
substantial gainful activity (comparable to what he engaged in prior his
disability) because of any physical or mental impairment. A physician must
determine that the impairment is expected to continue for a long and
indefinite period or to result in death. Qualifying Class B shares must be
redeemed within one year of the initial disability. Subsequent disabling
events may extend the one year redemption period if the disability is separate
and distinct from the initial qualifying disability. The following
documentation is required: A letter of instruction to redeem must accompany a
copy of Social Security Administration Schedule R or a notarized letter from
the shareholder's physician describing the nature of the disability, the date
of onset, and a statement that the disability is semi-permanent or expected to
result in death.
<PAGE>
3. SYSTEMATIC WITHDRAWAL. The CDSC is waived when a shareholder chooses to
systematically redeem Class B shares. See "Systematic Withdrawal Plan" below.
A letter of instruction or Systematic Withdrawal Plan must be sent to the
Administrator.
4. MINIMUM REQUIRED DISTRIBUTIONS. The CDSC is waived in connection with
distributions from IRA, 403(b)(7), and qualified employee benefit plan
accounts due to the shareholders reaching age 701/2.
5. INVOLUNTARY REDEMPTIONS. The CDSC is waived in connection with involuntary
redemptions of Class B shares in accounts with low balances as described in
"How to Redeem Shares" below.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES. After eight years (the
"Conversion Period"), Class B shares will be converted automatically into
Class A shares of the Fund. Class A shares are subject to lower distribution
fees. Automatic conversion of Class B shares into Class A shares will occur
eight years after the purchase of Class B shares (the "Conversion Date") on
the basis of the relative net asset value of the shares of the two classes on
the Conversion Date, without the imposition of any sales charge or any other
fee. Conversion of Class B shares to Class A shares will not be deemed a
purchase or sale of the shares for federal income tax purposes.
In addition, purchases of Class B shares through the reinvestment of dividends
also will convert automatically to Class A shares. The Conversion Date for
dividend reinvestment shares will be calculated taking into account the length
of time the shares underlying such dividend reinvestment shares were
outstanding. If at a Conversion Date the conversion of Class B shares to Class
A shares of the Fund in a single account will result in less that $50 worth of
Class B shares being left in the account, all of the Class B shares of the
Fund held in the account on the Conversion Date will be converted to Class A
shares of the Fund.
<PAGE>
HOW TO REDEEM SHARES
==============================================================================
Shares of the Fund may be redeemed on each day that the Fund is open for
business. The Fund is open for business on each day the New York Stock
Exchange (the "Exchange") is open for business. Any redemption may be for more
or less than the purchase price of your shares depending on the market value
of the Fund's portfolio securities. All redemption orders received in proper
form, as indicated herein, by the Administrator prior to 4:00 p.m. Eastern
time will redeem shares at the net asset value determined as of that business
day's close of trading, less any applicable contingent deferred sales charge
for Class B shares. Otherwise, your order will redeem shares on the next
business day. There is no charge for redemptions from the Fund other than the
contingent deferred sales charge imposed on certain redemptions of Class B
shares. You may also redeem your shares through a broker-dealer or other
institution which may charge you a fee for its services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $1,000 (due to redemptions, exchanges or
transfers, but not due to market action) upon 30 days' written notice. If the
shareholder brings his account value up to $1,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans
may be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-888-289-6465, or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to the Regional
Opportunity Fund: Ohio Indiana Kentucky, P.O. Box 5354, Cincinnati, Ohio
45201-5354. Your request for redemption must include:
1) your letter of instruction specifying the account number, and the number of
shares or dollar amount to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days
after receipt of your redemption request. However, the Fund may delay
forwarding a redemption check for recently purchased shares while it
determines whether the purchase payment will be honored. Such delay (which may
take up to 15 days) may be reduced or avoided if the purchase is made by wire
transfer. In such cases, the net asset value next determined after receipt of
the request for redemption will be used in processing the redemption and your
redemption proceeds will be mailed to you upon clearance of your check to
purchase shares. The Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the Exchange is closed, or trading
on the Exchange is restricted as determined by the Securities and Exchange
Commission (the "Commission"), (ii) during any period when an emergency exists
as defined by the rules of the Commission as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
to fairly determine the value of its assets, and (iii) for such other periods
as the Commission may permit.
TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option
of redeeming shares by telephone under certain limited conditions. You may
redeem shares, subject to the procedures outlined below, by calling the Fund
at 1-888-289-6465. The Fund will redeem shares when requested by telephone if,
and only if, the shareholder confirms redemption instructions in writing. The
Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX # 513-629-2901). The confirmation instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder;
4) Shareholder signature as it appears on the application then on file
with the Fund; and 5) Any required signature guarantees (see "Signature
Guarantees").
<PAGE>
In such cases, the net asset value used in processing the redemption will be
the net asset value next determined after the telephone request is received.
Proceeds from the redemption of Class B shares will be reduced by the amount
of any applicable contingent deferred sales charge imposed on such shares.
Redemption proceeds will not be remitted until written confirmation of the
redemption request is received. You can choose to have redemption proceeds
mailed to you at your address of record, your bank, or to any other authorized
person, or you can have the proceeds sent by bank wire to your bank ($1,000
minimum). Shares of the Fund may not be redeemed by wire on days in which your
bank is not open for business. Redemption proceeds will only be sent to the
bank account or person named in your Account Application currently on file
with the Fund. You can change your redemption instructions anytime you wish by
filing a letter including your new redemption instructions with the Fund. (See
"Signature Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any shareholder or all shareholders, without notice, if the
Trustees believe it to be in the best interest of the shareholders to do so.
During drastic economic and market changes, telephone redemption privileges
may be difficult to implement.
Neither the Trust, the Administrator, nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The affected investors will bear the risk of any such loss. The
Trust or the Administrator, or both, will employ reasonable procedures to
determine that telephone instructions are genuine. If the Trust and/or the
Administrator do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
There is currently no charge by the Administrator for wire redemptions.
However, the Administrator reserves the right, upon thirty days' written
notice, to make reasonable charges for wire redemptions. All charges will be
deducted from your account by redemption of shares in your account. Your bank
or brokerage firm may also impose a charge for processing the wire. In the
event that wire transfer of funds is impossible or impractical, the redemption
proceeds will be sent by mail to the designated account.
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. An investor who owns shares of the Fund valued at
$5,000 or more at the current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount of
not less than $50. Each month or quarter as specified, the Fund will
automatically redeem sufficient shares from your account to meet the specified
withdrawal amount. The investor may establish this service whether dividends
and distributions are reinvested or paid in cash. Systematic withdrawals may
be deposited directly to the investor's bank account by completing the
applicable section on the Account Application form accompanying this
Prospectus, or by calling or writing the Fund. See the Statement of Additional
Information for further details.
The amount of regular periodic payments specified by holders of Class B shares
pursuant to a Systematic Withdrawal Plan will be reduced by any applicable
contingent deferred sales charge, unless the shareholder qualifies for a
waiver of such charge under the circumstances described in "How To Purchase
Shares - Contingent Deferred Sales Charge Waivers" above. Because of the
effects of this deferred sales charge, the maintenance of a Systematic
Withdrawal Plan may be disadvantageous for holders of Class B shares unless
the shareholder qualifies for such waiver.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your
account. Signature guarantees are required for (1) change of registration
requests, and (2) requests to establish or change redemption services other
than through your initial account application, and (3) requests for
redemptions in excess of $25,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union, registered broker-dealer or a member firm of a U.S. Stock
Exchange, and must appear on the written request for redemption or change of
registration.
<PAGE>
HOW SHARES ARE VALUED
==============================================================================
The net asset value of Class B shares and the public offering price (net asset
value plus applicable sales charge) of Class A shares of the Fund is
determined on each business day that the Exchange is open for trading, as of
the close of the Exchange (currently 4:00 p.m., Eastern time). Net asset value
per share is determined by dividing the total value of all Fund securities
(valued at market value) and other assets, less liabilities, by the total
number of shares then outstanding. Net asset value includes interest on
fixed-income securities, which is accrued daily. The net asset value of each
class of shares will be affected by the expenses accrued and payable by such
class. Because certain expenses such as distribution fees are attributable
solely to one class of shares, the net income attributable to and the
dividends payable by each class of shares will differ from one another. See
the Statement of Additional Information for further details.
Securities which are traded over-the-counter are priced at the last sale
price, if available, otherwise, at the last quoted bid price. Securities
traded on a securities exchange are valued based upon the closing price on the
valuation date on the principal exchange where the security is traded.
Securities that are listed on an exchange and which are not traded on the
valuation date are valued at the mean of the bid and asked prices. Securities
in which market quotations are not readily available may be valued on the
basis of prices provided by an independent pricing service, when such prices
are believed to reflect the fair market value of such securities. Securities
and other assets for which no quotations are readily available will be valued
in good faith at fair value using methods determined by the Board of Trustees.
MANAGEMENT OF THE FUND
==============================================================================
The Fund is a non-diversified series of Maplewood Investment Trust (the
"Trust"), an investment company organized as a Massachusetts business trust in
1992, which was formerly known as The Nottingham Investment Trust. The Board
of Trustees has overall responsibility for management of the Fund under the
laws of Massachusetts governing the responsibilities of Trustees of business
trusts. The Statement of Additional Information identifies the Trustees and
officers of the Trust and provides information about them.
INVESTMENT ADVISOR. Subject to the authority of the Board of Trustees,
CityFund Advisory, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of securities,
pursuant to an Investment Advisory Agreement with the Trust. The Advisor is
also responsible for the selection of broker-dealers through which the Fund
executes portfolio transactions, subject to brokerage policies established by
the Trustees.
<PAGE>
The Advisor and its affiliates currently serve as investment advisor to over
$75 million in assets and have been rendering investment counsel utilizing
investment strategies substantially similar to that of the Fund to
individuals, banks and thrift institutions, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since 1992. The
Advisor's address is P.O. Box 54944, Cincinnati, Ohio 45254-0944.
Jill H. Travis, a representative of the Advisor, is primarily responsible for
the day-to-day management of the Fund's portfolio and has been managing the
Fund since November 1995. From 1993 to the present, Ms. Travis has been
President and Chief Executive Officer of Amelia Earhart Capital Management,
Inc., an investment advisory firm located in Southfield, Michigan, which
serves as investment advisor to the Amelia Earhart: Eagle Equity Fund, another
series of the Trust. Ms. Travis currently serves as portfolio manager of the
Amelia Earhart: Eagle Equity Fund, a position she has held since that fund's
inception in 1993. Since 1991, Ms. Travis has been a self-employed certified
financial planner and business consultant. In 1991 she was Senior Vice
President of Huntington Banks.
Under the Investment Advisory Agreement with the Fund, the Advisor receives a
monthly management fee equal to an annual rate of 1.25% of the average daily
net assets of the Fund. Although the investment advisory fee is higher than
that paid by most other investment companies, the Board of Trustees believes
the fee to be comparable to advisory fees paid by many funds having similar
objectives and policies. The Advisor may periodically voluntarily waive or
reduce its advisory fee to increase the performance of the Fund.
The Advisor currently intends to waive its investment advisory fees and
reimburse the Fund for expenses to the extent necessary to limit total
operating expenses (exclusive of interest, taxes, brokerage commissions, sales
charges and extraordinary expenses) to 1.95% per annum of Class A shares'
average daily net assets and 2.70% per annum of Class B shares' average daily
net assets. However, there is no assurance that any voluntary fee waivers or
expense reimbursements will continue in the current or future fiscal years,
and expenses may therefore exceed 1.95% and 2.70% of the average daily net
assets of Class A shares and Class B shares, respectively.
ADMINISTRATOR. The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying agent
and shareholder service agent. The Administrator is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and
reports to and filings with the Securities and Exchange Commission and state
securities authorities. The Fund pays the Administrator a fee for these
administrative services at the annual rate of .15% of the average value of its
daily net assets up to $50 million, .125% of the next $50 million of such
assets and .1% of such assets in excess of $100 million.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives a monthly fee of $3,000 for calculating daily net
asset value per share and maintaining such books and records as are necessary
to enable it to perform its duties. The Administrator also charges the Fund
for certain costs involved with the daily valuation of investment securities
and is reimbursed for out-of-pocket expenses.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank. The
Custodian's mailing address is 38 Fountain Square Plaza, Cincinnati, Ohio
45263. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income, disperses monies at the Fund's
request and maintains records in connection with its duties.
<PAGE>
OTHER EXPENSES. The Fund is responsible for the payment of all of its
operating expenses. These include the fees payable to the Advisor, or expenses
otherwise incurred in connection with the management of the investment of the
Fund's assets, the fees and expenses of the Custodian, the fees and expenses
of the Administrator, the fees and expenses of Trustees, outside auditing and
legal expenses, all taxes and corporate fees payable by the Fund, registration
fees, state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders,
costs of shareholder reports and shareholder meetings, and any extraordinary
expenses. The Fund also pays for brokerage commissions and transfer taxes (if
any) in connection with the purchase and sale of portfolio securities.
Expenses attributable to a particular series of the Trust, including the Fund,
will be charged to that series, and expenses not readily identifiable as
belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular class
of shares of the Fund will be borne solely by such class.
BROKERAGE. In selecting broker-dealers through which to execute brokerage
transactions for the Fund, the Advisor attempts to obtain the best execution
for all such transactions. If it is believed that more than one broker is able
to provide the best execution, the Advisor will consider the receipt of
quotations and other market services, receipt of research, statistical and
other data and the sale of shares of the Fund in selecting a broker. The
Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker. The Statement of Additional Information contains more information
about the management and brokerage practices of the Fund.
<PAGE>
DISTRIBUTOR AND DISTRIBUTION PLANS
==============================================================================
Midwest Group Financial Services, Inc., 312 Walnut Street, Cincinnati, Ohio
45202 (the "Distributor"), is the national distributor for the Fund under an
Underwriting Agreement with the Trust. The Distributor may sell Fund
shares to or through qualified securities dealers or others. The Distributor
is a subsidiary of Leshner Financial, Inc. Robert G. Dorsey, Treasurer of the
Distributor, is Vice President of the Trust. John F. Splain is Secretary of
both the Distributor and the Trust.
==============================================================================
The Trust has adopted a Distribution Plan for Class A shares of the Fund (the
"Class A Plan") and a Distribution Plan for Class B shares of the Fund (the
"Class B Plan") (collectively, the "Plans") pursuant to Rule 12b-1 under the
1940 Act. Under the Class A Plan the Fund may reimburse any expenditures to
finance any activity primarily intended to result in the sale of Class A
shares or the servicing of shareholder accounts, including, but not limited
to, the following: (i) payments to the Distributor, securities dealers, and
others for the sale of Class A shares; (ii) payment of compensation to and
expenses of personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by the
Administrator or Custodian; and (iii) formulation and implementation of
marketing and promotional activities. Expenditures by the Fund pursuant to the
Class A Plan are accrued based on average daily net assets and may not exceed
.25% of the Class A shares' average net assets for each year elapsed
subsequent to the adoption of the Class A Plan.
Under the Class B Plan, the Fund may reimburse any expenditures to finance any
activity primarily intended to result in the sale of Class B shares or the
servicing of shareholder accounts, including, but not limited to the
following: (i) payments to the Advisor, securities dealers and others for the
sale of Class B shares or the servicing of Class B shareholder accounts,
including payments used to pay for or finance sales commissions and other fees
payable to dealers and others who may sell Class B shares or service accounts
of Class B shareholders; (ii) payment of compensation to and expenses of
personnel who engage in or support distribution of shares or who render
shareholder support services not otherwise provided by the Administrator or
Custodian; and (iii) formulation and implementation of marketing and
promotional activities. Expenditures by the Fund pursuant to the Class B Plan
are accrued based on average daily net assets and may not exceed 1% of the
Class B shares' average net assets for each year elapsed subsequent to the
adoption of the Class B Plan. Such expenditures paid as service fees to any
person who sells Class B shares of the Fund may not exceed .25% of the average
daily net assets of Class B shares; such expenditures paid as distribution
fees for distribution-related activities as an asset-based sales charge under
the Class B Plan may not exceed .75% of the average daily net assets of Class
B shares.
The distribution fees payable under the Class B Plan are designed to permit an
investor to purchase Class B shares through dealers without the assessment of
a front-end sales charge and at the same time to permit the dealer to
compensate its personnel in connection with the sale of Class B shares. In
this regard, the purpose and function of the ongoing distribution fees and the
deferred sales charge are the same as those of the initial sales charge with
respect to the Class A shares in that the distribution fees and the contingent
deferred sales charges provide for the financing of the distribution of Class
B shares.
In addition to the payments by the Fund pursuant to the Plans for distribution
fees, dealers and other service organizations may charge their clients
additional fees for account services. Customers who are beneficial owners of
shares of the Fund should read this Prospectus in light of the terms and fees
governing their accounts with dealers or other service organizations.
The National Association of Securities Dealers, in its Rules of Fair Practice,
places certain limitations on asset-based sales charges of mutual funds. These
Rules require fund-level accounting in which all sales charges - front-end
charge, 12b-1 fees or contingent deferred charge - terminate when a percentage
of gross sales is reached. Expenditures paid as shareholder servicing fees
under the Plans which are limited to .25% of average daily net assets of each
class are not included in the limit. If in any month the Distributor expends
more monies than are immediately payable under the Plans because of the
percentage limitations described above (or, due to any expense limitation
imposed on the Fund, monies otherwise payable by the Fund to the Distributor
under the Plans are rendered uncollectible), the unpaid expenditures may be
"carried forward" from month to month until such time, if ever, as they may be
paid. In addition, payments to service organizations (which may include the
Distributor, the Advisor, and their affiliates) are not tied directly to the
organizations' own out-of-pocket expenses and therefore may be used as they
elect (including, for example, to defray their overhead expenses).
<PAGE>
Amounts accrued by each class under the Plans in one year but which are not
actually paid in that year, may be paid in subsequent years. Amounts not
accrued by each class under the Plans during a year may not be carried forward
to subsequent years. The Plans may not be amended to increase materially the
amount to be spent under the Plans without shareholder approval. The
continuation of the Plans must be approved annually by the Board of Trustees.
At least quarterly the Board of Trustees will review a written report of
amounts expended pursuant to the Plans and the purposes for which such
expenditures were made.
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION
==============================================================================
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general
and, particularly, with respect to dividends and distributions and other
matters. The discussion herein of the federal income tax consequences of an
investment in the Fund is not exhaustive on the subject. Consequently,
investors should seek qualified tax advice.
The Fund intends to remain qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986 (the "Code") and will
distribute all of its net income and realized capital gains to shareholders.
Shareholders are liable for taxes on distributions of net income and realized
capital gains of the Fund but, of course, shareholders who are not subject to
tax on their income will not be required to pay taxes on amounts distributed
to them. The Fund intends to declare dividends, if any, quarterly and will
distribute any net short-term or long-term capital gains derived from the sale
of securities at the end of its fiscal year. In addition, the Fund may make a
supplemental distribution of capital gains annually in December. The nature
and amount of all dividends and distributions will be identified separately
when tax information is distributed by the Fund at the end of each year. The
Fund intends to withhold 30% on taxable dividends and any other payments that
are subject to such withholding and are made to persons who are neither
citizens nor residents of the U.S.
There is no fixed dividend rate, and there can be no assurance as to the
payment of any dividends or the realization of any gains. All dividends and
capital gains distributions are reinvested in additional shares of the Fund
unless the shareholder requests in writing to receive dividends and/or capital
gains distributions in cash. That request must be received by the Fund prior
to the record date to be effective as to the next dividend. Tax consequences
to shareholders of dividends and distributions are the same if received in
cash or if received in additional shares of the Fund.
No gain or loss will be recognized by Class B investors on the conversion of
their Class B shares into Class A shares. An investor's basis in the Class A
shares acquired will be the same as such investor's basis in the Class B
shares converted, and the holding period of the acquired Class A shares will
include the holding period of the converted Class B shares.
TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to
qualify. For a more detailed discussion of the tax status of the Fund, see
"Additional Tax Information" in the Statement of Additional Information.
DESCRIPTION OF SHARES. The Trust was organized as a Massachusetts business
trust on August 12, 1992 under a Declaration of Trust. The Declaration of
Trust permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into
one or more classes of shares. A description of the authorized series of
shares of the Trust and classes of such series is contained in the Statement
of Additional Information. Pursuant to its authority under the Declaration of
Trust, the Board of Trustees has authorized the issuance of two classes of
shares (Class A shares and Class B shares) representing equal pro rata
interests in the Fund, except the classes bear different sales charges and
expenses that reflect the differences in services provided to them.
When issued, the shares of each series of the Trust, including the Fund, will
be fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder
meetings for purposes such as changing fundamental policies or electing
Trustees. The Board of Trustees shall promptly call a meeting for the purpose
of electing or removing Trustees when requested in writing to do so by the
record holders of at least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian
or by votes cast in person or by proxy at a meeting called for that purpose.
Shareholders of the Trust will vote in the aggregate and not by series (fund)
or class, except as otherwise required by the 1940 Act or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of the shareholders of a particular series or class. Matters affecting an
individual series, such as the Fund, include, but are not limited to, the
investment objectives, policies and restrictions of that series. Shares have
no subscription, preemptive or conversion rights. Share certificates will not
be issued. Each share is entitled to one vote (and fractional shares are
entitled to proportionate fractional votes) on all matters submitted for a
vote, and shares have equal voting rights except that only shares of a
particular series or class are entitled to vote on matters affecting only that
series or class. Shares do not have cumulative voting rights. Therefore, the
holders of more than 50% of the aggregate number of shares of all series of
the Trust may elect all the Trustees.
<PAGE>
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of
the Trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust
and its shares.
REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders annual
reports which have been audited by the Trust's independent accountants and
semiannual reports which are unaudited. In addition, the Administrator will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares
owned and any dividends or distributions paid.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate
future performance. Total return and yield are computed separately for Class A
and Class B shares. The yield is expected to be higher for Class A shares due
to the higher distribution fees imposed on Class B shares.
The "total return" of the Fund refers to the average annual compounded rates
of return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of
all dividends and distributions, includes all recurring fees that are charged
to all shareholder accounts and deducts all nonrecurring charges at the end of
each period, including any contingent deferred sales charge that would be
applicable to a complete redemption of the investment at the end of the
specified period. The calculation further assumes the deduction of the current
maximum sales charge from the initial investment. If the Fund has been
operating less than 1, 5 or 10 years, the time period during which the Fund
has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same
or different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents a cumulative change in value of an investment in the Fund for
various periods.
<PAGE>
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses
of the Fund all recurring fees that are charged to all shareholder accounts
and any nonrecurring charges for the period stated.
REGIONAL OPPORTUNITY FUND
OHIO, INDIANA, KENTUCKY
INVESTMENT ADVISOR CityFund Advisory, Inc.
P.O. Box 54944
Cincinnati, Ohio 45254-0944
ADMINISTRATOR
MGF Service Corp.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-888-289-6465
DISTRIBUTOR
Midwest Group Financial Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
REGIONAL OPPORTUNITY FUND
PROSPECTUS
June 20, 1996
<PAGE>
REGIONAL OPPORTUNITY FUND
OHIO INDIANA KENTUCKY
ACCOUNT APPLICATION (check appropriate share class)
o CLASS A SHARES (W4) $_________________
o CLASS B SHARES (W5) $_________________
Please mail account application to:
Regional Opportunity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
ACCOUNT NO. ___________________________
(For Fund Use Only)
FOR BROKER/DEALER USE ONLY
Firm Name:_______________________________________________
Home Office Address:_________________________________________________________
Branch Address: _________________________________________________________
Rep Name & No.: _________________________________________________________
Rep Signature: _________________________________________________________
Initial Investment of $_______________ ($1,000 minimum, $250 minimum for IRAs)
o Check or draft enclosed payable to the Regional Opportunity Fund.
o Bank Wire From: __________________________________________________________
ACCOUNT NAME S.S. #/TAX
L.D.#
- - --------------------------------------------------- --------------------------
Name of Individual, Corporation, Organization, or (In case of custodial
Minor, etc. account please list
minor's S.S.#)
__________________________________________________ Citizenship: o U.S.
Name of Joint Tenant, Partner, Custodian o Other _________________
ADDRESS PHONE
- - ---------------------------------------------- ( )-----------------
Street or P.O. Box Business Phone
- - ---------------------------------------------- ( )-----------------
City State Zip Home Phone
Check Appropriate Box: o Individual o Joint Tenant (Right of survivorship
presumed) o Partnership o Corporation o Trust o Custodial
o Non-Profit o Other
Occupation and Employer Name/Address__________________________________________
Are you an associated person of an NASD member? o Yes o No
TAXPAYER IDENTIFICATION NUMBER -- Under penalties of perjury I certify that
the Taxpayer Identification Number listed above is my correct number. Check
box if appropriate:
o I am exempt from backup withholding under the provisions of section 3406(a)
(1)(c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
o I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me and I have mailed or delivered an application
to receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do not
provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
o Share Option -- Income distributions and capital gains distributions
automatically reinvested in additional shares.
o Income Option -- Income distributions and short term capital
gains distributions paid in cash, long term capital gains
distributions reinvested in additional shares.
o Cash Option -- Income distributions and capital gains distributions paid
in cash.
<PAGE>
REDUCED SALES CHARGES (CLASS A SHARES ONLY)
RIGHT OF ACCUMULATION: I apply for Right of Accumulation subject to the
Agent's confirmation of the following holdings of the Regional Opportunity
Fund.
ACCOUNT NUMBER/NAME ACCOUNT NUMBER/NAME
- - ---------------------------------- -----------------------------------
- - ---------------------------------- -----------------------------------
LETTER OF INTENT: (Complete the Right of Accumulation section if related
accounts are being applied to your Letter of Intent.)
o l agree to the Letter of Intent in the current Prospectus of the Regional
Opportunity Fund. 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
______________________ 19 _______ (Purchase Date of not more than 90 days
prior to this Letter) an aggregate amount in the Fund at least equal to
(check appropriate box):
o $100,000 o $250,000 o $500,000 o $1,000,000
SIGNATURES
By signature below each investor certifies that he has received a copy of the
Fund's current Prospectus, that he is of legal age, and that he has full
authority and legal capacity for himself or the organization named below, to
make this investment and to use the options selected above. The investor
appoints MGF Service Corp. as his agent to enter orders for shares, to receive
dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption
shares held in the investor's account in accordance with any of the procedures
elected above or for payment of service charges incurred by the investor. The
investor further agrees that MGF Service Corp. can cease to act as such agent
upon ten days' notice in writing to the investor at the address contained in
this Application. The investor hereby ratifies any instructions given pursuant
to this Application and for himself and his successors and assigns does hereby
release MGF Service Corp., the Regional Opportunity Fund, Midwest Group
Financial Services, Inc., and their respective officers, employees, agents and
affiliates from any and all liability in the performance of the acts
instructed herein provided that such entities have exercised due care to
determine that the instructions are genuine. The Internal Revenue Service does
not require your consent to any provision of this document other than the
certifications required to avoid backup withholding.
- - --------------------------------------- -----------------------------------
Signature of Individual Owner, Signature of Joint Owner, if Any
Corporate Officer, Trustee, etc.
- - --------------------------------------- -----------------------------------
Title of Corporate Officer, Trustee, etc. Date
NOTE: CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS MUST COMPLETE THE
RESOLUTION FORM ON THE REVERSE SIDE.
<PAGE>
UNLESS OTHERWISE SPECIFIED, EACH JOINT OWNER SHALL HAVE FULL
AUTHORITY TO ACT ON BEHALF OF THE ACCOUNT.
AUTOMATIC INVESTMENT PLAN (COMPLETE FOR INVESTMENTS INTO THE FUND)
The Automatic Investment Plan is available for all established accounts of the
Regional Opportunity Fund. There is no charge for this service, and it offers
the convenience of automatic investing on a regular basis. The minimum
investment is $100.00 per month. For an account that is opened by using this
Plan, the minimum initial and subsequent investments must be $100.00. Though a
continuous program of 12 monthly investments is recommended, the Plan may be
discontinued by the shareholder at any time.
Please invest $ _________________per month in the Regional Opportunity Fund.
ABA Routing Number__________________________________________
FI Account Number___________________________________________
o Checking Account o Savings Account
- - ----------------------------------------------------------------------
Name of Financial Institution (FI)
- - ----------------------------------------------------------------------
City State
Please make my automatic investment on:
o the last business day of each month
o the 15th day of each month
o both the 15th and last business day
X_____________________________________________________________________
(Signature of Depositor EXACTLY as it appears on FI Records)
X___________________________________________________________
(Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please
sign exactly as signature appears on your FI's records.)
PLEASE ATTACH A VOIDED CHECK FOR THE AUTOMATIC INVESTMENT PLAN.
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which MGF Service Corp.
("MGF") has put into effect, by which amounts, determined by your depositor,
payable to the Regional Opportunity Fund, for purchase of shares of said Fund,
are collected by MGF, MGF hereby agrees:
MGF will indemnify and hold you harmless from any liability to any person
or persons whatsoever arising out of the payment by you of any amount drawn by
the Fund to its own order on the account of your depositor or from any
liability to any person whatsoever arising out of the dishonor by you whether
with or without cause or intentionally or inadvertently, of any such checks.
MGF will defend, at its own cost and expense, any action which might be
brought against you by any person or persons whatsoever because of your
actions taken pursuant to the foregoing request or in any manner arising by
reason of your participation in this arrangement. MGF will refund to you any
amount erroneously paid by you to the Fund on any such check if the claim for
the amount of such erroneous payment is made by you within six (6) months from
the date of such erroneous payment; your participation in this arrangement and
that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
AUTOMATIC WITHDRAWAL PLAN (COMPLETE FOR WITHDRAWALS FROM THE FUND)
This is an authorization for you to withdraw $_________ from my mutual fund
account beginning the last business day of the month of
___________________________________.
Please Indicate Withdrawal Schedule (Check One):
o MONTHLY -- Withdrawals will be made on the last business day of each month.
o QUARTERLY -- Withdrawals will be made on or about 3/31,6/30, 9/30 and 12/31.
o ANNUALLY -- Please make withdrawals on the last business day of the month of:
Please Select Payment Method (Check One):
o CHECK: Please mail a check for my withdrawal proceeds to the mailing address
on this account.
o ACH TRANSFER: Please send my withdrawal proceeds via ACH
transfer to my bank checking or savings account as indicated below. I
understand that the transfer will be completed in two to three
___________________________________ business days and that there is no charge.
o BANK WIRE: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one business
day and that there is an $8.00 fee.
PLEASE ATTACH A VOIDED
CHECK FOR ACH OR BANK WIRE
______________________________________________________________________________
Bank Name Bank Address
- - ------------------------------------------------------------------------------
Bank ABA# Account #
Account Name
o SEND TO SPECIAL PAYEE (OTHER THAN APPLICANT): Please mail a check for my
withdrawal proceeds to the mailing address below:
Name of payee_________________________________________________________________
Please send to:_______________________________________________________________
Street address City State Zip
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other
Organizations)
RESOLVED: That this corporation or organization become a shareholder of the
Regional Opportunity Fund (the Fund) and that
- - ------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf
of the corporation or organization and to take any action for it as may be
necessary or appropriate with respect to its shareholder account with the
Fund, and it is FURTHER RESOLVED: That any one of the above noted officers is
authorized to sign any documents necessary or appropriate to appoint MGF
Service Corp. as redemption agent of the corporation or organization for
shares of the Fund, to establish or acknowledge terms and conditions governing
the redemption of said shares and to otherwise implement the privileges
elected on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
- - ------------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of______________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held
on____________________________________________________________________________
at which a quorum was present and acting throughout, and that the same are now
in full force and effect. I further certify that the following is (are) duly
elected officer(s) of the corporation or organization, authorized to act in
accordance with the foregoing resolutions.
NAME TITLE
- - -------------------------------------- ---------------------------------
- - -------------------------------------- ---------------------------------
- - -------------------------------------- ---------------------------------
Witness my hand and seal of the corporation or organization this___________day
of_______________________________________, 19_______
- - --------------------------------- --------------------------------------
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
AMELIA EARHART: EAGLE EQUITY FUND
June 20, 1996
A Series of
MAPLEWOOD INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-326-6580
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES.............................................2
INVESTMENT LIMITATIONS....................................................... 7
TRUSTEES AND OFFICERS........................................................10
INVESTMENT ADVISOR...........................................................11
ADMINISTRATOR................................................................13
DISTRIBUTOR..................................................................14
OTHER SERVICES...............................................................15
BROKERAGE....................................................................15
DISTRIBUTION PLANS UNDER RULE 12b-1..........................................17
SPECIAL SHAREHOLDER SERVICES.................................................19
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................22
HOW SHARE PRICE IS DETERMINED................................................23
ADDITIONAL TAX INFORMATION...................................................24
DESCRIPTION OF THE TRUST.....................................................26
CALCULATION OF PERFORMANCE DATA..............................................27
APPENDIX A - DESCRIPTION OF RATINGS..........................................31
APPENDIX B - DESCRIPTION OF FUTURES CONTRACTS................................37
FINANCIAL STATEMENTS AND REPORTS.............................................46
This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Prospectus dated June 20, 1996 for the Amelia
Earhart: Eagle Equity Fund (the "Fund"). Copies of the Fund's Prospectus may be
obtained at no charge from the Fund, at the address and phone number shown
above.
- 1 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used but not defined have the same meaning as in the
Prospectus. A description of the various ratings used by the nationally
recognized statistical rating organizations ("NRSROs") for securities in which
the Fund may invest is included in this SAI as Appendix A. A description of the
futures contracts in which the Fund may invest is included in this SAI as
Appendix B.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S.Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve System or a registered Government Securities
dealer) and must deliver the security (and/or securities substituted for them
under the repurchase agreement) to the vendor on an agreed upon date in the
future. Such securities, including any securities so substituted, are referred
to as the "Repurchase Securities." The repurchase price exceeds the purchase
price by an amount which reflects an agreed upon market interest rate
effective for the period of time during which the repurchase agreement is in
effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the
instrument purchased, decline in its value and loss of interest. These risks
are minimized when the Fund holds a perfected security interest in the
Repurchase Securities and can therefore sell the instrument promptly. Under
guidelines issued by the Trustees, the Advisor will carefully consider the
creditworthiness during the term of the repurchase agreement. Repurchase
agreements are considered as loans collateralized by the Repurchase
Securities, such agreements being defined as "loans" under the Investment
Company Act of 1940 (the "1940 Act"). The return on such "collateral" may be
more or less than that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the "collateral" is
at all times as least equal to the value of the loan, including the accrued
interest earned thereon. All Repurchase Securities will be held by the Fund's
custodian either directly or through a securities depository.
BANK OBLIGATIONS. The Fund may purchase bank obligations for
temporary defensive purposes, which include bankers' acceptances,
negotiable certificates of deposit and non-negotiable time
- 2 -
<PAGE>
deposits, including U.S. dollar-denominated instruments issued or supported by
the credit of U.S. or foreign banks or savings institutions. Although the Fund
may invest in obligations of foreign banks or foreign branches or U.S. banks
only where the Advisor deems the instrument to present minimal credit risks,
such investments may nevertheless entail risks that are different from those
of investment in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. All investments in
bank obligations are limited to the obligations of financial institutions
having more than $1 billion in total assets at the time of purchase.
COMMERCIAL PAPER AND SHORT-TERM DEBT SECURITIES. Commercial paper, including
variable and floating rate notes and other short term corporate obligations,
generally must be rated in one of the two highest categories by at least one
NRSRO, or if not rated, must have been independently determined by the Advisor
to be of comparable quality. Other short term debt securities purchased by the
Fund, if not rated as commercial paper, generally must be rated BBB or Baa, or
higher, by at least one NRSRO, respectively, or if unrated, be of comparable
quality in the judgment of the Advisor. The Fund will invest no more than 5%
of its net assets in debt securities not meeting such standards.
VARIABLE AND FLOATING RATE INSTRUMENTS. With respect to variable and floating
rate obligations that may be acquired by the Fund, the Advisor will consider
the earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such notes and will continuously monitor their financial status
to meet payment on demand. The absence of an active secondary market with
respect to particular variable and floating rate instruments could make it
difficult for the Fund to dispose of instruments if the issuer defaulted on
its payment obligation or during periods that the Fund is not entitled to
exercise its demand rights, and the fund could, for these or other reasons,
suffer a loss with respect to such instruments.
LENDING SECURITIES. When the Fund lends its securities, it continues to
receive interest or dividends on the securities loaned and may simultaneously
earn interest on the investment of the cash collateral. The Fund will invest
cash collateral in readily marketable, high-quality, short-term obligations.
Although voting rights, or rights to consent, attendant to securities on loan
pass to the borrower, such loans will be called so that the securities may be
voted by the Fund if a material event affecting the investment is to occur.
OPTIONS TRADING AND SHORT SALES AGAINST THE BOX. The Fund may use a technique
known as "selling short against the box" to hedge an unrealized gain on a
security. This technique involves selling a security which the Fund owns for
delivery at a specified date in the future.
- 3 -
<PAGE>
The Fund may also purchase or sell put and call options for hedging purposes.
This is a highly specialized activity that entails greater than ordinary
investment risks. Regardless of how much the market price of the underlying
security increases or decreases, the option buyer's risk is limited to the
amount of the original investment for the purchase of the option. However,
options may be more volatile than the underlying securities, and therefore, on
a percentage basis, an investment in options may be subject to greater
fluctuation than an investment in the underlying securities. A listed call
option gives the purchaser of the option the right to buy from a clearing
corporation, and a writer has the obligation to sell to the clearing
corporation, the underlying security at the stated exercise price at any time
prior to the expiration of the option, regardless of the market price of the
security. The premium paid to the writer is in consideration for undertaking
the obligations under the option contract. A listed put option gives the
purchaser the right to sell to a clearing corporation the underlying security
at the stated exercise price at any time prior to the expiration date of the
option, regardless of the market price of the security. Put and call options
purchased by the Fund will be valued at the last sale price or, in the absence
of such a price, at the mean between bid and asked prices.
The Fund's obligation to sell a security subject to a covered call option
written by it, or to purchase a security subject to a secured put option
written by it, may be terminated prior to the expiration date of the option by
the Fund executing a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
security, exercise price and expiration date) as the option previously
written. Such a purchase does not result in the ownership of an option. A
closing purchase transaction will ordinarily be effected to realize a profit
on an outstanding option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to permit the writing of a
new option containing different terms on such underlying security. The cost of
such a liquidation purchase plus transaction costs may be greater than the
premium received upon the original option, in which event the Fund will have
incurred a loss in the transaction. An option position may be closed out only
on an exchange that provides a secondary market for an option of the same
series. There is no assurance that a liquid secondary market on an exchange
will exist for any particular option. A covered call option writer, unable to
effect a closing purchase transaction, will not be able to sell the underlying
security until the option expires or the underlying security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline in the underlying security during such period.
The Fund will write an option on a particular security only if
- 4 -
<PAGE>
the Advisor believes that a liquid secondary market will exist on an exchange
for options of the same series which will permit the Fund to make a closing
purchase transaction in order to close out its position.
When the Fund writes a covered call option, an amount equal to the net premium
(the premium less the commission) received by the Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The
current value of the traded option is the last sale price or, in the absence
of a sale, the average of the closing bid and asked prices. If an option
expires on the stipulated expiration date or if the Fund enters into a closing
purchase transaction, it will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is
sold), and the deferred credit related to such option will be eliminated. Any
gain on a covered call option may be offset by a decline in the market price
of the underlying security during the option period. If a covered call option
is exercised, the Fund may deliver the underlying security held by it or
purchase the underlying security in the open market. In either event, the
proceeds of the sale will be increased by the net premium originally received,
and the Fund will realize a gain or loss. If a secured put option is
exercised, the amount paid by the Fund for the underlying security will be
partially offset by the amount of the premium previously paid to the Fund.
Premiums from expired options written by the Fund and net gains from closing
purchase transactions are treated as short-term capital gains for federal
income tax purposes, and losses on closing purchase transactions are
short-term capital losses.
STOCK INDEX OPTIONS. The Fund may purchase or sell put and call stock index
options for hedging purposes. Stock index options are put options and call
options on various stock indexes. In most respects, they are identical to
listed options on common stocks. The primary difference between stock options
and index options occurs when index options are exercised. In the case of
stock options, the underlying security, common stock, is delivered. However,
upon the exercise of an index option, settlement does not occur by delivery of
the securities comprising the index. The option holder who exercises the index
option receives an amount of cash if the closing level of the stock index upon
which the option is based is greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option. This amount of
cash is equal to the difference between the closing price of the stock index
and the exercise price of the option expressed in dollars times a specified
multiple. A stock index fluctuates with changes in the market values of the
stocks included in the index.
- 5 -
<PAGE>
The Fund may purchase call and put stock index options in an attempt to either
hedge against the risk of unfavorable price movements adversely affecting the
value of the Fund's securities, or securities the Fund intends to buy, or
otherwise in furtherance of the Fund's investment objectives. The Fund will
sell (write) stock index options for hedging purposes or in order to close out
positions in stock index options which the Fund has purchased.
The Fund's use of stock index options is subject to certain risks. Successful
use by the Fund of options on stock indices will be subject to the ability of
the Advisor to correctly predict movements in the directions of the stock
market. This requires different skills and techniques than predicting changes
in the prices of individual securities. In addition, the Fund's ability to
effectively hedge all or a portion of the securities in its portfolio, in
anticipation of or during a market decline through transactions in put options
on stock indices, depends on the degree to which price movements in the
underlying index correlate with the price movements in the Fund's portfolio
securities. Inasmuch as the Fund's portfolio securities will not duplicate the
components of an index, the correlation will not be perfect. Consequently, the
Fund will bear the risk that the prices of its portfolio securities being
hedged will not move in the same amount as the prices of the Fund's put
options on the stock indices. It is also possible that there may be a negative
correlation between the index and the Fund's portfolio securities that would
result in a loss on both such portfolio securities and the options on stock
indices acquired by the Fund.
FORWARD COMMITMENT AND WHEN-ISSUED SECURITIES. The Fund may purchase
securities on a when-issued basis or for settlement at a future date if the
Fund holds sufficient assets to meet the purchase price. In such purchase
transactions the Fund will not accrue interest on the purchased security until
the actual settlement. Similarly, if a security is sold for a forward date,
the Fund will accrue the interest until the settlement of the sale.
When-issued security purchases and forward commitments have a higher degree of
risk of price movement before settlement due to the extended time period
between the execution and settlement of the purchase or sale. As a result, the
exposure to the counterparty of the purchase or sale is increased. Although
the Fund would generally purchase securities on a forward commitment or
when-issued basis with the intention of taking delivery, the Fund may sell
such a security prior to the settlement date if the Advisor believes such
action is appropriate. In such a case, the Fund could incur a short-term gain
or loss.
- 6 -
<PAGE>
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval of the holders of a majority of the
outstanding voting shares of the Fund. When used in the Prospectus or this SAI,
a "majority" of shareholders means the vote of the lesser of (1) 67% of the
shares of the Trust (or the Fund) present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (2)
more than 50% of the outstanding shares of the Trust (or the Fund). Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund MAY NOT:
1. Invest in common stocks or other equity-type securities that
are not components of either the DJIA or the Technology
Index;
2. Invest in non-investment grade debt securities if more than
5% of the Fund's net assets are held in such securities;
3. In respect to 75% of the value of the Fund's total assets,
purchase securities of an issuer (other than obligations of,
or guaranteed by, the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of the
value of the assets of the Fund would be invested in
securities of that issuer or more than 10% of the
outstanding securities of one issuer would be owned by the
Fund;
4. Invest more than 5% of its total assets in securities of issuers (other
than obligations of, or guaranteed by, the United States Government,
its agencies or instrumentalities) which with their predecessors have a
record of less than three years continuous operation, and equity
securities of issuers which are not readily marketable;
5. Invest in warrants, valued at the lower of cost or market, exceeding
more than 5% of the net assets of the Fund; included within the amount,
but not to exceed 2% of the value of the Fund's net assets, may be
warrants which are not listed on the New York or American Stock
Exchange; warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
6. Make loans to others, except (i) purchase a portion of an issue of
publicly distributed bonds, debentures, or other debt securities; (ii)
acquire repurchase agreements and commercial paper of corporations;
(iii) lend portfolio securities provided no such loan may be made, if
as a result
- 7 -
<PAGE>
the aggregate of such loans of portfolio securities exceed 30% of the
value of the Fund's total assets; and (iv) acquire private issues of
debt securities subject to the limitations in Section 10 below;
7. Make short sales of securities, except where a long position is held in
the same security which equals or exceeds the number of shares sold
short, or purchase any securities on margin except in connection with
transactions in options, futures and options on futures (but the Fund
may obtain such short-term credits as may be necessary for the
clearance of transactions);
8. Invest in options on securities, stock indices, and futures contracts
if the total premiums paid for all such options exceeds 5% of its total
assets and the aggregate value of the portfolio securities covering
such options exceeds 25% of its total assets;
9. Purchase or retain the securities of any issuer if the officers,
directors or trustees of the Trust or the Advisor owning beneficially
more than 1/2 of 1% of the securities of such issuer together own more
than 5% of the securities of such issuer;
10. Invest more than 5% of its net assets in securities restricted as to
disposition under the federal securities laws, illiquid securities
(including repurchase agreements with a maturity of more than seven
days), or other securities without readily available market quotations;
11. Invest for the purpose of exercising control or management
of another issuer;
12. Invest in commodities or commodity futures contracts (except
that the Fund may enter into interest rate futures contracts
and index futures contracts subject to Section 8 and 19
hereof) or in real estate, real estate mortgage loans, or
real estate limited partnerships, although it may invest in
securities that are secured by real estate or interests
therein and readily marketable securities of issuers that
invest or deal in real estate or interests therein;
13. Invest in interest in oil, gas or other mineral exploration
or development programs or leases, although it may invest in
the securities of issuers that invest in or sponsor such
programs or leases;
14. Underwrite securities issued by others except to the extent
it may be deemed to be an underwriter, under the federal
securities laws, in connection with the disposition of Fund
securities;
- 8 -
<PAGE>
15. Issue senior securities as defined in the Investment Company
Act of 1940;
16. Participate on a joint or a joint and several basis in any
trading account in securities;
17. Purchase or retain the securities of an insurance company if
the total invested would exceed 10% of its total assets,
unless the Commission has issued an order permitting such
investment;
18. Borrow money except from banks for temporary or emergency purposes (but
not for the purpose of purchase of investments), and then only in an
amount not to exceed 5% of the value of its total assets at the time
the borrowing is incurred, or borrow money in violation of the 1940
Act; provided, however, the Fund may enter into transactions in
options, futures and options on futures; or
19. Enter into an interest rate futures contract, an index
futures contract, or an option thereon unless if, as a
result thereof, (i) not more than 30% of the Fund's total
assets would be represented by such futures contracts
(including the then current aggregate futures market prices
of financial instruments required to be delivered under open
futures contract sales plus the then current aggregate
purchase prices of financial instruments required to be
purchased under open futures contract purchases), and (ii)
not more than 5% of the Fund's total assets (taken at market
value at the time of entering into the contract) would be
committed to initial margins and premiums paid on futures
contracts and options on futures contracts. Transactions in
futures contracts and options thereon may be entered into
only for hedging purposes.
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of assets, it is intended that if the percentage limitation
is met at the time the investment is made, a later change in percentage
resulting from changing total or net asset values will not be considered a
violation of such policy.
In order to permit the sale of the Fund's shares in certain states, the Fund
may make commitments more restrictive than the investment policies and
limitations described above and in the Prospectus. Should the Fund determine
that any such commitment is no longer in the best interests of the Fund, it
will revoke the commitment by terminating sales of the Fund's shares in the
state involved.
- 9 -
<PAGE>
With respect to investments permitted in other investment companies, see
"Investment Objective, Investment Policies and Risk Considerations" in the
Prospectus, certain limitations are placed on such investments, including the
Advisor's waiver of duplicative advisory fees. During any time that shares of
the Fund may be registered in the State of California, it is a fundamental
policy of the Fund that fees incurred in connection with the purchase of shares
of other investment companies will not be duplicative, management fees will not
be duplicated, and initial sales charges incurred for such purchases will not
exceed one percent (1%).
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Trust, their present
position with the Trust or Fund, age, principal occupations during the past 5
years and their aggregate compensation from the Trust for the fiscal year ended
February 29, 1996:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- - ------------------ -------------------- --------------
<C> <C> <C>
John P. Boone (age 64) President None
Trustee* Legacy Advisors, Inc. and
President Legacy Global Advisors, Inc.
Legacy Equity Fund Dallas, Texas
2911 Turtle Creek Boulevard Executive Vice President
Suite 400 Forum Securities, Inc.
Dallas, Texas 75219 Dallas, Texas
Jack E. Brinson (age 64) President, Brinson Investment Co. $6,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886 Trustee, Williamsburg Investment Trust
Cincinnati, Ohio
O. James Peterson III (age 59) Chief Financial Officer $6,000
Trustee Pimlico Race Course
Five Bellona Arsenal Laurel, Maryland; previously
Midlothian, Virginia Senior Vice President, Chief Financial Officer
Dominion Resources, Inc.
Richmond, Virginia
- 10 -
<PAGE>
Christopher J. Smith (age 29) President None
Trustee* ObjectTiger Ltd.
867 Thorn Tree Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel
Seligman & Associates
Director, Amelia Earhart
Capital Management, Inc.
Southfield, Michigan
Ashby M. Foote III (age 44) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
One Jackson Place, Suite 1070
Jackson, Mississippi 39201
Jasen M. Snelling (age 32 ) President
President CityFund Advisory, Inc; previously
Regional Opportunity Fund: Registered Representative
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 Registered Representative
Cincinnati, Ohio 45254 Provident Securities Investment Co.
Cincinnati, Ohio
Robert B. Thompson (age 49) Chief Executive Officer
President Morehead Capital Advisors LLC
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 47) President
President Amelia Earhart Capital Management, Inc.
Amelia Earhart: Eagle Equity Fund Southfield, Michigan
One Towne Square President
Suite 1913 Jill H. Travis, CFP
Southfield, Michigan 48076 Shelby Township, Michigan; previously
Senior Vice President
Huntington Banks, Troy, Michigan
Robert G. Dorsey (age 39) President and Treasurer, MGF Service Corp.;
Vice President Treasurer, Midwest Group Financial Services,
312 Walnut Street, 21st Floor Inc.; Treasurer and Director, Leshner
Cincinnati, Ohio 45202 Financial, Inc.
- 11 -
<PAGE>
John F. Splain (age 39) Secretary and General Counsel,
Secretary MGF Service Corp., Midwest
312 Walnut Street, 21st Floor Group Financial Services, Inc. and
Cincinnati, Ohio 45202 Leshner Financial, Inc.; Secretary
Midwest Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust
Mark J. Seger (age 34) Vice President, MGF Service Corp.
Treasurer and Leshner Financial, Inc.; Treasurer,
312 Walnut Street, 21st Floor Midwest Trust, Midwest Group
Cincinnati, Ohio 45202 Tax Free Trust and Midwest Strategic Trust
- - -------------------------------------
</TABLE>
* Indicates that Trustee is an "interested person" for purposes of the 1940 Act
because of his position with one of the investment advisors to the Trust.
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. Each disinterested Trustee receives an
annual retainer of $2,000 plus $250 from each series of the Trust for each Board
meeting attended in person and $100 from each series of the Trust for each
meeting attended by telephone. All Trustees are reimbursed for any out-of-pocket
expenses incurred in connection with their attendance at Board meetings.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 7, 1996, the Trustees and
officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund. On
the same date, D&S Investment Company, One Towne Square Suite 1913, Southfield,
Michigan 48076, owned of record 21.8% of the then outstanding Class A shares of
the Fund; Metro United Gas Service, One Towne Square Suite 1913, Southfield,
Michigan 48076, owned of record 17.3% of the then outstanding Class A shares of
the Fund; Joseph Krinsky and Emily Krinsky JT WROS, 1212 Pembury Lane,
Bloomfield Hills, Michigan 48302, owned of record 12.9% of the then outstanding
Class A shares of the Fund; and Amelia Earhart Capital Management, Inc., 1760 W.
Telegraph Suite 100, Bloomfield Hills, Michigan 48302, owned of record 9.6% of
the then outstanding Class A shares of the Fund.
INVESTMENT ADVISOR
Amelia Earhart Capital Management, Inc. (the "Advisor") supervises the Fund's
investments pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") described in the Prospectus. The Advisory Agreement will be
renewed for one year periods only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of
a majority of the Fund's outstanding voting securities, provided the
continuance is also approved by a
- 12 -
<PAGE>
majority of the Trustees who are not "interested persons" of the Trust or the
Advisor by vote cast in person at a meeting called for the purpose of voting
on such approval. The Advisory Agreement is terminable without penalty on
sixty days notice by the Board of Trustees of the Trust or by the Advisor. The
Advisory Agreement provides that it will terminate automatically in the event
of its assignment.
Compensation of the Advisor is at the annual rate of 1% of the Fund's average
daily net assets. The Advisor may be required to reimburse the Fund if the
Fund's annual ordinary operating expenses exceed certain limits. This expense
limitation is calculated and administered in accordance with the requirements
of state securities authorities. For the fiscal year ended February 29, 1996,
the Advisor voluntarily waived its entire advisory fee of $14,327 and
reimbursed the Fund $80,085 in expenses in order to voluntarily reduce the
operating expenses of the Fund. For the fiscal year ended February 28, 1995,
the Advisor voluntarily waived its entire advisory fee of $3,868 and
reimbursed the Fund $65,953 of expenses in order to voluntarily reduce the
operating expenses of the Fund. For the fiscal year ended February 28, 1994,
the Advisor voluntarily waived its entire advisory fee of $1,836 and
reimbursed the Fund $37,198 of expenses in order to voluntarily reduce the
operating expenses of the Fund.
The Advisor is controlled by Sandra J. Seligman, Jill H. Travis
and Scott J. Seligman. The Advisor serves solely as investment
advisor to the Fund.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities,
investments, cash and cash equivalents of the Fund. The Advisor determines
what securities and other investments will be purchased, retained or sold by
the Fund, and does so in accordance with the investment objective and policies
of the Fund as described herein and in the Prospectus. The Advisor places all
securities orders for the Fund, determining with which broker, dealer, or
issuer to place the orders. The Advisor also provides, at its own expense,
certain Executive Officers to the Trust.
The Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Advisor attempts to
obtain the best execution for all securities brokerage transactions.
Under the Advisory Agreement, the Advisor is not responsible for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of the Agreement, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services or
a loss resulting from willful misfeasance, bad faith or gross negligence
- 13 -
<PAGE>
on the part of the Advisor in the performance of its duties or from the
reckless disregard of its duties and obligations under the Agreement.
ADMINISTRATOR
MGF Service Corp. (the "Administrator") maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator receives for its services as transfer
agent a fee payable monthly at an annual rate of $17 per account, provided,
however, that the minimum fee is $1,000 per month for each class of shares. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage, envelopes, checks, drafts, forms, reports, record storage and
communication lines.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives $3,000 per month from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable the Administrator to perform its duties.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies
non-investment related statistical and research data, internal regulatory
compliance services and executive and administrative services. The
Administrator supervises the preparation of tax returns, reports to
shareholders of the Fund, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for
meetings of the Board of Trustees. For the performance of these administrative
services, the Fund pays the Administrator a fee at the annual rate of .15% of
the average value of its daily net assets up to $50,000,000, .125% of such
assets from $50,000,000 to $100,000,000 and .1% of such assets in excess of
$100,000,000.
Prior to June 1, 1996 the administrator to the Fund was The Nottingham
Company, Rocky Mount, North Carolina. For the fiscal year ended February 29,
1996, The Nottingham Company received from the Fund a fee of $36,000.
DISTRIBUTOR
Midwest Group Financial Services, Inc. (the "Distributor") is the principal
underwriter of the Fund and, as such, the exclusive agent for distribution of
shares of the Fund. The Distributor is obligated to sell the shares on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
- 14 -
<PAGE>
The Distributor currently allows concessions to dealers who sell Class A
shares of the Fund. The Distributor retains the entire sales charge on all
direct investments in Class A shares of the Fund and on all investments in
accounts with no designated dealer of record. Prior to June 1, 1996, Capital
Investment Group, Inc. served as the distributor for the Fund. For the fiscal
years ended February 29, 1996 and February 28, 1995, Capital Investment Group,
Inc. retained $4,922 and $124, respectively in underwriting commissions.
The Fund may compensate dealers, including the Distributor and its affiliates,
based on the average balance of all accounts in the Fund for which the dealer
is designated as the party responsible for the account. See "Distribution
Plans Under Rule 12b-1" below.
OTHER SERVICES
AUDITORS. The firm of KPMG Peat Marwick LLP, 201 East Fifth Street,
Cincinnati, Ohio 45202, has been retained by the Board of Trustees to perform
an independent audit of the financial statements of the funds and to prepare
the Fund's federal and state tax returns.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank, 38
Fountain Square Plaza, Cincinnati, Ohio 45263. The Custodian holds all cash
and securities of the Fund (either in its possession or in its favor through
"book entry systems" authorized by the Trustees in accordance with the 1940
Act), collects all income and effects all securities transactions on behalf of
the Fund. For its services as Custodian, the Custodian receives an annual fee
from the Fund based on the average net assets of the Fund held by the
Custodian.
BROKERAGE
It is the Fund's practice to seek to obtain the best overall terms available
in executing Fund transactions and selecting brokers or dealers. Subject to
the general supervision of the Board of Trustees, the Advisor is responsible
for, makes decisions with respect to, and places orders for all purchases and
sales of portfolio securities for the Fund.
In assessing the best overall terms available for any transaction, the Advisor
shall consider factors it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In addition, the Advisor may cause the Fund to
- 15 -
<PAGE>
pay a broker-dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided the Advisor determines in good faith
that such commission is reasonable in relation to the value of the brokerage
and research services provided by such broker-dealer, viewed in terms of
either the particular transaction or the overall responsibilities of the
Advisor to the Fund. Such brokerage and research services may consist of
reports and statistics relating to specific companies or industries, general
summaries of groups of stocks or bonds and their comparative earnings and
yields, or broad overviews of the economy and the stock, bond and government
securities markets.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review
any commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits received by the Fund. It is possible that certain of the
supplementary research or other services received will primarily benefit one
or more other accounts for which investment discretion is exercised by the
Advisor. Conversely, the Fund may be the primary beneficiary of the research
or other services received as a result of securities transactions effected for
such other accounts.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution from such firm. The
Fund will not execute portfolio transactions through, acquire securities
issued by, make savings deposits in or enter into repurchase agreements with
the Advisor or an affiliated person of the Advisor (as such term is defined in
the 1940 Act) acting as principal, except to the extent permitted by the
Securities and Exchange Commission ("SEC"). In addition, the Fund will not
purchase securities during the existence of any underwriting or selling group
relating thereto of which the Advisor or an affiliated person of the Advisor,
is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations
in comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.
The Fund purchases money market instruments from dealers, underwriters and
issuers. The Fund does not expect to incur any brokerage commissions on such
purchases because money market instruments are generally traded on a net basis
by a dealer acting as principal for its own account without a stated
commission. The price of the security, however, usually includes
- 16 -
<PAGE>
a profit to the dealer. Securities purchased in underwritten offerings include
a fixed amount of compensation to the underwriter, generally referred to as
the underwriter's concession or discount. When securities are purchased
directly from or sold directly to an issuer, no commissions or discounts are
paid.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without
commission) through dealers, or otherwise involve transactions directly with
the issuer of an instrument. The Fund's fixed income portfolio transactions
will normally be principal transactions executed in the over-the-counter
market and will be executed on a net basis, which may include a dealer markup.
With respect to securities traded only in the over-the-counter market, orders
will be executed on a principal basis with primary market makers in such
securities except where better prices or executions may be obtained on an
agency basis or by dealing with other than a primary market maker.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole
discretion, believes such practice to be otherwise in the Fund's interest.
Investment decisions for the Fund will be made independently from any other
accounts advised or managed by the Advisor. Such other accounts may also
invest in the same securities as the Fund. To the extent permitted by law, the
Advisor may aggregate the securities to be sold or purchased for the Fund with
those to be sold or purchased for other accounts in executing transactions.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Fund and other accounts, the transaction will be
averaged as to price and available investments allocated as to amount, in the
manner which the Advisor believes to be equitable to the Fund and such other
accounts. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.
For the fiscal years ended February 29, 1996, February 28, 1995 and February
28, 1994, the total amount of brokerage commissions paid by the Fund were
$20,151, $5,144 and $931, respectively.
- 17 -
<PAGE>
DISTRIBUTION PLANS UNDER RULE 12B-1
The Fund has adopted a Plan of Distribution for Class A shares (the "Class A
Plan") and for Class C shares (the "Class C Plan") pursuant to Rule 12b-1
under the 1940 Act (collectively, the "Plans"). The Plans permit the Fund to
pay for expenses incurred in the distribution and promotion of each class of
the Fund's shares.
Under the Class A Plan, the Fund may expend in any fiscal year up to .25% of
the Class A shares' average daily net assets to finance any activity which is
primarily intended to result in the sale of Class A shares and the servicing
of shareholder accounts, provided the Board of Trustees has approved the
category of expenses for which payment is being made. The front-end sales
charge and amounts payable to the Distributor under the Class A Plan are used
by the Distributor to pay commissions and other fees to dealers and other
service organizations who sell Class A shares.
Under the Class B Plan, the Fund may expend in any fiscal year up to 1% of the
Class B shares' average daily net assets to finance any activity which is
primarily intended to result in the sale of Class B shares and the servicing
of shareholder accounts, provided the Board of Trustees has approved the
category of expenses for which payment is being made. Expenditures under the
Class B Plan as service fees to any person who sells Class B shares may not
exceed an annual rate of .25% of the average net assets of such shares.
Expenditures under the Class B Plan for distribution activities as an
asset-based sales charge may not exceed an annual rate of .75% of the average
net assets of Class B shares.
Dealers and other service organizations receive commissions from the Advisor
for selling Class B shares, which are paid at the time of sale. These
commissions approximate the commissions payable with respect to sales of Class
A shares. The expenditures payable under the Class B Plan for distribution
activities ( at an annual rate of .75% of net assets) are intended to cover
the expense to the Advisor of paying such up- front commissions, and the
contingent deferred sales charge is calculated to charge the investor with any
shortfall that would occur if Class B shares are redeemed prior to the
expiration of the five year CDSC period. To provide funds for the payment of
up-front sales commissions, the Advisor has arranged a line of credit with an
unaffiliated third party lender, which provides funds for the payment of
commissions and other fees payable to dealers and other service organizations
which sell Class B shares. Under the terms of the financing, the Advisor will
assign to the lender the distribution fees that may be payable from time to
time to the Advisor under the Class B Plan and the contingent deferred sales
charges payable to the Advisor with respect to Class B shares. - 18 -
<PAGE>
During the fiscal year ended February 29, 1996, Class A shares incurred $3,556
in distribution expenses for payments to broker-dealers and others for the
retention of assets.
Sandra J. Seligman, Jill H. Travis and Scott J. Seligman, as controlling
shareholders of the Advisor may be deemed to have a financial interest in the
operation of the Plans and the Implementation Agreement.
Potential benefits to the Fund from the Plans include improved shareholder
servicing, savings in transfer agency costs, benefits to the investment
process from growth and stability of assets and maintenance of a financially
healthy management organization. Subject to its practice of seeking to obtain
best execution, the Fund may, from time to time, buy or sell portfolio
securities from or to firms which receive payments under the Plans.
The Plans, the Underwriting Agreement with the Distributor and the form of
Dealer Agreement with broker-dealers have all been approved by the Board of
Trustees of the Trust, including a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in the Plans or any related agreements,
by vote cast in person or at a meeting duly called for the purpose of voting
on the Plans and such Agreements. Continuation of the Plans, the Underwriting
Agreement and the form of Dealer Agreement must be approved annually by the
Board of Trustees in the same manner as specified above.
Each year the Trustees must determine that continuation of the Plans is in the
best interests of shareholders of the Fund and there is a reasonable
likelihood that the Plans will benefit the Fund. The Board of Trustees has
made such a determination for the current year of operations under the Plans.
The Plans, the Underwriting Agreement and the Dealer Agreements may be
terminated at any time without penalty by a majority of those trustees who are
not "interested persons" or by a majority of the outstanding shares of each
class. Any amendment materially increasing the maximum percentage payable
under the Plans must likewise be approved by a majority of the outstanding
shares of the applicable class as well as a majority of the Trustees who are
not "interested persons" and have no direct or indirect financial interest in
the Plans (the "Independent Trustees"). In order for the Plans to remain
effective, the selection and nomination of those Trustees who are not
interested persons of the Trust must be effected by the Independent Trustees
during such period. All amounts spent by the Fund pursuant to the Plans must
be reported quarterly in a written report to the Trustees for their review.
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<PAGE>
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder
services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be
made at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to
date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bi-monthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum) which will be automatically invested in
shares at the public offering price on or about the fifteenth and/or the last
business day of the month. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the
Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $5,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $50 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and
December). Payments in amounts over $5,000 may be made directly to an
investor's account with a commercial bank or other depository institution via
an Automated Clearing House ("ACH") transaction. Instructions for establishing
this service are included in the Application contained in the Prospectus or
are available by calling the Fund. Payment may also be made by check made
payable to the designated recipient and mailed within 7 days of the valuation
date. If the designated recipient is other than the registered shareholder,
the signature of each shareholder must be guaranteed on the application (see
"Signature Guarantees" in the Prospectus). A corporation (or partnership) must
also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to
act on its behalf. The application must be signed by a duly authorized
officer(s) and the corporate seal
- 20 -
<PAGE>
affixed. No redemption fees are charged to shareholders under this plan except
for potential deferred sales charges with respect to Class B shares. The
Prospectus contains additional information and limitations relating to the use
of a Systematic Withdrawal Plan by a holder of Class B shares. Costs in
conjunction with the administration of the plan are borne by the Fund.
Investors should be aware that such systematic withdrawals may deplete or use
up entirely their initial investment and may result in realized long-term or
short-term capital gains or losses. The Systematic Withdrawal Plan may be
terminated at any time by the Fund upon sixty days' written notice or by an
investor upon written notice to the Fund. Applications and further details may
be obtained by calling the Fund at 1-800-326-6580, or by writing to:
Amelia Earhart: Eagle Equity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment
for the purchase of shares of the Fund. The acceptance of such securities is
at the sole discretion of the Advisor based upon the suitability of the
securities accepted for inclusion as a long term investment of the Fund, the
marketability of such securities, and other factors which the Advisor may deem
appropriate. If accepted, the securities will be valued using the same
criteria and methods as described in "How Shares are Valued" in the
Prospectus. Transactions involving the issuance of shares in the Fund for
securities in lieu of cash will be limited to acquisitions of securities
(except for municipal debt securities issued by state political subdivisions
or their agencies or instrumentalities) which: (a) meet the investment
objective and policies of the Fund; (b) are acquired for investment and not
for resale; (c) are liquid securities which are not restricted as to transfer
either by law or liquidity of market; and (d) have a value which is readily
ascertainable (and not established only by evaluation procedures) as evidenced
by a listing on the American Stock Exchange, the New York Stock Exchange or
NASDAQ.
REDEMPTION IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the
Trustees, make it undesirable for the Fund to pay for all redemptions in cash.
In such case, the Board of Trustees may authorize payment to be made in
readily marketable portfolio securities of the Fund. Securities delivered in
payment of redemptions would be valued at the same value assigned to them in
computing the net asset value per share. Shareholders receiving such
securities would incur brokerage costs when the securities are sold. An
irrevocable
- 21 -
<PAGE>
election has been filed under Rule 18f-1 of the 1940 Act, wherein the Fund is
committed to pay redemptions in cash, rather than in kind, to any shareholder
of record of the Fund who redeems during any ninety day period, the lesser of
(a) $250,000 or (b) one percent (1%) of the Fund's net assets at the beginning
of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund's Administrator at the address shown herein. Your request
should include the following: (1) the Fund name and existing account
registration; (2) signature(s) of the registered owner(s) exactly as the
signature(s) appear(s) on the account registration; (3) the new account
registration, address, social security or taxpayer identification number and
how dividends and capital gains are to be distributed; (4) signature
guarantees (see the Prospectus under the heading "Signature Guarantees"); and
(5) any additional documents which are required for transfer by corporations,
administrators, executors, trustees, guardians, etc. If you have any questions
about transferring shares, call or write the Administrator.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
PURCHASES. Shares of the Fund are offered and sold on a continuous basis and
may be purchased through authorized dealers or directly by contacting the
Distributor or the Administrator. Selling dealers have the responsibility of
transmitting orders promptly to the Fund's Administrator. The public offering
price of Class A shares of the Fund equals the net asset value plus a sales
charge. Class B shares may be subject to a contingent deferred sales charge
upon redemption. The Distributor receives the sales charge on Class A shares
as Distributor and may reallow all or a part of the sales charge in the form
of dealer discounts and brokerage commissions. The Advisor may compensate
dealers up-front from its own funds for distribution-related activities in
connection with the sale of Class B shares, for which the Advisor will receive
the contingent deferred sales charge and a distribution fee under the Class B
Plan as described in "Distribution Plans Under Rule 12b-1." The current
schedule of sales charges and related dealer discounts and brokerage
commissions is set forth in the Prospectus. See "How to Purchase Shares" in
the Prospectus.
REDEMPTIONS. Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading
on the New York Stock Exchange is restricted by applicable rules and
regulations of the SEC; (b) the Exchange is closed for other than customary
weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC. The Fund may
also suspend or postpone the recordation of the
- 22 -
<PAGE>
transfer of shares upon the occurrence of any of the foregoing
conditions.
In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of an investor to make full
payment for shares purchased by the investor or to collect any charge relating
to a transaction effected for the benefit of an investor which is applicable
to Fund shares as provided in the Prospectus from time to time.
HOW SHARE PRICE IS DETERMINED
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund and they have
adopted procedures to do so as follows:
The public offering price (net asset value plus applicable sales charge) of
Class A shares and the net asset value of Class B shares of the Fund is
determined as of 4:00 p.m. Eastern time, Monday through Friday, except on
business holidays when the New York Stock Exchange is closed. The New York
Stock Exchange recognizes the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day
and Christmas Day. Any other holiday recognized by the New York Stock Exchange
will be considered a business holiday on which the Fund's share price will not
be determined.
The net asset value per share of each class of the Fund is calculated
separately by adding the value of the securities and other assets belonging to
the Fund and attributable to that class, subtracting the liabilities charged
to the Fund and to that class and dividing the result by the number of
outstanding shares of that class. Assets belonging to the Fund consist of the
consideration received upon the issuance of shares of the Fund together with
all net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular Fund.
Income, realized and unrealized capital gains and losses, and any expenses of
the Fund not allocable to a particular class of shares will be allocated to
each class based on the net assets of that class in relation to the net assets
of the Fund. Assets belonging to the Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net assets of all series in the Trust at the time of allocation or in
accordance with other allocation methods approved by the Board of Trustees.
- 23 -
<PAGE>
Certain expenses attributable to a particular class of shares (such as
distribution fees) will be charged to that class. Certain other expenses
attributable to a particular class of shares (such as registration fees,
professional fees and certain printing and postage expenses) may be charged to
that class if such expenses are actually incurred in a different amount by
that class or if the class receives services of a different kind or to a
different degree than another class and the Board of Trustees approves such
allocation. Subject to the provisions of the Declaration of Trust,
determinations by the Board of Trustees as to the direct and allocable
liabilities and the allocable portion of any general assets, with respect to
the Fund and its classes are conclusive.
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is
based on tax laws and regulations that are in effect on the date hereof; such
laws and regulations may be changed by legislative, judicial or administrative
action. Investors are advised to consult their tax advisors with specific
reference to their own tax situations.
Each series of the Trust, including the Fund, will be treated as a separate
entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source
of its income for a taxable year. At least 90% of the gross income of the Fund
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities or
foreign currencies, and other income derived with respect to the Fund's
business of investing in such stock, securities or currencies. Any income
derived by the Fund from a partnership or trust is derived with respect to the
Fund's business of investing in such stock, securities or currencies only to
the extent that such income is attributable to items of income that would have
been qualifying income if realized by the Fund in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of the Fund's gross income for a taxable year
must be derived from gains realized on the sale or other disposition of the
following investments held
- 24 -
<PAGE>
for less than three months: (1) stock and securities (as defined in Section
2(a)(36) of the 1940 Act); (2) options, futures and forward contracts other
than those on foreign currencies; or (3) foreign currencies (or options,
futures or forward contracts on foreign currencies) that are not directly
related to the Fund's principal business of investing in stocks or securities
(or options and futures with respect to stocks or securities). Interest
(including original issue discount and, with respect to certain debt
securities, accrued market discount) received by the Fund upon maturity or
disposition of a security held for less than three months will not be treated
as gross income derived from the sale or other disposition of such security
within the meaning of this requirement. However, any other income which is
attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
An investment company may not qualify as a regulated investment company for
any taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more that 5% of the total assets of the
investment company nor more than 10% of the outstanding voting securities of
such issuer. In addition, not more than 25% of the value of the investment
company's total assets may be invested in the securities (other than
government securities or the securities of other regulated investment
companies) of any one issuer. The Fund intends to satisfy all requirements on
an ongoing basis for continued qualification as a regulated investment
company.
The Fund will designate any distribution of long term capital gains as a
capital gain dividend in a written notice mailed to shareholders within 60
days after the close of the Fund's taxable year. Shareholders should note
that, upon the sale or exchange of shares, if the shareholder has not held
such shares for at least six months, any loss on the sale or exchange of those
shares will be treated as a long term capital loss to the extent of the
capital gain dividends with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies
that fail to currently distribute an amount equal to specified percentages of
their ordinary taxable income and capital gain net income (excess of capital
gains over capital losses). The Fund intends to make sufficient distributions
or deemed distributions of its ordinary taxable income and any capital gain
net income prior to the end of each calendar year to avoid liability for this
excise tax.
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<PAGE>
If for any taxable year the Fund does not qualify for the special federal
income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate
rates (without any deduction for distributions to its shareholders). In such
event, dividend distributions (whether or not derived from interest on
tax-exempt securities) would be taxable as ordinary income to shareholders to
the extent of the Fund's current and accumulated earnings and profits, and
would be eligible for the dividends received deduction for corporations.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the
Internal Revenue Service for failure to properly include on their tax return
payments of taxable interest or dividends, or who have failed to certify to
the Fund that they are not subject to backup withholding when required to do
so or that they are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent
contractors are located or in which it is otherwise deemed to be conducting
business, the Fund may be subject to the tax laws of such states or
localities. In addition, in those states and localities that have income tax
laws, the treatment of the Fund and its shareholders under such laws may
differ from their treatment under federal income tax laws.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Massachusetts
law on August 12, 1992. The Trust's Declaration of Trust authorizes the Board
of Trustees to divide shares into series, each series relating to a separate
portfolio of investments. The Declaration of Trust currently provides for the
shares of five series: The Carolinas Fund managed by Morehead Capital Advisors
LLC of Charlotte, North Carolina; the Legacy Equity Fund managed by Legacy
Advisors, Inc. of Dallas, Texas; the Mississippi Opportunity Fund managed by
Vector Money Management, Inc. of Jackson, Mississippi; the Regional
Opportunity Fund: Ohio Indiana Kentucky managed by CityFund Advisory, Inc. of
Cincinnati, Ohio; and the Fund. The Board of Trustees has authorized separate
classes of shares for the Fund, The Carolinas Fund, the Regional Opportunity
Fund: Ohio Indiana Kentucky and the Mississippi Opportunity Fund.
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<PAGE>
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be
entitled to receive the assets available for distribution belonging to such
series. Shareholders of a series are entitled to participate equally in the
net distributable assets of the particular series involved on liquidation,
based on the number of shares of the series that are held by each shareholder.
If any assets, income, earnings, proceeds, funds or payments are not readily
identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more series as they, in their sole discretion,
deem fair and equitable.
Shares of the Fund, when issued, are fully paid and non-assessable.
Shareholders are entitled to one vote for each full share held and a
fractional vote for each fractional share held. Shareholders of all series in
the Trust, including the Fund, will vote together and not separately, except
as otherwise required by law or when the Board of Trustees determines that the
matter to be voted upon affects only the interests of the shareholders of a
particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority
of the outstanding shares of each series affected by the matter. A series is
affected by a matter unless it is clear that the interests of each series in
the matter are substantially identical or that the matter does not affect any
interest of the series. Under Rule 18f-2 of the 1940 Act, the approval of an
investment advisory agreement, a material change to a Rule 12b-1 Plan or any
change in a fundamental investment policy would be effectively acted upon with
respect to a series only if approved by a majority of the outstanding shares
of such series. However, the Rule also provides that the ratification of the
appointment of independent accountants, the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
shareholders of the Trust voting together, without regard to a particular
series.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as
such liability may arise from his or her own bad faith, willful misfeasance,
gross negligence or reckless disregard of duties. It also provides that all
third parties shall look solely to the Trust property for satisfaction of
claims arising in connection with the affairs of the Trust. With the
exceptions stated, the Declaration of Trust provides that a Trustee or officer
is entitled to be indemnified against all liability in connection with the
affairs of the Trust.
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<PAGE>
Prior to June 1, 1996 the Trust was named The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. Total return and yield are computed
separately for Class A and Class B shares of the Fund. The yield of Class A
shares is expected to be higher than the yield of Class B shares due to the
higher distribution fees imposed on Class B shares.
The average annual total return of the Fund for a period is computed by
subtracting the net asset value per share at the beginning of the period from
the net asset value per share at the end of the period (after adjusting for
the reinvestment of any income dividends and capital gain distributions), and
dividing the result by the net asset value per share at the beginning of the
period. In particular, the average annual total return of the Fund ("T") is
computed by using the redeemable value at the end of a specified period of
time ("ERV") of a hypothetical initial investment of $1,000 ("P") over a
period of time ("n") according to the formula P(l+T)n=ERV. The calculation of
average annual total return assumes the reinvestment of all dividends and
distributions and the deduction of the current maximum sales load from the
initial $1,000 payment. The Fund may also compute its aggregate total return,
which is calculated in a similar manner, except that the results are not
annualized.
The average annual total returns for Class A shares for the one year period
ended February 29, 1996 and for the period since inception (March 5, 1993) to
February 29, 1996 are 19.46% and 24.64%, respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return.
Nonstandardized Return may consist of a cumulative percentage of return,
actual year-by-year rates or any combination thereof.
The cumulative total return for Class A shares for the period since
inception (March 5, 1993) to February 29, 1996 is 70.13%. The average annual
Nonstandardized Returns of Class A shares (computed without the applicable
sales load) for the one year period ended February 29, 1996 and for the period
since inception (March 5, 1993) to February 29, 1996 are 30.59% and 21.31%,
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<PAGE>
respectively. A nonstandardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
From time to time, the Fund may advertise its yield. A yield quotation is
based on a 30-day (or one month) period and is computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity
of each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day
prior to the start of the 30-day (or one month) period for which yield is
being calculated, or, with respect to obligations purchased during the month,
the purchase price (plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other
mutual funds having similar objectives or to standardized indices or other
measures of investment performance. In particular, the Fund may compare its
performance to the S&P 500 Index, which is generally considered to be
representative of the performance of unmanaged common stocks that are publicly
traded in the United States securities markets. The Fund may also compare its
performance to the Dow Jones Industrial Average or the Pacific Stock Exchange
Technology Index, which Average and Index are described in the Prospectus.
Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service, such as Lipper Analytical
Services, Inc. or Morningstar, Inc. or by one or more newspapers, newsletters
or financial periodicals. The Fund may also occasionally cite statistics to
reflect its volatility and risk. Performance comparisons may be useful to
investors who wish to compare the Fund's past performance to that of other
mutual funds and investment products. Of course, past performance is not a
guarantee of future results.
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<PAGE>
The Fund's performance fluctuates on a daily basis largely because net
earnings and net asset value per share fluctuate daily. Both net earnings and
net asset value per share are factors in the computation of total return as
described above.
As indicated, from time to time, the Fund may advertise its
performance compared to similar funds or portfolios using certain
indices, reporting services, and financial publications. These
may include the following:
O LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change
in net asset value over a specific period of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain
a more complete view of the Fund's performance before investing. Of course,
when comparing the Fund's performance to any index, factors such as
composition of the index and prevailing market conditions should be considered
in assessing the significance of such comparisons. When comparing funds using
reporting services, or total return, investors should take into consideration
any relevant differences in funds such as permitted portfolio compositions and
methods used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote total returns
that are calculated on nonstandardized base periods. The total returns
represent the historic change in the value of an investment in the Fund based
on monthly reinvestment of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation
and the effects of inflation on the dollar, including the purchasing power of
the dollar at various rates of inflation. The Fund may also disclose from time
to time information about its portfolio allocation and holdings at a
particular date (including ratings of securities assigned by independent
rating services such as S&P and Moody's). The Fund may also depict the
historical performance of the securities in which the Fund may invest over
periods reflecting a variety of market or economic conditions either alone or
in comparison with alternative investments, performance indices of those
investments, or economic indicators. The Fund may also include in
advertisements and in materials furnished to present and
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<PAGE>
prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be
employed to meet specific financial goals, such as saving for retirement,
children's education, or other future needs.
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<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
The Fund may acquire from time to time fixed-income securities meeting at
least the following minimum rating criteria (or if not rated, of equivalent
quality as determined by the Advisor) ("Investment Grade Debt Securities").
The Fund will not invest in non-Investment Grade Debt Securities if, after
giving effect thereto, more than 5% of the Fund's net assets are held in such
securities.
The various ratings used by the NRSROs are described below. A rating by an
NRSRO represents the organization's opinion as to the credit quality of the
security being rated. However, the ratings are general and are not absolute
standards of quality or guarantees as to the creditworthiness of an issuer.
Consequently, the Advisor believes that the quality of fixed-income securities
in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved
in credit analysis. A rating is not a recommendation to purchase, sell or hold
a security because it does not take into account market value or suitability
for a particular investor. When a security has received a rating from more
than one NRSRO, each rating is evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the NRSROs from
other sources that they consider reliable. Ratings may be changed, suspended
or withdrawn as a result of changes in or unavailability of such information,
or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS:
The following summarizes the four highest ratings used by Moody's Investors
Service, Inc. ("Moody's") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA: Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long term risks appear somewhat larger than in Aaa securities.
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A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
that suggest a susceptibility to impairment sometime in the future.
BAA: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated
Aa, A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
Investment-Grade Debt Securities by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because
the protection of interest and principal payments often may be very moderate
and not well safeguarded. Bonds which are rated B generally lack
characteristics of a desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the security over any long period
of time may be small. Bonds which are rated Caa are of poor standing. Such
securities may be in default or there may be present elements of danger with
respect to principal or interest. Bonds which are rated Ca represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. Bonds which are rated C are the
lowest rated class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics of issuers
rated Prime-1 but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriated may be more affected by external
conditions. Ample alternate liquidity is maintained.
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The following summarizes the highest rating used by Moody's for short-term
notes and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S RATINGS:
The following summarizes the four highest ratings used by Standard & Poor's
Ratings Group ("S&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay
principal and interest.
AA: Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within these major rating categories.
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
Investment-Grade Debt Securities and are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay
interest and principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds may have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
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Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted A-1+. Capacity for timely
payment on commercial paper rated A-2 is satisfactory, but the relative degree
of safety is not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are give a
plus (+) designation.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S RATINGS:
The following summarizes the four highest ratings used by Fitch Investors
Service, Inc. ("Fitch") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA: Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated
in the AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-1+.
A: Bonds are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within a rating category.
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Bonds rated BB, B and CCC by Fitch are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for
short-term notes, municipal notes, variable rate demand instruments and
commercial paper.
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as
great as for issues assigned F-1+ and F-1 ratings.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S RATINGS:
The following summarizes the four highest ratings used by Duff & Phelps Credit
Rating Co. ("D&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating credit quality. The risk
factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit
quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A: Bonds rated A have average but adequate protection
factors. However risk factors are more variable and greater in
periods of economic stress.
BBB: Bonds rated BBB have below average protection factors,
but are still considered sufficient for prudent investment.
There is considerable variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
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The rating Duff 1 is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff 1+, Duff 1
and Duff 1- within the highest rating category. Duff 1+ indicates highest
certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is judged to
be outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1 indicates very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are considered to be minor. Duff 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
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APPENDIX B
DESCRIPTION OF FUTURES CONTRACTS
The Fund may enter into interest rate and index futures contracts for hedging
purposes (but not for speculation). The Fund may enter into futures contracts
and options transactions only to the extent that obligations under such
contracts or transactions represent not more than 30% of the Fund's total
assets. Furthermore, in no event would the Fund purchase or sell futures
contracts, or related options thereon, for hedging purposes if, immediately
thereafter, the aggregate initial margin that is required to be posted by the
Fund under the rules of the exchange on which the futures contract (or futures
option) is traded, plus any premiums paid by the Fund on its open futures
options positions, exceeds 5% of the Fund's total assets, after taking into
account any unrealized profits and unrealized losses on the Fund's open
contracts and excluding the amount that a futures option is "in-the-money" at
the time of purchase. (An option to buy a futures contract is "in-the-money"
if the value of the contract that is subject to the option exceeds the
exercise price; an option to sell a futures contract is in the money if the
exercise price exceeds the value of the contract that is the subject of the
option.)
I. Interest Rate Futures Contracts
USE OF INTEREST RATE FUTURES CONTRACTS. Bond prices are established in both
the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the
future for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, the Fund may use interest rate futures
as a defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures
contract sales to protect against expected increases in interest rates and
futures contract purchases to offset the impact of interest rate declines.
The Fund presently could accomplish a similar result to that which it hopes to
achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates
are expected to increase, or conversely, selling short-term bonds and
investing in long-term bonds when interest rates are expected to decline.
However, because of the liquidity that is often available in the futures
market the protection is more likely to be achieved, perhaps at a lower cost
and without changing the rate of interest being earned by the Fund, through
using futures contracts.
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DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate futures
contract sale would create an obligation by the Fund, as seller, to deliver
the specific type of financial instrument called for in the contract at a
specific future time for a specified price. A futures contract purchase would
create an obligation by the Fund, as purchaser, to take delivery of the
specific type of financial instrument at a specific future time at a specific
price. The specific securities delivered or taken, respectively, as settlement
date, would not be determined until at or near that date. The determination
would be in accordance with the rules of the exchange on which the futures
contract sale or purchase was made.
Although interest rate contracts by their terms call for actual delivery or
acceptance of securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery of securities.
Closing out a futures contract sale is effected by the Fund's entering into a
futures contract purchase for the same aggregate amount of the specific type
of financial instrument and the same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the Fund is paid the difference
and thus realizes a gain. If the offsetting purchase price exceeds the sale
price, the Fund pays the difference and realizes a loss. Similarly, the
closing out of a futures contract purchase is effected by the Fund's entering
into a futures contract sale. If the offsetting sale price exceeds the
purchase price, the Fund realizes a gain, and if the purchase price exceeds
the offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges - principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Fund would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the exchange membership.
A public market now exits in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
three-month United States Treasury Bills; and ninety-day commercial paper. The
Fund may trade in any futures contract for which there exists a public market,
including, without limitation, the foregoing instruments.
The Fund would engage in an interest rate futures contract sale to maintain
the income advantage from continued holding of a bond while endeavoring to
avoid part or all of the loss in market value that would otherwise accompany a
decline in securities prices. Assume that the market value of a certain
security in
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the Fund tends to move in concert with the futures market prices of long-term
United States Treasury bonds ("Treasury bonds"). The Advisor wishes to fix the
current market value of this Fund security until some point in the future.
The Fund would engage in an interest rate futures contract purchase when it is
not fully invested in long-term bonds but wishes to defer for a time the
purchase of long-term bonds in light of the availability of advantageous
interim investments, e.g., shorter-term securities whose yields are greater
than those available on long-term bonds. The Fund's basic motivation would be
to maintain for a time the income advantage from investing in the short-term
securities; the Fund would be endeavoring at the same time to eliminate the
effect of all or part of an expected increase in market price of the long-term
bonds that the Fund may purchase.
In each transaction, expenses would also be incurred.
II. Index Futures Contracts.
A stock or bond index assigns relative values to the stocks or bonds included
in the index, and the index fluctuates with changes in the market values of
the stocks or bonds included. Some stock index futures contracts are based on
broad market indices, such as the Standard & Poor's 500 or the New York Stock
Exchange Composite Index. In contrast, certain exchanges offer futures
contracts on narrower market indices, such as the Standard & Poor's 100 or
indices based on an industry or market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the Commodity
Futures Trading Commission. Transactions on such exchanges are cleared through
a clearing corporation, which guarantees the performance of the parties to
each contract.
The Fund will sell index futures contracts in order to offset a decrease in
market value of its Fund securities that might otherwise result from a market
decline. The Fund may do so either to hedge the value of its Fund as a whole,
or to protect against declines, occurring prior to sales of securities, in the
value of the securities to be sold. Conversely, the Fund will purchase index
futures contracts in anticipation of purchases of securities. In a substantial
majority of these transactions, the Fund will purchase such securities upon
termination of the long futures position, but a long futures position may be
terminated without a corresponding purchase of securities.
In addition, the Fund may utilize index futures contracts in anticipation of
changes in the composition of its Fund holdings. For example, if the Fund
expects to narrow the range of industry groups represented in its holdings it
may, prior to making
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purchases of the actual securities, establish a long futures position based on
a more restricted index, such as an index comprised of securities of a
particular industry group. The Fund may also sell futures contracts in
connection with this strategy, in order to protect against the possibility
that the value of the securities to be sold as part of the restructuring of
the Fund will decline prior to the time of sale.
III. Margin Payments.
Unlike when the Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract.
Initially, the Fund will be required to deposit with the broker or in a
segregated account with the Fund's Custodian an amount of cash or cash
equivalents, the value of which may vary but is generally equal to 10% or less
of the value of the contract. This amount is known as initial margin. The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not
involve the borrowing of funds by the customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or good
faith deposit on the contract which is returned to the Fund upon termination
of the futures contract assuming all contractual obligations have been
satisfied. Subsequent payments, called variation margin, to and from the
broker, will be made on a daily basis as the price of the underlying security
or index fluctuates making the long and short positions in the futures
contract more or less valuable, a process known as "marking-to-market." For
example, when the Fund has purchased a futures contract and the price of the
contract has risen in response to a rise in the underlying instruments, that
position will have increased in value, and the Fund will be entitled to
receive from the broker a variation margin payment equal to that increase in
value. Conversely, where the Fund has purchased a futures contract and the
price of the future contract has declined in response to a decrease in the
underlying instruments, the position would be less valuable, and the Fund
would be required to make a variation margin payment to the broker. At any
time prior to expiration of the futures contract, the Advisor may elect to
close the position by taking an opposite position, subject to the availability
of a secondary market, which will operate to terminate the Fund's position in
the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the
Fund realizes a loss or gain.
IV. Risks of Transactions in Futures Contracts.
There are several risks in connection with the use of futures by the Fund as a
hedging device. One risk arises because of the imperfect correlation between
movements in the price of the
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future and movements in the price of the securities that are the subject of
the hedge. The price of the future may move more than or less than the price
of the securities being hedged. If the price of the future moves less than the
price of the securities that are the subject of the hedge, the hedge will not
be fully effective but, if the price of the securities being hedged has moved
in an unfavorable direction, the Fund would be in a better position than if it
had not hedged at all. If the price of the securities being hedged has moved
in a favorable direction, this advantage will be partially offset by the loss
on the future. If the price of the future moves more than the price of the
hedged securities, the Fund will experience either a loss or gain on the
future which will not be completely offset by movements in the price of the
securities that are the subject of the hedge. To compensate for the imperfect
correlation of movements in the price of the securities being hedged and
movements in the price of futures contracts, the Fund may buy or sell futures
contracts in a greater dollar amount than the dollar amount of securities
being hedged if the volatility over a particular time period of the prices of
such securities has been greater than the volatility over such time period of
the future, of if otherwise deemed to be appropriate by the Advisor.
Conversely, the Fund may buy or sell fewer futures contracts if the volatility
over a particular time period of the prices of the securities being hedged is
less than the volatility over such time period of the futures contract being
used, or if otherwise deemed to be appropriate by the Advisor. It is also
possible that, where the Fund has sold futures to hedge its portfolio against
a decline in the market, the market may advance and the value of securities
held by the Fund may decline. If this occurred, the Fund would lose money on
the future and also experience a decline in value in its portfolio securities.
Where futures are purchased to hedge against a possible increase in the price
of securities before the Fund is able to invest its cash (or cash equivalents)
in securities (or options) in an orderly fashion, it is possible that the
market may decline instead; if the Fund then concludes not to invest in
securities or options at that time because of concern as to possible further
market decline or for other reasons, the Fund will realize a loss on the
futures contract that is not offset by a reduction in the price of securities
purchased.
In instances involving the purchase of futures contracts by the Fund, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts (or options), will be deposited in a segregated account with the
Fund's Custodian and/or in a margin account with a broker to collateralize the
position and thereby insure that the use of such futures is unleveraged.
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In addition to the possibility that there may be an imperfect correlation, or
no correlation at all, between movements in the futures and the securities
being hedged, the price of futures may not correlate perfectly with movement
in the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions that could distort the normal relationship
between the cash and futures markets. Second, with respect to financial
futures contracts, the liquidity of the futures market depends on participants
entering into offsetting transactions rather than making or taking delivery.
To the extent participants decide to make or take delivery, liquidity in the
futures market could be reduced thus producing distortions. Third, from the
point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between the movements
in the cash market and movements in the price of futures, a correct forecast
of general market trends or interest rate movements by the Advisor may still
not result in a successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of trade
that provides a secondary market for such futures. Although the Fund intends
to purchase or sell futures only on exchanges or boards of trade where there
appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not be sold
until the futures contract can be terminated. In such circumstances, an
increase in the price of the securities, if any, may partially or completely
offset losses on the futures contract. However, as described above, there is
no guarantee that the price of the securities will in fact correlate with the
price movements in the futures contract and thus provide an offset on a
futures contract.
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges that limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions.
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Successful use of futures by the Fund is also subject to the Advisor's ability
to predict correctly movements in the direction of the market. For example, if
the Fund has hedged against the possibility of a decline in the market
adversely affecting securities held in its portfolio and securities prices
increase instead, the Fund will lose part or all of the benefit to the
increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations,
if the Fund has insufficient cash, it may have to sell securities to meet
daily variation margin requirements. Such sales of securities may be, but will
not necessarily be, at increased prices which reflect the rising market. The
Fund may have to sell securities at a time when it may be disadvantageous to
do so.
V. Options on Futures Contracts.
The Fund may also purchase put and write call options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing, an option of the same
series, at which time the person entering into the closing transaction will
realize a gain or loss.
Investments in futures options involve some of the same considerations that are
involved in connection with investments in futures contracts (for example, the
existence of a liquid secondary market). In addition, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
Depending on the pricing of the option compared to either the futures contract
upon which it is based, or upon the price of the securities being hedged, an
option may or may not be less risky than ownership of the futures contract or
such securities. In general, the market prices of options can be expected to be
more volatile than the market prices on the underlying futures contract.
Compared to the purchase or sale of futures contracts, however, the purchase of
call or put options on futures contacts may frequently involve less potential
risk to the Fund because the maximum amount at risk is the premium paid for the
options (plus transaction costs).
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VI. Accounting and Tax Treatment.
Accounting for futures contracts and options will be in accordance with
generally accepted accounting principles.
Generally, futures contracts held by the Fund at the close of the Fund's
taxable year will be treated for federal income tax purposes as sold for their
fair market value on the last business day of such year, a process known as
"marking-to-market." Forty percent of any gain or loss resulting from such
constructive sale will be treated as short-term capital gain or loss, and 60%
of such gain or loss will be treated as long-term capital gain or loss without
regard to the length of time the Fund holds the futures contract (the "40%-60%
rule"). The amount of any capital gain or loss actually realized by the Fund
in a subsequent sale or other disposition of those futures contracts will be
adjusted to reflect any capital gain or loss taken into account by the Fund in
a prior year as a result of the constructive sale of the contracts. With
respect to futures contracts to sell, that will be regarded as parts of a
"mixed straddle" because their values fluctuate inversely to the values of
specific securities held by the Fund, losses as to such contracts to sell will
be subject to certain loss deferral rules that limit the amount of loss
currently deductible on either part of the straddle to the amount thereof
which exceeds the unrecognized gain (if any) with respect to the other part of
the straddle, and to certain wash sales regulations. Under short sales rules,
which will be also be applicable, the holding period of the securities forming
part of the straddle will (if they have not been held for the long-term
holding period) be deemed not to begin prior to termination of the straddle.
With respect to certain futures contracts, deductions for interest and
carrying charges will not be allowed. Notwithstanding the rules described
above, with respect to futures contracts to sell that are properly identified
as such, the Fund may make an election that will exempt (in whole or in part)
those identified futures contracts from being treated for federal income tax
purposes as sold on the last business day of the Fund's taxable year, but
gains and losses will be subject to such short sales, wash sales, and loss
deferral rules and the requirement to capitalize interest and carrying
charges. Under temporary regulations, the Fund would be allowed (in lieu of
the foregoing) to elect to either (1) offset gains or losses from portions
that are part of a mixed straddle by separately identifying each mixed
straddle to which such treatment applies, or (2) establish a mixed straddle
account for which gains and losses would be recognized and offset on a
periodic basis during the taxable year. Under either election, the 40%-60%
rule will apply to the net gain or loss attributable to the futures contracts,
but in the case of a mixed straddle account election, not more than 50% of any
net gain may be treated as long-term and no more than 40% of any net loss may
be treated as short-term. Options on futures receive federal tax treatment
similar to that described above.
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Certain foreign currency contracts entered into by the Fund may be subject to
the "marking-to-market" process and the 40%-60% rule in a manner similar to
that described in the preceding paragraph for futures contracts. To receive
such federal income tax treatment, a foreign currency contract must meet the
following conditions: (1) the contract must require delivery, or its
settlement must depend on the value, or a foreign currency of a type in which
regulated futures contracts are traded; (2) the contract must be entered into
at arm's length at a price determined by reference to the price in the
interbank market; and (3) the contract must be traded in the interbank market.
The Treasury Department has broad authority to issue regulations under the
provisions respecting foreign currency contracts. As of the date of this SAI,
the Treasury Department has not issued any such regulations. Other foreign
currency contracts entered into by the Fund may result in the creation of one
or more straddles for federal income tax purposes, in which case certain loss
deferral, short sales, and wash sales rules and the requirement to capitalize
interest and carrying charges may apply.
As described more fully in "Additional Tax Information," a regulated
investment company must derive less than 30% of its gross income from gains
realized on the sale or other disposition of securities and certain other
investments held for less than three months. With respect to futures contracts
and other financial instruments subject to the marking-to-market rules, the
Internal Revenue Service has ruled in private letter rulings that a gain
realized from such a futures contract or financial instrument will be treated
as being derived from a security held for less than three months or more
(regardless of the actual period for which the contract or instrument is held)
if the gain arises as a result of a constructive sale under the
marking-to-market rules, and will be treated as being derived from a security
held for less than three months only if the contract or instrument is
terminated (or transferred) during the taxable year (other than by reason of
marking-to-market) and less than three months have elapsed between the date
the contract or instrument is acquired and the termination date. In
determining whether the 30% test is met for a taxable year, increases and
decreases in the value of the Fund's futures contracts and other investments
that qualify as part of a "designated hedge," as defined in the Code, may be
netted.
- 46 -
<PAGE>
FINANCIAL STATEMENTS AND REPORTS
The Financial Statements of the Fund will be audited at least once each
year by independent public accountants. Shareholders will receive annual
audited and semiannual (unaudited) reports when published, and will receive
written confirmation of all confirmable transactions in their account. A copy
of the Annual Report will accompany the Statement of Additional Information
whenever the Statement of Additional Information is requested by a shareholder
or prospective investor. The Financial Statements of the Fund as of February
29, 1996, together with the report of the independent accountants thereon, are
included on the following pages.
- 47 -
<PAGE>
(AMELIA EARHART CAPITAL MANAGEMENT, INC. LOGO)
Dear Shareholder:
The stock and bond markets turned in an extremely strong performance in
1995 after a relatively flat year for stocks and the worst performance in 30
years for bonds in 1994. The Amelia Earhart: Eagle Equity Fund's performance
exceeded the overall market into November 1995 when profit taking and sector
rotation resulted in share price declines for most technology issues.
Short-term volatility in the technology sector is common and should be
expected. Technology will continue to grow exponentially as we enter the next
millennium.
The Fund returned 30.59% to shareholders for the fiscal year March 1,
1995 to February 29, 1996. The Fund's comparative indices, the Pacific Stock
Exchange Technology Index (PSE Tech Index) and the Dow Jones Industrial
Average (DJIA), rose 47.65% and 36.76%, respectively, for the same time
period. The Tech Index's strong performance was due to substantial gains by
many stocks which lagged the market in 1994 and were not expected to
outperform the market in 1995. The Fund's investment philosophy is to identify
stocks which have the strongest potential to outperform the market over a 12
month period. The selection process excluded many of 1995's surprise
performers on the PSE Tech Index.
The Fund outperformed the PSE Tech Index and the DJIA in 1994 and was the
#2 growth fund out of 564 growth funds in the USA according to Lipper
Analytical Services, with a return to shareholders of 17.72% The Fund's
annualized rate of return to shareholders since inception (3/93) was 21.31%
through 2/29/96. Net of the maximum 4.50% sales load, the Fund's average
annual return since inception was 19.46% through 2/29/96. The Fund has
achieved a 4-star Morningstar rating for the 3-year period ended 2/29/96, out
of 879 growth funds 1.
The Fund consists of a diversified, professionally managed portfolio of
primarily large capitalization growth stocks. The stocks are selected from the
top 100 technology companies in the USA (PSE Tech Index) and the 30 DJIA blue
chips, which are considered leaders in their industries. The economic climate
for 1996 is favorable to large capitalization growth stocks. The economy is
sending mixed signals, and volatility in the markets will continue throughout
the year. The equity market lacks leadership, and sector rotation is common.
Portfolio managers counting on weakness in the economy will be hurt by
strength and vice versa. Investors should have at least a five year time
horizon for equity investments and a well-diversified portfolio. It is highly
unlikely that 1995's outstanding overall equity and bond market performances
will be repeated in 1996. However, it is an election year, and moderate
economic growth combined with low interest rates and low inflation will be
favorable for equities. Interest rate increases, unlikely in the near term,
would be detrimental to the markets. Unless the economy slips into a
recession, the majority of rate cuts are probably behind us as well. We are
pleased to report another strong year for the Fund. Please contact us at
1-800-326-6580 if we may provide additional investment information.
Sincerely,
Amelia Earhart Capital Management, Inc.
Jill Travis, MBA, CFP
President and CEO
1 Morningstar proprietary ratings reflect historical risk-adjusted performance
as of February 29, 1996. The ratings are subject to change every month. Past
performance is no guarantee of future performance. Morningstar ratings are
calculated from the funds' 3, 5, and 10-year average annual returns (if
available) in excess of 90-day Treasury bill returns with appropriate fee and
sales load adjustments, and a risk factor that reflects fund performance below
90-day T-bill returns. 10% of the funds in an investment category receive 5
stars, and 22.5% receive 4 stars. During the period covered by the performance
information, the Fund's advisor waived its fee and reimbursed a portion of
the Fund's expenses, which increased the total return of the Fund.
AMELIA EARHART CAPITAL MANAGEMENT, INC.
ONE TOWNE SQUARE (Bullet) 26100 NORTHWESTERN HIGHWAY (Bullet) SUITE 1913
(Bullet) SOUTHFIELD MICHIGAN 48076
(810) 351-4856 (Bullet) FAX (810) 827-4278
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
Performance Update - $10,000 Investment
For the period from March 5, 1993 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
AMELIA EARHART:
EAGLE EQUITY PACIFIC DOW JONES
05-Mar-93 9550 9550 9550
31-May-93 10037 10227 9893
31-Aug-93 10604 10490 10241
30-Nov-93 10613 10900 10332
28-Feb-94 11880 12268 10748
31-May-94 11524 11794 10541
31-Aug-94 12282 12866 10976
30-Nov-94 12294 13279 10487
28-Feb-95 13028 14465 11250
31-May-95 14015 16412 12523
31-Aug-95 16668 19942 12931
30-Nov-95 16823 20886 14232
29-Feb-96 17013 21358 15386
THIS GRAPH DEPICTS THE PERFORMANCE OF THE AMELIA EARHART: EAGLE EQUITY FUND
VERSUS THE DOW JONES INDUSTRIAL AVERAGE INDEX AND THE PACIFIC TECHNOLOGY
INDEX. IT IS IMPORTANT TO NOTE THAT THE AMELIA EARHART: EAGLE EQUITY FUND
IS A PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS NOT AVAILABLE
FOR INVESTMENT AND IS UNMANAGED. THE COMPARISON IS SHOWN FOR ILLUSTRATIVE
PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement One Year ended
of operations 2/29/96
through 2/29/96
Maximum 4.5% Sales Load 19.46% 24.64%
No Sales Load 21.31% 30.59%
(bullet) The graph assumes an initial $10,000 investment at March 5, 1993
($9,550 after maximum sales load of 4.5%). All dividends and
distributions are reinvested.
(bullet) At February 29, 1996, the Fund would have grown to $17,013 - total
investment return of 70.13% since March 5,1993. Without the deduction
of the 4.5% maximum sales load, the Fund would have grown to $17,815-
total investment return of 78.15% since March 5, 1993. The sales
load is reduced or eliminated for larger purchases.
(bullet) At February 29,1996, a similar investment in the Dow Jones Industrial
Average Index (after the maximum sales load of 4.5%) would have grown
to $15,386 - total investment return of 53.86%; while a similar
investment in the Pacific Technology Index (after maximum sales load
of 4.5%) would have grown to $21,358 - total investment return of
113.58% since March 5, 1993.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions,
and the principal value of shares, when redeemed, may be worth more or
less than the original cost. Average annual returns are historical
in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestments of dividends.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - 77.94%
Beverages - 1.81%
The Coca-Cola Company 400 $32,300
Biopharmaceuticals - 3.77%
(a) Amgen, Inc. 940 56,165
(a) Genentech, Inc. 200 10,925
67,090
Chemicals - 1.26%
Union Carbide Corporation 500 22,500
Commercial Services - 1.12%
(a) CUC International, Inc. 618 20,008
Computers - 10.19%
(a) 3Com Corporation 500 24,438
(a) Cabletron Systems Inc. 300 22,538
(a) Compaq Computer Corporation 500 25,312
(a) Data General Corporation 1,000 16,875
(a) Komag, Inc. 600 18,825
(a) Sun Microsystems, Inc. 1,400 73,500
181,488
Computer Software & Services - 22.21%
(a) America Online, Inc. 600 29,475
Automatic Data Processing, Inc. 482 18,678
(a) BMC Software, Inc. 478 26,649
(a) Cisco Systems, Inc. 2,060 97,850
Computer Associates International, Inc. 600 41,250
(a) Computer Sciences Corporation 183 13,359
(a) Informix Corporation 1,000 35,250
(a) Microsoft Corporation 518 51,120
(a) Oracle Corporation 974 50,648
System Software Associates, Inc. 1,500 31,500
395,779
</TABLE>
(Continued)
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - continued
Electronics - 6.37%
General Electric Company 200 $15,100
Hewlett-Packard Company 400 40,300
(a) Mentor Graphics Corporation 700 9,975
Perkin-Elmer Corporation 452 20,792
Tektronix, Inc. 300 13,612
(a) Thermo Instrument Systems, Inc. 500 13,688
113,467
Electronics- Semiconductor - 7.72%
(a) Adaptec, Inc. 500 28,031
(a) Analog Devices, Inc. 1,200 32,250
(a) Applied Materials, Inc. 604 21,593
Intel Corporation 702 41,286
(a) KLA Instruments Corporation 600 14,400
137,560
Financial- Securities Brokers - 0.02%
Lehman Brothers Holdings, Inc. 14 346
Financial Services - 1.21%
American Express Company 470 21,620
Machine- Diversified - 0.82%
(a) Kulicke & Soffa Industries, Inc. 700 14,525
Medical Supplies - 5.71%
(a) Benson Eyecare Corporation 230 2,041
(a) Biomet, Inc. 1,300 24,700
(a) Boston Scientific Corporation 500 24,000
(a) Coherent, Inc. 500 22,750
(a) St. Jude Medical, Inc. 750 28,312
101,803
Medical- Biotechnology - 1.29%
Medtronic, Inc. 400 22,950
</TABLE>
(Continued)
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - continued
Misc- Manufacturing - 2.94%
Eastman Kodak Company 236 $16,874
Millipore Corporation 800 35,500
52,374
Office & Business Equipment - 0.73%
Xerox Corporation 100 13,025
Pharmaceuticals - 1.86%
Merck & Company, Inc . 500 33,125
Restaurants & Food Service - 1.12%
McDonald's Corporation 400 20,000
Telecommunications - 3.79%
(a) Tellabs, Inc. 1,430 67,568
Telecommunications Equipment - 3.88%
(a) ADC Telecommunications 752 29,892
(a) Digital Equipment Corporation 500 36,000
(a) Octel Communications Corporation 81 3,230
69,122
Utilities- Telecommunications - 0.12%
A T & T Corporation 33 2,100
Total Common Stocks (Cost $1,037,763) $1,388,750
Principal
Amount
REPURCHASE AGREEMENT (b) - 7.05%
Wachovia Bank $125,574
5.32%, due March 1, 1996
(Cost $125,574)
Total Value of Investments (Cost $1,163,337 (c)) 84.99% $1,514,324
Other Assets Less Liabilities 15.01% 267,410
Net Assets 100.00% $1,781,734
</TABLE>
(Continued)
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into February 29, 1996, with a
maturity value of $68,302,116 collateralized by $71,660,000 U.S.
Treasury Bills, due September 19, 1996. The aggregate market value
of the collateral at February 29, 1996 was $69,697,130. The Fund's
pro rata interest in the market value of the collateral at February
29, 1996 was $128,173. The Fund's pro rata interest in the joint
repurchase agreement collateral is taken into possession by the
Fund's custodian upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is
at least 102 percent of the sales price of the repurchase agreement.
(c) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation)
of investments for financial reporting and federal income tax
purposes is as follows:
Unrealized appreciation $379,048
Unrealized depreciation (28,061)
Net unrealized appreciation $350,987
See accompanying notes to financial statements
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at value (cost $1,163,337) $1,514,324
Interest receivable 500
Dividends receivable 419
Receivable for investments sold 332,040
Due from advisor (note 2) 26,357
Deferred organization expenses, net (note 4) 15,977
Other assets 1,004
Total assets 1,890,621
LIABILITIES
Accrued professional fees 7,000
Accrued expenses 9,885
Payable for investment purchases 92,002
Total liabilities 108,887
NET ASSETS
(applicable to 104,238 Class A shares outstanding; unlimited
shares of no par value beneficial interest authorized) $1,781,734
NET ASSETS CONSIST OF
Paid-in capital $1,396,996
Undistributed net realized gain on investments 33,751
Net unrealized appreciation on investments 350,987
$1,781,734
NET ASSET VALUE AND REPURCHASE PRICE PER CLASS A SHARE
($1,781,734 (division sign) 104,238 shares) $17.09
OFFERING PRICE PER CLASS A SHARE
(100 (division sign) 95.5 of $17.09 adjusted to nearest cent) $17.90
</TABLE>
See accompanying notes to financial statements
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
STATEMENT OF OPERATIONS
Year Ended February 29, 1996
INVESTMENT INCOME
Income
Interest $10,943
Dividends 4,211
Total income 15,154
Expenses
Fund accounting fees (note 2) 24,000
Investment advisory fees (note 2) 14,327
Professional fees 20,495
Fund administration fees (note 2) 5,924
Custody fees 5,526
Registration and filing administration fees 5,173
Distribution and service fees (note 3) 3,556
Securities pricing fees 3,433
Shareholder recordkeeping fees 903
Registration and filing expenses 14,218
Amortization of deferred organization expenses (note 4) 8,023
Trustee fees and meeting expenses 6,836
Shareholder servicing expenses 4,835
Printing expenses 460
Other operating expenses 4,176
Total expenses 121,885
Less:
Expense reimbursements (note 2) (80,085)
Investment advisory fees waived (note 2) (14,327)
Net expenses 27,473
Net investment loss (12,319)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 76,272
Increase in unrealized appreciation on investments 258,233
Net realized and unrealized gain on investments 334,505
Net increase in net assets resulting from operations $322,186
See accompanying notes to financial statements
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended Year ended
February 29, February 28,
1996 1995
INCREASE IN NET ASSETS
<S> <C> <C>
Operations
Net investment loss $ (12,319) $ (655)
Net realized gain from investment transactions 76,272 253
Increase in unrealized appreciation on investments 258,233 49,416
Net increase in net assets resulting from operations 322,186 49,014
Distributions to shareholders from
Net realized gain from investment transactions (42,598) 0
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 682,007 526,740
Total increase in net assets 961,595 575,754
NET ASSETS
Beginning of year 820,139 244,385
End of year $ 1,781,734 820,139
</TABLE>
(a) A summary of capital share activity follows:
Year ended Year ended
February 29, 1996 February 28, 1995
Shares Value Shares Value
Shares sold 44,893 $714,005 41,096 $526,740
Shares issued for reinvestment
of distributions 2,641 42,528 0 0
47,534 756,533 41,096 526,740
Shares redeemed (4,338) (74,526) 0 0
Net increase 43,196 $682,007 41,096 $526,740
See accompanying notes to financial statements
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
<TABLE>
<CAPTION>
Year ended Year ended Year ended
February 29, February 28, February 28,
1996 1995 1994
<S> <C> <C> <C>
Net asset value, beginning of year $13.44 $12.25 $10.00
Income (loss) from investment operations (a)
Net investment loss (0.12) (0.02) (0.07)
Net realized and unrealized gain on investments 4.20 1.21 2.49
Total from investment operations 4.08 1.19 2.42
Distributions to shareholders from
Net investment income 0.00 0.00 (0.12)
Net realized gain from investment transactions (0.43) 0.00 (0.05)
Total distributions (0.43) 0.00 (0.17)
Net asset value, end of year $17.09 $13.44 $12.25
Total return 30.59% (b) 9.66% (b) 24.39% (b)
Ratios/supplemental data
Net assets, end of year $1,781,734 $820,139 $244,385
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 8.53% 21.00% 24.60%
After expense reimbursements and waived fees 1.90% 1.86% 1.85%
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (7.47)% (19.32)% (23.39)%
After expense reimbursements and waived fees (0.86)% (0.17)% (0.72)%
Portfolio turnover rate 63.90% 2.24% 48.39%
</TABLE>
(a) Based on weighted average shares outstanding for the period.
(b) Total return does not reflect payment of sales charge.
See accompanying notes to financial statements
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
Amelia Earhart: Eagle Equity Fund (the "Fund") is a diversified series of
shares of beneficial interest of The Nottingham Investment Trust (the
"Trust"). The Trust, an open-end investment company, was organized on August
12, 1992 as a Massachusetts Business Trust and is registered under the
Investment Company Act of 1940. The Fund began operations on March 1, 1993.
Pursuant to a plan approved by the Board of Trustees of the Trust, the
existing single class of shares of the Fund was redesignated as the Class A
Shares of the Fund on April 10, 1995, and an additional class of shares, Class
B, was authorized. To date, only Class A shares have been issued by the Fund.
The Class B shares will be subject to a maximum 5.0% contingent deferred sales
charge, which will be reduced or eliminated depending on the length of time
the shares are held. The Class A shares are sold with a sales charge and bear
distribution fees. The following is a summary of significant accounting
policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
As a result of a permanent book-to-tax difference relating to
an operating net investment loss for the year ended February
29, 1996, paid-in-capital has been decreased by $12,319.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. The Fund may
make a supplemental distribution subsequent to the end of its
fiscal year ended February 29, 1996.
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from those estimates.
(Continued)
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 2 - INVESTMENT ADVISORY FEE AND RELATED PARTY AND OTHER TRANSACTIONS
Pursuant to an investment advisory agreement, Amelia Earhart Capital
Management, Inc. (the "Advisor") provides the Fund with a continuous program
of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of securities. As
compensation for its services, the Advisor receives a fee at the annual rate
of 1.00% of the Fund's average daily net assets. The Agreement provides for an
expense reimbursement from the Advisor if the Fund's total expenses exclusive
of interest, taxes, brokerage commissions, sales charges, distribution fees
and extraordinary expenses, exceed 1.90% of the Fund's average daily net
assets for any fiscal year, or the limits set by applicable state securities
laws or other applicable laws if such limits are lower.
The Advisor has voluntarily waived its fee amounting to $14,327 ($0.16
per share) and reimbursed a portion of the Fund's operating expenses for the
year ended February 29, 1996. The total fees waived and expenses to be
reimbursed amounted to $94,412.
The Nottingham Company (the "Administrator") provides administrative
services to and is generally responsible for the overall management and
day-to-day operations of the Fund pursuant to an accounting and administrative
agreement with the Trust. As compensation for its services, the Administrator
receives a fee at the annual rate of 0.20% of the Fund's first $50 million of
average daily net assets, 0.175% on the next $50 million of average daily net
assets, and 0.15% on average daily net assets over $100 million. The
Administrator also receives a monthly fee of $2,000 for accounting and
recordkeeping services. Additionally, the Administrator charges the Fund for
servicing of shareholder accounts and registration of the Fund's shares. The
contract with the Administrator provides that the aggregate fees for the
aforementioned administration, accounting, and recordkeeping services shall
not be less than $3,000 per month. The Administrator also charges the Fund for
certain expenses involved with the daily valuation of portfolio securities.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any sales
charges imposed on purchases of shares and re-allocates a portion of such
charges to dealers through whom the sale was made, if any. For the year ended
February 29, 1996, the Distributor retained sales charges in the amount of
$4,922.
Certain Trustees and officers of the Trust are also officers and
directors of the Advisor or the Administrator.
At February 29, 1996, the Advisor held 10,424 shares or 10% of the Fund
shares outstanding.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a distribution plan pursuant to Rule 12b-1 of the
Act (the "Plan") applicable to the Class A shares. Rule 12b-1 regulates the
manner in which a regulated investment company may assume costs of
distributing and promoting the sales of its shares and servicing of its
shareholder accounts.
(Continued)
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Fund's average daily net assets for each year
elapsed subsequent to the adoption of the plan, for payment to the Distributor
and others for items such as advertising expenses, selling expenses,
commissions, travel, or other expenses reasonably intended to result in sales
of Class A shares in the Fund or support servicing of Class A shareholder
accounts. The Fund incurred $3,556 in distribution and service fees for the
year ended February 29, 1996.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization and
the registration of its shares have been assumed by the Fund. The organization
expenses are being amortized over a period of sixty months. Investors
purchasing shares of the Fund bear such expenses only as they are amortized
against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
of the Fund outstanding at the time of the redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments other than short-term investments
aggregated $1,320,954 and $569,891, respectively, for the year ended February
29, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
For Federal income tax purposes, the Fund must report distributions from
net realized gains from investment transactions that represent long-term
capital gain to its shareholders. All such distributions for the year ended
February 29, 1996 represent long-term capital gain. Shareholders should
consult a tax advisor on how to report distributions for state and local
income tax purposes.
<PAGE>
(KPMG Peat Marwick LLP Logo)
Independent Auditors' Report
To the Board of Trustees and Shareholders
The Nottingham Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Amelia Earhart: Eagle Equity
Fund (the "Fund"), a series of The Nottingham Investment Trust, as of February
29, 1996, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Amelia Earhart: Eagle Equity Fund as of February 29, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and financial
highlights for each of the three years in the period then ended in conformity
with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
April 5, 1996
STATEMENT OF ADDITIONAL INFORMATION
THE CAROLINASFUND
June 20, 1996
A Series of
MAPLEWOOD INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-934-1012
Table of Contents
INVESTMENT OBJECTIVE AND POLICIES.........................................2
INVESTMENT LIMITATIONS....................................................4
TRUSTEES AND OFFICERS.....................................................6
INVESTMENT ADVISOR........................................................9
ADMINISTRATOR............................................................10
DISTRIBUTOR..............................................................11
OTHER SERVICES...........................................................12
BROKERAGE................................................................12
DISTRIBUTION PLAN UNDER RULE 12b-1.......................................14
SPECIAL SHAREHOLDER SERVICES.............................................16
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................17
HOW SHARE PRICE IS DETERMINED............................................18
ADDITIONAL TAX INFORMATION...............................................19
DESCRIPTION OF THE TRUST.................................................21
CALCULATION OF PERFORMANCE DATA..........................................23
ADDITIONAL INFORMATION ON NORTH AND SOUTH CAROLINA.......................26
APPENDIX A - DESCRIPTION OF RATINGS......................................27
FINANCIAL STATEMENTS AND REPORTS.........................................32
This Statement of Additional Information ("SAI") is not a prospectus
and should be read in conjunction with the Prospectus dated June 20,
1996 for The CarolinasFund (the "Fund"). Copies of the Fund's
Prospectus may be obtained at no charge from the Fund, at the address
and phone number shown above.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described
in the Prospectus. Supplemental information about these policies
is set forth below. Certain capitalized terms used but not
defined have the same meaning as in the Prospectus. A
description of the various ratings used by the nationally
recognized statistical rating organizations ("NRSROs") for
securities in which the Fund may invest is included in this SAI
as Appendix A.
Repurchase Agreements. The Fund may acquire U.S. Government
Securities or corporate debt securities subject to repurchase
agreements. A repurchase transaction occurs when, at the time
the Fund purchases a security (normally a U.S. Treasury
obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve System or a registered Government
Securities dealer) and must deliver the security (and/or
securities substituted for them under the repurchase agreement)
to the vendor on an agreed upon date in the future. Such
securities, including any securities so substituted, are referred
to as the "Repurchase Securities." The repurchase price exceeds
the purchase price by an amount which reflects an agreed upon
market interest rate effective for the period of time during
which the repurchase agreement is in effect.
The majority of these transactions run day to day and the
delivery pursuant to the resale typically will occur within one
to five days of the purchase. The Fund's risk is limited to the
ability of the vendor to pay the agreed upon sum upon the
delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating
the instrument purchased, decline in its value and loss of
interest. These risks are minimized when the Fund holds a
perfected security interest in the Repurchase Securities and can
therefore sell the instrument promptly. Under guidelines issued
by the Trustees, the Advisor will carefully consider the
creditworthiness during the term of the repurchase agreement.
Repurchase agreements are considered as loans collateralized by
the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940
Act"). The return on such "collateral" may be more or less than
that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the
"collateral" is at all times as least equal to the value of the
loan, including the accrued interest earned thereon. All
Repurchase Securities will be held by the Fund's custodian either
directly or through a securities depository.
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<PAGE>
Description of Money Market Instruments. Money market
instruments may include U.S. Government Securities or corporate
debt securities (including those subject to repurchase
agreements) as described herein, provided that they mature in
thirteen months or less from the date of acquisition and are
otherwise eligible for purchase by the Fund. Money market
instruments also may include Bankers' Acceptances and
Certificates of Deposit of domestic branches of U.S. banks,
Commercial Paper and Variable Amount Demand Master Notes ("Master
Notes"). Bankers' Acceptances are time drafts drawn on and
"accepted" by a bank, are the customary means of effecting
payment for merchandise sold in import-export transactions and
are a source of financing used extensively in international
trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Bankers'
Acceptance, the bank which "accepted" the time draft is liable
for payment of interest and principal when due. The Bankers'
Acceptance, therefore, carries the full faith and credit of such
bank. A Certificate of Deposit ("CD") is an unsecured interest-
bearing debt obligation of a bank. Commercial Paper is an
unsecured, short term debt obligation of a bank, corporation or
other borrower. Commercial Paper maturity generally ranges from
two to 270 days and is usually sold on a discounted basis rather
than as an interest-bearing instrument. The Fund will invest in
Commercial Paper only if it is rated in one of the two highest
rating categories by any NRSRO or, if not rated, is of equivalent
quality in the Advisor's opinion. Commercial Paper may include
Master Notes of the same quality. Master Notes are unsecured
obligations which are redeemable upon demand of the holder and
which permit the investment of fluctuating amounts at varying
rates of interest. Master Notes are acquired by the Fund only
through the Master Note program of the Fund's custodian, acting
as administrator thereof. The Advisor will monitor, on a
continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.
Illiquid Investments. The Fund may invest up to 10% of its net
assets in illiquid securities, which are investments that cannot
be sold or disposed of in the ordinary course of business within
seven days at approximately the prices at which they are valued.
Under the supervision of the Board of Trustees, the Advisor
determines the liquidity of the Fund's investments and, through
reports from the Advisor, the Board monitors investments in
illiquid instruments. In determining the liquidity of the Fund's
investments, the Advisor may consider various factors including
(1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security
(including any demand or tender features) and (5) the nature of
the marketplace for trades (including the ability to assign or
offset the Fund's rights and obligations relating to the
- 3 -
<PAGE>
investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder
to payment of principal and interest within seven days and
restricted securities. If through a change in values, net assets
or other circumstances, the Fund were in a position where more
than 10% of its net assets were invested in illiquid securities,
it would seek to take appropriate steps to protect liquidity.
Restricted Securities. Within its limitation on investments in
illiquid securities, the Fund may purchase restricted securities
that generally can be sold in privately negotiated transactions,
pursuant to an exemption from registration under the federal
securities laws, or in a registered public offering. Where
registration is required, the Fund may be obligated to pay all or
part of the registration expense and a considerable period may
elapse between the time it decides to seek registration and the
time the Fund may be permitted to sell a security under an
effective registration statement. If during such a period,
adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to
seek registration of the security.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment
limitations, which cannot be changed without approval of the
holders of a majority of the outstanding voting shares of the
Fund. When used in the Prospectus or this SAI, a "majority" of
shareholders means the vote of the lesser of (1) 67% of the
shares of the Trust (or the Fund) present at a meeting if the
holders of more than 50% of the outstanding shares are present in
person or by proxy, or (2) more than 50% of the outstanding
shares of the Trust (or the Fund). Unless otherwise indicated,
percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund may not:
(1) Issue senior securities, borrow money, or pledge its assets,
except that it may borrow from banks as a temporary measure
(a) for extraordinary or emergency purposes, in amounts not
exceeding 5% of its total assets or (b) in order to meet
redemption requests in amounts not exceeding 15% of its
total assets. The Fund will not make any further
investments if borrowing exceeds 5% of its total assets
until such time as total borrowing represents less than 5%
of Fund assets.
(2) Invest for the purpose of exercising control or management
of another issuer;
- 4 -
<PAGE>
(3) Purchase or sell commodities or commodities contracts, real
estate, (including limited partnership interests, but
excluding readily marketable securities secured by real
estate or interests therein, readily marketable interests
in real estate investment trusts, or readily marketable
securities issued by companies that invest in real estate or
interests therein) or interests in oil, gas or other mineral
exploration or development programs or leases (although it
may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases).
(4) Underwrite securities issued by others, except to the extent
that the disposition of portfolio securities, either
directly from an issuer or from an underwriter for an issuer
may be deemed to be an underwriter under the federal
securities laws.
(5) Invest in warrants, valued at the lower of cost or market,
exceeding more than 5% of the value of the Fund's net
assets. Included within this amount, but not to exceed 2%
of the value of the Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchange;
warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
(6) Participate on a joint or joint and several basis in any
trading account in securities;
(7) Purchase foreign securities;
(8) Invest more than 10% of its total assets in the securities
of one or more investment companies; or
(9) Make loans of money or securities, except that the Fund may
(i) invest in repurchase agreements and commercial paper;
(ii) purchase a portion of an issue of publicly distributed
bonds, debentures or other debt securities; and (iii)
acquire private issues of debt securities subject to the
limitations on investments in illiquid securities.
The following investment limitations are not fundamental, and may
be changed without shareholder approval. As a matter of
nonfundamental policy, the Fund may not:
(1) Invest in securities of issuers which have a record of less
than three years' continuous operation (including
predecessors and, in the case of bonds, guarantors) if more
than 5% of its total assets would be invested in such
securities;
- 5 -
<PAGE>
(2) Invest more than 10% of its net assets in illiquid
securities. For this purpose, illiquid securities include,
among others (a) securities for which no readily available
market exists or which have legal or contractual
restrictions on resale, (b) fixed time deposits that are
subject to withdrawal penalties and have maturities of more
than seven days, and (c) repurchase agreements not
terminable within seven days;
(3) Invest in the securities of any issuer if those officers or
Trustees of the Trust and those officers and directors of
the Advisor who individually own more than 1/2 of 1% of the
outstanding securities of such issuer together own more than
5% of such issuer's securities;
(4) Write, purchase or sell puts, calls, straddles, spreads, or
combinations thereof or futures contracts or related
options;
(5) Make short sales of securities or maintain a short
position, except short sales "against the box." A short
sale is made by selling a security the Fund does not own.
A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no
additional cost securities identical to those sold short.
(While the Fund has reserved the right to make short sales
"against the box", the Advisor has no present intention of
engaging in such transactions at this time or during the
coming year); or
(6) Purchase any securities on margin except in connection with
such short-term credits as may be necessary for the
clearance of transactions.
Whenever any fundamental investment policy or investment
restriction states a maximum percentage of assets, it is intended
that if the percentage limitation is met at the time the
investment is made, a later change in percentage resulting from
changing total or net asset values will not be considered a
violation of such policy.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Trust,
their present position with the Trust or Fund, age, principal
occupations during the past 5 years and their aggregate
compensation from the Trust for the fiscal year ended February
29, 1996:
- 6 -
<PAGE>
<TABLE>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
<C> <C> <C>
John P. Boone (age 64) President None
Trustee* Legacy Advisors, Inc. and
President Legacy Global Advisors, Inc.
Legacy Equity Fund Dallas, Texas
2911 Turtle Creek Boulevard Executive Vice President
Suite 400 Forum Securities, Inc.
Dallas, Texas 75219 Dallas, Texas
Jack E. Brinson (age 64) President, Brinson Investment Co. $6,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886 Trustee, Williamsburg Investment Trust
Cincinnati, Ohio
O. James Peterson III (age 59) Chief Financial Officer $6,000
Trustee Pimlico Race Course
Five Bellona Arsenal Laurel, Maryland; previously
Midlothian, Virginia Senior Vice President, Chief Financial Officer
Dominion Resources, Inc.
Richmond, Virginia
Christopher J. Smith (age 29) President None
Trustee* ObjectTiger Ltd.
867 Thorn Tree Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel
Seligman & Associates; Director,
Amelia Earhart Capital Management,
Inc., Southfield, Michigan
Ashby M. Foote III (age 44) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
One Jackson Place, Suite 1070
Jackson, Mississippi 39201
Jasen M. Snelling (age 32 ) President
President CityFund Advisory, Inc.; previously
Regional Opportunity Fund: Registered Representative
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 Provident Securities Investment Co.
Cincinnati, Ohio 45254 Cincinnati, Ohio
- 7 -
<PAGE>
Robert B. Thompson (age 49) Chief Executive Officer
President Morehead Capital Advisors LLC
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 47) President
President Amelia Earhart Capital Management, Inc.
Amelia Earhart: Eagle Equity Fund Southfield, Michigan
One Towne Square President
Suite 1913 Jill H. Travis, CFP
Southfield, Michigan 48076 Shelby Township, Michigan; previously
Senior Vice President
Huntington Banks, Troy, Michigan
Robert G. Dorsey (age 39) President and Treasurer, MGF Service Corp.;
Vice President Treasurer, Midwest Group Financial Services,
312 Walnut Street, 21st Floor Inc.; Treasurer and Director, Leshner
Cincinnati, Ohio 45202 Financial, Inc.
John F. Splain (age 39) Secretary and General Counsel,
Secretary MGF Service Corp., Midwest
312 Walnut Street, 21st Floor Group Financial Services, Inc. and
Cincinnati, Ohio 45202 Leshner Financial, Inc.; Secretary
Midwest Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust
Mark J. Seger (age 34) Vice President, MGF Service Corp.
Treasurer and Leshner Financial, Inc.; Treasurer,
312 Walnut Street, 21st Floor Midwest Trust, Midwest Group
Cincinnati, Ohio 45202 Tax Free Trust and Midwest Strategic Trust
_____________________________________
<FN>
* Indicates that Trustee is an "interested person" for purposes
of the 1940 Act because of his position with one of the
investment advisors to the Trust.
</FN>
</TABLE>
The officers of the Trust do not receive compensation from the
Trust for performing the duties of their office. Each
disinterested Trustee receives an annual retainer of $2,000 plus
$250 from each series of the Trust for each Board meeting
attended in person and $100 from each series of the Trust for
each meeting attended by telephone. All Trustees are reimbursed
for any out-of-pocket expenses incurred in connection with their
attendance at Board meetings.
Principal Holders of Voting Securities. As of June 7, 1996, the
Trustees and officers of the Trust as a group owned beneficially
(i.e., had voting and/or investment power) less than 1% of the
then outstanding shares of the Fund. On the same date, Midsouth
Data Systems, Inc. Retirement Trust, 1670 Hendersonville Road,
- 8 -
<PAGE>
Asheville, North Carolina 28803, owned of record 7.5% of the then
outstanding Investor Shares of the Fund; Richter & Co., Inc.,
1712 East Boulevard, Charlotte, North Carolina 28203, owned of
record 5.0% of the then outstanding Investor Shares of the Fund;
Ronald H. Wrenn, 2423 Beretania Drive, Charlotte, North Carolina
28211, owned of record 5.0% of the then outstanding Investor
Shares of the Fund; International Fund for Capitalist
Development, L.P., P.O. Box 30036, Charlotte, North Carolina
28230, owned of record 31.0% of the then outstanding
Institutional Shares of the Fund; Betsy T. Smith, 14201 Allison
Drive, Raleigh, North Carolina 27615, owned of record 21.0% of
the then outstanding Institutional Shares of the Fund; Billie B.
Smith, 14201 Allison Drive, Raleigh, North Carolina 27615, owned
of record 21.0% of the then outstanding Institutional Shares of
the Fund; J.C.B. Ehringhaus, Jr. & J.C.B. Ehringhaus III, 2565
Roswell Avenue, Charlotte, North Carolina 29209, owned of record
13.9% of the then outstanding Institutional Shares of the Fund;
Steve W. Drew & Susan Dee Drew JTWROS, 1129 Dilworth Crescent
Row, Charlotte, North Carolina 28203, owned of record 7.2% of the
then outstanding Institutional Shares of the Fund; and Frank P.
Meadows III, Trustee FBO F.P. Meadows & Company 401K, P.O. Box
69, Rocky Mount, North Carolina 27802, owned of record 6.0% of
the then outstanding Institutional Shares of the Fund.
International Fund for Capitalist Development, L.P. may be deemed
to control the Institutional Shares of the Fund by virtue of the
fact that it owns of record more than 25% of the outstanding
Institutional Shares.
INVESTMENT ADVISOR
Morehead Capital Advisors LLC (the "Advisor") supervises the
Fund's investments pursuant to an Investment Advisory Agreement
(the "Advisory Agreement") described in the Prospectus. The
Advisory Agreement will be renewed for one year periods only so
long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority
of the Fund's outstanding voting securities, provided the
continuance is also approved by a majority of the Trustees who
are not "interested persons" of the Trust or the Advisor by vote
cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement is terminable without
penalty on sixty days notice by the Board of Trustees of the
Trust or by the Advisor. The Advisory Agreement provides that it
will terminate automatically in the event of its assignment.
Compensation of the Advisor is at the annual rate of 1% of the
Fund's average daily net assets. The Advisor may be required to
reimburse the Fund if the Fund's annual ordinary operating
expenses exceed certain limits. This expense limitation is
calculated and administered in accordance with the requirements
of state securities authorities. For the fiscal year ended
February 29, 1996, the Advisor waived its entire advisory fee of
$11,386 and reimbursed the Fund $69,248 of expenses in order to
- 9 -
<PAGE>
voluntarily reduce the operating expenses of the Fund. For the
fiscal period ended February 28, 1995, the Advisor waived its
entire advisory fee of $410 and reimbursed the Fund $10,548 of
expenses in order to voluntarily reduce the operating expenses of
the Fund.
The Advisor is controlled by Robert B. Thompson. The Chief
Investment Officer of the Advisor has been rendering investment
counsel, utilizing investment strategies substantially similar to
that of the Fund to individuals, bank and thrift institutions,
pension and profit sharing plans, trusts, estates, charitable
organizations and corporations since 1986.
The Advisor provides a continuous investment program for the
Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents of the
Fund. The Advisor determines what securities and other
investments will be purchased, retained or sold by the Fund, and
does so in accordance with the investment objective and policies
of the Fund as described herein and in the Prospectus. The
Advisor places all securities orders for the Fund, determining
with which broker, dealer, or issuer to place the orders.
The Advisor also provides, at its own expense, certain Executive
Officers to the Trust.
The Advisor must adhere to the brokerage policies of the Fund in
placing all orders, the substance of which policies are that the
Advisor attempts to obtain the best execution for all securities
brokerage transactions.
Under the Advisory Agreement, the Advisor is not responsible for
any error of judgment or mistake of law or for any loss suffered
by the Fund in connection with the performance of the Agreement,
except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence
on the part of the Advisor in the performance of its duties or
from the reckless disregard of its duties and obligations under
the Agreement.
ADMINISTRATOR
MGF Service Corp. (the "Administrator") maintains the records of
each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of
the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. The
Administrator receives for its services as transfer agent a fee
payable monthly at an annual rate of $17 per account, provided,
however, that the minimum fee is $1,000 per month for each class
of shares. In addition, the Fund pays out-of-pocket expenses,
including but not limited to, postage, envelopes, checks, drafts,
forms, reports, record storage and communication lines.
- 10 -
<PAGE>
The Administrator also provides accounting and pricing services
to the Fund. The Administrator receives $3,000 per month from
the Fund for calculating daily net asset value per share and
maintaining such books and records as are necessary to enable the
Administrator to perform its duties.
In addition, the Administrator has been retained to provide
administrative services to the Fund. In this capacity, the
Administrator supplies non-investment related statistical and
research data, internal regulatory compliance services and
executive and administrative services. The Administrator
supervises the preparation of tax returns, reports to
shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees.
For the performance of these administrative services, the Fund
pays the Administrator a fee at the annual rate of .15% of the
average value of its daily net assets up to $50,000,000, .125% of
such assets from $50,000,000 to $100,000,000 and .1% of such
assets in excess of $100,000,000.
Prior to June 1, 1996 the administrator to the Fund was The
Nottingham Company, Rocky Mount, North Carolina. For the fiscal
year ended February 29, 1996, The Nottingham Company received
from the Fund a fee of $36,000.
DISTRIBUTOR
Midwest Group Financial Services, Inc. (the "Distributor") is the
principal underwriter of the Fund and, as such, the exclusive
agent for distribution of shares of the Fund. The Distributor is
obligated to sell the shares on a best efforts basis only against
purchase orders for the shares. Shares of the Fund are offered
to the public on a continuous basis.
The Distributor currently allows concessions to dealers who sell
Investor Shares of the Fund. The Distributor retains the entire
sales charge on all direct investments in Investor Shares and on
all investments in accounts with no designated dealer of record.
Prior to June 1, 1996, Capital Investment Group, Inc. served as
distributor for the Fund. For the fiscal year ended February 29,
1996, Capital Investment Group, Inc. retained $5,198 in
underwriting commissions.
The Fund may compensate dealers, including the Distributor and
its affiliates, based on the average balance of all accounts in
Investor Shares for which the dealer is designated as the party
responsible for the account. See "Distribution Plan Under Rule
12b-1" below.
- 11 -
<PAGE>
OTHER SERVICES
Auditors. The firm of KPMG Peat Marwick LLP, 201 East Fifth
Street, Cincinnati, Ohio 45202, has been retained by the Board of
Trustees to perform an independent audit of the financial statements of the
Fund and to prepare the Fund's federal and state tax returns.
Custodian. The Custodian of the Fund's assets is The Fifth Third
Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263. The
Custodian holds all cash and securities of the Fund (either in
its possession or in its favor through "book entry systems"
authorized by the Trustees in accordance with the 1940 Act),
collects all income and effects all securities transactions on
behalf of the Fund. For its services as Custodian, the Custodian
receives an annual fee from the Fund based on the average net
assets of the Fund held by the Custodian.
BROKERAGE
It is the Fund's practice to seek to obtain the best overall
terms available in executing Fund transactions and selecting
brokers or dealers. Subject to the general supervision of the
Board of Trustees, the Advisor is responsible for, makes
decisions with respect to, and places orders for all purchases
and sales of portfolio securities for the Fund.
In assessing the best overall terms available for any
transaction, the Advisor shall consider factors it deems
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In addition, the Advisor may cause the Fund to
pay a broker-dealer which furnishes brokerage and research
services a higher commission than that which might be charged by
another broker-dealer for effecting the same transaction,
provided the Advisor determines in good faith that such
commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer,
viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Fund. Such
brokerage and research services may consist of reports and
statistics relating to specific companies or industries, general
summaries of groups of stocks or bonds and their comparative
earnings and yields, or broad overviews of the economy and the
stock, bond and government securities markets.
- 12 -
<PAGE>
Supplementary research information so received is in addition to,
and not in lieu of, services required to be performed by the
Advisor and does not reduce the advisory fees payable by the
Fund. The Trustees will periodically review any commissions paid
by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in
relation to the benefits received by the Fund. It is possible
that certain of the supplementary research or other services
received will primarily benefit one or more other accounts for
which investment discretion is exercised by the Advisor.
Conversely, the Fund may be the primary beneficiary of the
research or other services received as a result of securities
transactions effected for such other accounts.
The Advisor may also utilize a brokerage firm affiliated with the
Trust or the Advisor if it believes it can obtain the best
execution from such firm. The Fund will not execute portfolio
transactions through, acquire securities issued by, make savings
deposits in or enter into repurchase agreements with the Advisor
or an affiliated person of the Advisor (as such term is defined
in the 1940 Act) acting as principal, except to the extent
permitted by the Securities and Exchange Commission ("SEC"). In
addition, the Fund will not purchase securities during the
existence of any underwriting or selling group relating thereto
of which the Advisor or an affiliated person of the Advisor, is a
member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these
limitations in comparison with other investment companies that
have similar investment objectives but are not subject to such
limitations.
The Fund purchases money market instruments from dealers,
underwriters and issuers. The Fund does not expect to incur any
brokerage commissions on such purchases because money market
instruments are generally traded on a net basis by a dealer
acting as principal for its own account without a stated
commission. The price of the security, however, usually includes
a profit to the dealer. Securities purchased in underwritten
offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. When securities are purchased directly
from or sold directly to an issuer, no commissions or discounts
are paid.
Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary
among different brokers. Transactions in the over-the-counter
market are generally on a net basis (i.e. without commission)
through dealers, or otherwise involve transactions directly with
the issuer of an instrument.
- 13 -
<PAGE>
The Fund's fixed-income portfolio transactions will normally be
principal transactions executed in over-the-counter markets and
will be executed on a "net" basis, which may include a dealer
markup. With respect to securities traded only in the over-the-
counter market, orders will be executed on a principal basis with
primary market makers in such securities except where better
prices or executions may be obtained on an agency basis or by
dealing with other than a primary market maker.
The Fund may participate, if and when practicable, in bidding for
the purchase of Fund securities directly from an issuer in order
to take advantage of the lower purchase price available to
members of a bidding group. The Fund will engage in this
practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
Investment decisions for the Fund will be made independently from
those for any other accounts advised or managed by the Advisor.
Such other accounts may also invest in the same securities as the
Fund. To the extent permitted by law, the Advisor may aggregate
the securities to be sold or purchased for the Fund with those to
be sold or purchased for other accounts in executing
transactions. When a purchase or sale of the same security is
made at substantially the same time on behalf of the Fund and
other accounts, the transaction will be averaged as to price and
available investments allocated as to amount, in the manner which
the Advisor believes to be equitable to the Fund and such other
accounts. In some instances, this investment procedure may
adversely affect the price paid or received by the Fund or the
size of the position obtained or sold by the Fund.
For the fiscal year ended February 29, 1996 and for the fiscal
period ended February 28, 1995, the total amount of brokerage
commissions paid by the Fund were $9,704 and $306, respectively.
DISTRIBUTION PLAN UNDER RULE 12b-1
The Trust has adopted a Plan of Distribution for Investor Shares
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). The Plan
permits Investor Shares of the Fund to pay for expenses incurred
in the distribution and promotion of such shares.
Under the Plan, the Fund may expend in any fiscal year up to .50%
of the Investor Shares' average daily net assets to finance any
activity which is primarily intended to result in the sale of
Investor Shares and the servicing of shareholder accounts,
provided the Board of Trustees has approved the category of
expenses for which payment is being made. Expenditures under the
Plan as service fees to any person who sells Investor Shares may
not exceed an annual rate of .25% of the average daily net assets
of such shares.
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Potential benefits to the Fund from the Plan include improved
shareholder servicing, savings in transfer agency costs, benefits
to the investment process from growth and stability of assets and
maintenance of a financially healthy management organization.
Subject to its practice of seeking to obtain best execution, the
Fund may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plan.
During the fiscal period ended February 29, 1996, Investor Shares
incurred $3,791 in distribution costs under the Plan for payments
to broker-dealers and others for the sale or retention of assets.
Robert B. Thompson, as the Chief Executive Officer and
controlling shareholder of the Advisor, may be deemed to have a
financial interest in the operation of the Plan and the
Implementation Agreements.
The Plan, the Underwriting Agreement with the Distributor and the
form of Dealer Agreement with broker-dealers have all been
approved by the Board of Trustees of the Trust, including a
majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the Plan or any related
agreements, by vote cast in person or at a meeting duly called
for the purpose of voting on the Plan and such Agreements.
Continuation of the Plan, the Underwriting Agreement and the form
of Dealer Agreement must be approved annually by the Board of
Trustees in the same manner as specified above.
Each year the Trustees must determine that continuation of the
Plan is in the best interests of shareholders of the Fund and
there is a reasonable likelihood that the Plan will benefit the
Fund. The Board of Trustees has made such a determination for
the current year of operations under the Plan. The Plan, the
Underwriting Agreement and the Dealer Agreements may be
terminated at any time without penalty by a majority of those
trustees who are not "interested persons" or by a majority of the
outstanding Investor Shares. Any amendment materially increasing
the maximum percentage payable under the Plan must likewise be
approved by a majority of the outstanding Investor Shares as well
as a majority of the Trustees who are not "interested persons"
and have no direct or indirect financial interest in the Plans
(the "Independent Trustees"). In order for the Plan to remain
effective, the selection and nomination of those Trustees who are
not interested persons of the Trust must be effected by the
Independent Trustees during such period. All amounts spent by
the Fund pursuant to the Plan must be reported quarterly in a
written report to the Trustees for their review.
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SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following
shareholder services:
Regular Account. The regular account allows for voluntary
investments to be made at any time. Available to individuals,
custodians, corporations, trusts, estates, corporate retirement
plans and others, investors are free to make additions and
withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a
shareholder account is opened in accordance with the investor's
registration instructions. Each time there is a transaction in a
shareholder account, such as an additional investment or the
reinvestment of a dividend or distribution, the shareholder will
receive a confirmation statement showing the current transaction
and all prior transactions in the shareholder account during the
calendar year to date.
Automatic Investment Plan. The automatic investment plan enables
investors to make regular monthly or bimonthly investments in
shares through automatic charges to their checking account. With
shareholder authorization and bank approval, the Administrator
will automatically charge the checking account for the amount
specified ($50 minimum) which will be automatically invested in
shares at the public offering price on or about the fifteenth day
or the last business day of the month. The shareholder may
change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
Purchases in Kind. The Fund may accept securities in lieu of
cash in payment for the purchase of shares of the Fund. The
acceptance of such securities is at the sole discretion of the
Advisor based upon the suitability of the securities accepted for
inclusion as a long term investment of the Fund, the
marketability of such securities, and other factors which the
Advisor may deem appropriate. If accepted, the securities will
be valued using the same criteria and methods as described in
"How Shares are Valued" in the Prospectus. Transactions
involving the issuance of shares in the Fund for securities in
lieu of cash will be limited to acquisitions of securities
(except for municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) which: (a)
meet the investment objective and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid
securities which are not restricted as to transfer either by law
or liquidity of market; and (d) have a value which is readily
ascertainable (and not established only by evaluation procedures)
as evidenced by a listing on the American Stock Exchange, the New
York Stock Exchange or NASDAQ.
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Redemption in Kind. The Fund does not intend, under normal
circumstances, to redeem its securities by payment in kind. It
is possible, however, that conditions may arise in the future
which would, in the opinion of the Trustees, make it undesirable
for the Fund to pay for all redemptions in cash. In such case,
the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities
delivered in payment of redemptions would be valued at the same
value assigned to them in computing the net asset value per
share. Shareholders receiving such securities would incur
brokerage costs when the securities are sold. An irrevocable
election has been filed under Rule 18f-1 of the 1940 Act, wherein
the Fund is committed to pay redemptions in cash, rather than in
kind, to any shareholder of record of the Fund who redeems during
any ninety day period, the lesser of (a) $250,000 or (b) one
percent (1%) of the Fund's net assets at the beginning of such
period.
Transfer of Registration. To transfer shares to another owner,
send a written request to the Fund's Administrator at the address
shown herein. Your request should include the following: (1)
the Fund name and existing account registration; (2) signature(s)
of the registered owner(s) exactly as the signature(s) appear(s)
on the account registration; (3) the new account registration,
address, social security or taxpayer identification number and
how dividends and capital gains are to be distributed; (4)
signature guarantees (see the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which
are required for transfer by corporations, administrators,
executors, trustees, guardians, etc. If you have any questions
about transferring shares, call or write the Administrator.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases. Shares of the Fund are offered and sold on a
continuous basis and may be purchased through authorized dealers
or directly by contacting the Distributor or the Administrator.
Selling dealers have the responsibility of transmitting orders
promptly to the Fund's Administrator. The public offering price
of Investor Shares equals net asset value plus a sales charge.
Institutional Shares are sold at net asset value. The
Distributor receives the sales charge on Investor Shares as
Distributor and may reallow it in the form of dealer discounts
and brokerage commissions. The current schedule of sales charges
and related dealer discounts and brokerage commissions for
Investor Shares is set forth in the Prospectus. See "How to
Purchase Shares" in the Prospectus.
Redemptions. Under the 1940 Act, the Fund may suspend the right
of redemption or postpone the date of payment for shares during
any period when (a) trading on the New York Stock Exchange is
restricted by applicable rules and regulations of the SEC; (b)
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the Exchange is closed for other than customary weekend and
holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC.
The Fund may also suspend or postpone the recordation of the
transfer of shares upon the occurrence of any of the foregoing
conditions.
In addition to the situations described in the Prospectus under
"How to Redeem Shares," the Fund may redeem shares involuntarily
to reimburse the Fund for any loss sustained by reason of the
failure of an investor to make full payment for shares purchased
by the investor or to collect any charge relating to a
transaction effected for the benefit of an investor which is
applicable to Fund shares as provided in the Prospectus from time
to time.
HOW SHARE PRICE IS DETERMINED
Under the 1940 Act, the Trustees are responsible for determining
in good faith the fair value of the securities and other assets
of the Fund and they have adopted procedures to do so as follows:
The public offering price (net asset value plus applicable sales
charge) of Investor Shares and the net asset value of
Institutional Shares of the Fund is determined as of 4:00 p.m.,
Eastern time, Monday through Friday, except on business holidays
when the New York Stock Exchange is closed. The New York Stock
Exchange recognizes the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Thanksgiving Day and Christmas Day. Any other holiday
recognized by the New York Stock Exchange will be considered a
business holiday on which the Fund's share price will not be
determined.
The net asset value per share of each class of the Fund is
calculated separately by adding the value of the securities and
other assets belonging to the Fund and attributable to that
class, subtracting the liabilities charged to the Fund and to
that class and dividing the result by the number of outstanding
shares of that class. Assets belonging to the Fund consist of
the consideration received upon the issuance of shares of the
Fund together with all net investment income, realized gains/
losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any
funds or payments derived from any reinvestment of such proceeds,
and a portion of any general assets of the Trust not belonging to
a particular Fund. Income, realized and unrealized capital gains
and losses, and any expenses of the Fund not allocable to a
particular class of shares will be allocated to each class based
on the net assets of that class in relation to the net assets of
the Fund. Assets belonging to the Fund are charged with the
direct liabilities of the Fund and with a share of the general
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liabilities of the Trust, which are normally allocated in
proportion to the number of or the relative net assets of all
series in the Trust at the time of allocation or in accordance
with other allocation methods approved by the Board of Trustees.
Certain expenses attributable to a particular class of shares
(such as distribution fees attributable to Investor Shares) will
be charged to that class. Certain other expenses attributable to
a particular class of shares (such as registration fees,
professional fees and certain printing and postage expenses) may
be charged to that class if such expenses are actually incurred
in a different amount by that class or if the class receives
services of a different kind or to a different degree than
another class and the Board of Trustees approves such allocation.
Subject to the provisions of the Declaration of Trust,
determinations by the Board of Trustees as to the direct and
allocable liabilities and the allocable portion of any general
assets, with respect to the Fund and its classes are conclusive.
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations
generally affecting the Fund and its shareholders that are not
described in the Prospectus. No attempt is made to present a
detailed explanation of the tax treatment of the Fund or its
shareholders, and the discussion here and in the Prospectus is
not intended as a substitute for careful tax planning and is
based on tax laws and regulations that are in effect on the date
hereof; such laws and regulations may be changed by legislative,
judicial or administrative action. Investors are advised to
consult their tax advisors with specific reference to their own
tax situations.
Each series of the Trust, including the Fund, will be treated as
a separate entity under the Code and intends to qualify or remain
qualified as a regulated investment company. In order to so
qualify, each series must elect to be a regulated investment
company or have made such an election for a previous year and
must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to
the source of its income for a taxable year. At least 90% of the
gross income of the Fund must be derived from dividends,
interest, payments with respect to securities loans, gains from
the sale or other disposition of stocks, securities or foreign
currencies, and other income derived with respect to the Fund's
business of investing in such stock, securities or currencies.
Any income derived by the Fund from a partnership or trust is
derived with respect to the Fund's business of investing in such
stock, securities or currencies only to the extent that such
income is attributable to items of income that would have been
qualifying income if realized by the Fund in the same manner as
by the partnership or trust.
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Another requirement for qualification as a regulated investment
company under the Code is that less than 30% of the Fund's gross
income for a taxable year must be derived from gains realized on
the sale or other disposition of the following investments held
for less than three months: (1) stock and securities (as defined
in Section 2(a)(36) of the 1940 Act); (2) options, futures and
forward contracts other than those on foreign currencies; or (3)
foreign currencies (or options, futures or forward contracts on
foreign currencies) that are not directly related to the Fund's
principal business of investing in stocks or securities (or
options and futures with respect to stocks or securities).
Interest (including original issue discount and, with respect to
certain debt securities, accrued market discount) received by the
Fund upon maturity or disposition of a security held for less
than three months will not be treated as gross income derived
from the sale or other disposition of such security within the
meaning of this requirement. However, any other income which is
attributable to realized market appreciation will be treated as
gross income from the sale or other disposition of securities for
this purpose.
An investment company may not qualify as a regulated investment
company for any taxable year unless it satisfies certain
requirements with respect to the diversification of its
investments at the close of each quarter of the taxable year. In
general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities,
securities of other regulated investment companies and other
securities which, with respect to any one issuer, do not
represent more that 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of
such issuer. In addition, not more than 25% of the value of the
investment company's total assets may be invested in the
securities (other than government securities or the securities of
other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for
continued qualification as a regulated investment company.
The Fund will designate any distribution of long term capital
gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the Fund's taxable
year. Shareholders should note that, upon the sale or exchange
of shares, if the shareholder has not held such shares for at
least six months, any loss on the sale or exchange of those
shares will be treated as a long term capital loss to the extent
of the capital gain dividends with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment
companies that fail to currently distribute an amount equal to
specified percentages of their ordinary taxable income and
capital gain net income (excess of capital gains over capital
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losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any
capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.
If for any taxable year the Fund does not qualify for the special
federal income tax treatment afforded regulated investment
companies, all of its taxable income will be subject to federal
income tax at regular corporate rates (without any deduction for
distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt
securities) would be taxable as ordinary income to shareholders
to the extent of the Fund's current and accumulated earnings and
profits, and would be eligible for the dividends received
deduction for corporations.
The Fund will be required in certain cases to withhold and remit
to the U.S. Treasury 31% of taxable dividends or 31% of gross
proceeds realized upon sale paid to shareholders who have failed
to provide a correct tax identification number in the manner
required, or who are subject to withholding by the Internal
Revenue Service for failure to properly include on their tax
return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup
withholding when required to do so or that they are "exempt
recipients."
Depending upon the extent of the Fund's activities in states and
localities in which its offices are maintained, in which its
agents or independent contractors are located or in which it is
otherwise deemed to be conducting business, the Fund may be
subject to the tax laws of such states or localities. In
addition, in those states and localities that have income tax
laws, the treatment of the Fund and its shareholders under such
laws may differ from their treatment under federal income tax
laws.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under
Massachusetts law on August 12, 1992. The Trust's Declaration of
Trust authorizes the Board of Trustees to divide shares into
series, each series relating to a separate portfolio of
investments. The Declaration of Trust currently provides for the
shares of five series: the Amelia Earhart: Eagle Equity Fund
managed by Amelia Earhart Capital Management, Inc. of Southfield
Michigan; the Regional Opportunity Fund: Ohio Indiana Kentucky
managed by CityFund Advisory, Inc. of Cincinnati, Ohio; the
Legacy Equity Fund managed by Legacy Advisors, Inc. of Dallas,
Texas; the Mississippi Opportunity Fund managed by Vector Money
Management, Inc. of Jackson, Mississippi and the Fund. The Board
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of Trustees has authorized separate classes of shares for the
Amelia Earhart: Eagle Equity Fund, the Regional Opportunity Fund:
Ohio Indiana Kentucky, the Mississippi Opportunity Fund and the
Fund.
In the event of a liquidation or dissolution of the Trust or an
individual series, such as the Fund, shareholders of a particular
series would be entitled to receive the assets available for
distribution belonging to such series. Shareholders of a series
are entitled to participate equally in the net distributable
assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each
shareholder. If any assets, income, earnings, proceeds, funds or
payments are not readily identifiable as belonging to any
particular series, the Trustees shall allocate them among any one
or more series as they, in their sole discretion, deem fair and
equitable.
Shares of the Fund, when issued, are fully paid and non-
assessable. Shareholders are entitled to one vote for each full
share held and a fractional vote for each fractional share held.
Shareholders of all series in the Trust, including the Fund, will
vote together and not separately, except as otherwise required by
law or when the Board of Trustees determines that the matter to
be voted upon affects only the interests of the shareholders of a
particular series or class. Rule 18f-2 under the 1940 Act
provides that any matter required to be submitted to the holders
of the outstanding voting securities of an investment company
such as the Trust shall not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the
outstanding shares of each series or class affected by the
matter. A series or class is affected by a matter unless it is
clear that the interests of each series in the matter are
substantially identical or that the matter does not affect any
interest of the series. Under Rule 18f-2 of the 1940 Act, the
approval of an investment advisory agreement, a material change
to a Rule 12b-1 Plan or any change in a fundamental investment
policy would be effectively acted upon with respect to a series
only if approved by a majority of the outstanding shares of such
series. However, the Rule also provides that the ratification of
the appointment of independent accountants, the approval of
principal underwriting contracts and the election of Trustees
may be effectively acted upon by shareholders of the Trust voting
together, without regard to a particular series.
The Declaration of Trust provides that the Trustees of the Trust
will not be liable in any event in connection with the affairs of
the Trust, except as such liability may arise from his or her own
bad faith, willful misfeasance, gross negligence or reckless
disregard of duties. It also provides that all third parties
shall look solely to the Trust property for satisfaction of
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claims arising in connection with the affairs of the Trust. With
the exceptions stated, the Declaration of Trust provides that a
Trustee or officer is entitled to be indemnified against all
liability in connection with the affairs of the Trust.
Prior to June 1, 1996 the Trust was named The Nottingham
Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time,
advertise certain total return and yield information. Average
annual total return and yield are computed separately for
Investor and Institutional Shares of the Fund. The yield of
Institutional Shares is expected to be higher than the yield of
Investor Shares due to the distribution fees imposed on Investor
Shares. The average annual total return of the Fund for a period
is computed by subtracting the net asset value per share at the
beginning of the period from the net asset value per share at the
end of the period (after adjusting for the reinvestment of any
income dividends and capital gain distributions), and dividing
the result by the net asset value per share at the beginning of
the period. In particular, the average annual total return of
the Fund ("T") is computed by using the redeemable value at the
end of a specified period of time ("ERV") of a hypothetical
initial investment of $1,000 ("P") over a period of time ("n")
according to the formula P(l+T)n=ERV. The calculation of average
annual total return assumes the reinvestment of all dividends and
distributions and the deduction of the current maximum sales load
from the initial $1,000 payment. The average annual total
returns of Investor Shares for the one year period ended February
29, 1996 and the period since inception (January 3, 1995) to
February 29, 1996 are 14.40% and 17.63%, respectively. The
average annual total return of Institutional Shares for the
period since inception (May 22, 1995) to February 29, 1996 is
23.44%
In addition, the Fund may advertise other total return
performance data ("Nonstandardized Return"). Nonstandardized
Return shows as a percentage rate of return encompassing all
elements of return (i.e., income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and
capital gain distributions. This computation does not include
the effect of the applicable sales load which, if included, would
reduce total return. Nonstandardized Return may consist of a
cumulative percentage of return, actual year-by-year rates or any
combination thereof. The average annual Nonstandardized Returns
of Investor Shares (computed without the applicable sales load)
for the one year period ended February 29, 1996 and for the
period since inception (January 3, 1995) to February 29, 1996 are
18.59% and 21.32%, respectively. A nonstandardized quotation of
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total return will always be accompanied by the Fund's average
annual total return as described above.
From time to time, the Fund may advertise its yield. A yield
quotation is based on a 30-day (or one month) period and is
computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is
recognized by accruing 1/360 of the stated dividend rate of the
security each day that the Fund owns the security. Generally,
interest earned (for the purpose of "a" above) on debt
obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation
(including actual accrued interest) at the close of business on
the last business day prior to the start of the 30-day (or one
month) period for which yield is being calculated, or, with
respect to obligations purchased during the month, the purchase
price (plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales
literature, shareholder reports, and other communications to the
performance of other mutual funds having similar objectives or to
standardized indices or other measures of investment performance.
In particular, the Fund may compare its performance to the S&P
500 Index, which is generally considered to be representative of
the performance of unmanaged common stocks that are publicly
traded in the United States securities markets. Comparative
performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service, such as Lipper
Analytical Services, Inc. or Morningstar, Inc. or by one or more
newspapers, newsletters or financial periodicals. The Fund may
also occasionally cite statistics to reflect its volatility and
risk. The Fund may also compare its performance to published
reports of the performance of unmanaged portfolios of companies
located in North and South Carolina. The performance of such
unmanaged portfolios generally does not reflect the effects of
dividends or dividend reinvestment. Of course, there can be no
assurance that the Fund will experience the same results.
Performance comparisons may be useful to investors who wish to
compare the Fund's past performance to that of other mutual funds
and investment products. Of course, past performance is not a
guarantee of future results.
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The Fund's performance fluctuates on a daily basis largely
because net earnings and net asset value per share fluctuate
daily. Both net earnings and net asset value per share are
factors in the computation of total return as described above.
As indicated, from time to time, the Fund may advertise its
performance compared to similar funds or portfolios using certain
indices, reporting services, and financial publications. These
may include the following:
Lipper Analytical Services, Inc. ranks funds in various fund
categories by making comparative calculations using total
return. Total return assumes the reinvestment of all
capital gains distributions and income dividends and takes
into account any change in net asset value over a specific
period of time.
Morningstar, Inc., an independent rating service, is the
publisher of the bi-weekly Mutual Fund Values. Mutual Fund
Values rates more than 1,000 NASDAQ-listed mutual funds of
all types, according to their risk-adjusted returns. The
maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's
Prospectus to obtain a more complete view of the Fund's
performance before investing. Of course, when comparing the
Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered
in assessing the significance of such comparisons. When
comparing funds using reporting services, or total return,
investors should take into consideration any relevant differences
in funds such as permitted portfolio compositions and methods
used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote
total returns that are calculated on nonstandardized base
periods. The total returns represent the historic change in the
value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.
From time to time the Fund may include in advertisements and
other communications information, charts, and illustrations
relating to inflation and the effects of inflation on the dollar,
including the purchasing power of the dollar at various rates of
inflation. The Fund may also disclose from time to time
information about its portfolio allocation and holdings at a
particular date (including ratings of securities assigned by
independent rating services such as S&P and Moody's). The Fund
may also depict the historical performance of the securities in
which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with
alternative investments, performance indices of those
investments, or economic indicators. The Fund may also include
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<PAGE>
in advertisements and in materials furnished to present and
prospective shareholders statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds
that may be employed to meet specific financial goals, such as
saving for retirement, children's education, or other future
needs.
ADDITIONAL INFORMATION ON NORTH AND SOUTH CAROLINA
The economies of North and South Carolina embrace the following
sectors: financial (39%), utilities (17%), services (17%), basic
industries (11%), consumer goods (nondurables)(7%), capital goods
(5%), consumer goods (durables)(2%), health care (1%) and
transportation (1%). (Source: Standard & Poor's.)
From 1982-1991, the combined Gross State Product (GSA) for North
and South Carolina exceeded the Gross National Product (GNP) by
50% (3.6% versus 2.4% average annual growth). This information,
based on billions of 1987 dollars, may be provided by graph in
advertisements and sales literature prepared for the Fund.
(Source: Federal Reserve Bank of Richmond.)
The Advisor believes North and South Carolina have an economic
atmosphere anchored by: low taxes; progressive governments that
support business growth and opportunity; ready availability of
capital, with banking assets in the two states exceeding $145
billion; a highly skilled workforce, combined with right-to-work
status; major transportation and distribution hubs; nationally
recognized colleges and universities, plus statewide community
college networks; and citizens who enjoy an outstanding quality
of life, based on traditional values, a strong work ethic, and a
commitment to education and the arts.
In the past, North and South Carolina have ranked first and
second in the nation in corporate headquarter relocations:
1991-1993 Corporate Relocations by State
Overall Facilities per
Rank State 1 mil. Population
1 North Carolina 161.6
2 South Carolina 103.9
3 Ohio 119.7
4 Texas 60.7
5 Indiana 74.2
(Source: Site Selection Magazine)
- 26 -
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
Under normal market conditions, at least 90% of the Fund's net
assets will be invested in equities. As a temporary defensive
position, however, the Fund may invest up to 100% of its assets
in investment grade bonds, U.S. Government Securities, repurchase
agreements or money market instruments ("Investment-Grade Debt
Securities"). When the Fund invests in Investment-Grade Debt
Securities as a temporary defensive measure, it is not pursuing
its investment objective. Under normal circumstances, however,
the Fund may invest in money market or repurchase agreement
instruments as described in the Prospectus.
The various ratings used by the NRSROs are described below. A
rating by an NRSRO represents the organization's opinion as to
the credit quality of the security being rated. However, the
ratings are general and are not absolute standards of quality or
guarantees as to the creditworthiness of an issuer.
Consequently, the Advisor believes that the quality of fixed-
income securities in which the Fund may invest should be
continuously reviewed and that individual analysts give different
weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a
security because it does not take into account market value or
suitability for a particular investor. When a security has
received a rating from more than one NRSRO, each rating is
evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the NRSROs
from other sources that they consider reliable. Ratings may be
changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
Description of Moody's Investors Service, Inc.'s Ratings:
The following summarizes the four highest ratings used by Moody's
Investors Service, Inc. ("Moody's") for bonds which are deemed by
the Advisor to be Investment-Grade Debt Securities.
Aaa: Bonds rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
- 27 -
<PAGE>
Aa: Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which
make the long term risks appear somewhat larger than in Aaa
securities.
A: Bonds rated A possess many favorable investment
attributes and are to be considered upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present that suggest
a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Moody's applies numerical modifiers (1,2 and 3) with respect to
bonds rated Aa, A and Baa. The modifier 1 indicates that the
bond being rated ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the bond ranks in the lower end of its
generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not
considered Investment-Grade Debt Securities by the Advisor.
Bonds rated Ba are judged to have speculative elements because
their future cannot be considered as well assured. Uncertainty
of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very
moderate and not well safeguarded. Bonds which are rated B
generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period of time may be
small. Bonds which are rated Caa are of poor standing. Such
securities may be in default or there may be present elements of
danger with respect to principal or interest. Bonds which are
rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class
of bonds, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
- 28 -
<PAGE>
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Issuers rated Prime-1 (or related
supporting institutions) are considered to have superior capacity
for repayment of short-term promissory obligations. Issuers
rated Prime-2 (or related supporting institutions) are considered
to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while
still appropriated may be more affected by external conditions.
Ample alternate liquidity is maintained.
The following summarizes the highest rating used by Moody's for
short-term notes and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are
of the best quality, enjoying strong protection by
established cash flows, superior liquidity support or
demonstrated broad-based access to the market for
refinancing.
Description of Standard & Poor's Ratings Group's Ratings:
The following summarizes the four highest ratings used by
Standard & Poor's Ratings Group ("S&P") for bonds which are
deemed by the Advisor to be Investment-Grade Debt Securities.
AAA: This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay
principal and interest.
AA: Bonds rated AA also qualify as high quality debt
obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from AAA
issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally
exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A
and BBB ratings may be modified by the addition of a plus or
minus sign to show relative standing within these major rating
categories.
- 29 -
<PAGE>
Bonds rated BB, B, CCC, CC and C are not considered by the
Advisor to be Investment-Grade Debt Securities and are regarded,
on balance, as predominately speculative with respect to the
issuer's capacity to pay interest and principal in accordance
with the terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation. While
such bonds may have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of
safety regarding timely payment is strong. Those issues
determined to possess extremely strong safety characteristics are
denoted A-1+. Capacity for timely payment on commercial paper
rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to
municipal notes and indicates very strong or strong capacity to
pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are give a plus (+)
designation.
Description of Fitch Investors Service Inc.'s Ratings:
The following summarizes the four highest ratings used by Fitch
Investors Service, Inc. ("Fitch") for bonds which are deemed by
the Advisor to be Investment-Grade Debt Securities.
AAA: Bonds are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely to
be affected by reasonably foreseeable events.
AA: Bonds are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated
F-1+.
A: Bonds are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB: Bonds are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
- 30 -
<PAGE>
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds,
and therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A
and BBB ratings may be modified by the addition of a plus or
minus sign to show relative standing within a rating category.
Bonds rated BB, B and CCC by Fitch are not considered Investment-
Grade Debt Securities and are regarded, on balance, as
predominately speculative with respect to the issuer's ability to
pay interest and make principal payments in accordance with the
terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch
for short-term notes, municipal notes, variable rate demand
instruments and commercial paper.
F-1+ - Instruments assigned this rating are regarded as
having the strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance
of timely payment only slightly less in degree than issues
rated F-1+.
F-2 - Instruments assigned this rating have satisfactory
degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1
ratings.
Description of Duff & Phelps' Credit Rating Co.'s Ratings:
The following summarizes the four highest ratings used by Duff &
Phelps Credit Rating Co. ("D&P") for bonds which are deemed by
the Advisor to be Investment-Grade Debt Securities.
AAA: This is the highest rating credit quality. The risk
factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit
quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A: Bonds rated A have average but adequate protection
factors. However risk factors are more variable and greater in
periods of economic stress.
- 31 -
<PAGE>
BBB: Bonds rated BBB have below average protection factors,
but are still considered sufficient for prudent investment.
There is considerable variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment-
Grade Debt Securities and are regarded, on balance, as
predominately speculative with respect to the issuer's ability to
pay interest and make principal payments in accordance with the
terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The rating Duff 1 is the highest rating assigned by D&P for
short-term debt, including commercial paper. D&P employs three
designations, Duff 1+, Duff 1 and Duff 1- within the highest
rating category. Duff 1+ indicates highest certainty of timely
payment. Short-term liquidity, including internal operating
factors and/or access to alternative sources of funds, is judged
to be outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations. Duff 1 indicates very high
certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors
are considered to be minor. Duff 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by
good fundamental protection factors. Risk factors are very
small.
FINANCIAL STATEMENTS AND REPORTS
The Financial Statements of the Fund will be audited at least once each
year by independent public accountants. Shareholders will receive annual
audited and semiannual (unaudited) reports when published, and will receive
written confirmation of all confirmable transactions in their account. A copy
of the Annual Report will accompany the Statement of Additional Information
whenever the Statement of Additional Information is requested by a shareholder
or prospective investor. The Financial Statements of the Fund as of February
29, 1996, together with the report of the independent accountants thereon, are
included on the following pages.
- 32 -
<PAGE>
- - -
April 30, 1996
Dear CarolinasFund Shareholder:
Your Fund ended the fiscal year on February 29, 1996 with an annualized
total return of 18.59% in Investor Class Shares. Institutional Shares, first
issued May 22, 1995, had a total investment return of 17.68% through the end
of the fiscal year.
Based on the strength and diversity of the Carolinas' economies, as
reflected in the Fund's portfolio, we remain optimistic that it will continue
to reward our shareholders.
The CarolinasFund is a modified index fund containing the 50 largest
market capitalization companies in North and South Carolina. Companies are
ranked, or indexed, quarterly according to market capitalization (share price
times number of shares outstanding). The amount invested in any company
depends on its percentage of the total market capitalization with no company
receiving more than 3% of total dollars available; The 15 biggest companies
are capped at 3%. As a result of this investment strategy, smaller companies
are "overweighted", taking advantage of their historical tendency to
outperform large cap stocks.
Thank you for your confidence in The CarolinasFund. I trust it will
continue to be merited.
Bob Thompson
President
<PAGE>
THE CAROLINASFUND
INVESTOR SHARES
Performance Update - $10,000 Investment
For the period from January 3, 1995 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
CarolinasFund-
Investor class fund S&P 500
03-Jan-95 9650 9650
28-Feb-95 10174 10244
31-May-95 10429 11212
31-Aug-95 11516 11810
30-Nov-95 11671 12724
29-Feb-96 12066 13461
THIS GRAPH DEPICTS THE PERFORMANCE OF THE CAROLINASFUND INVESTOR SHARES VERSUS
THE S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE CAROLINASFUND IS A
PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS NOT AVAILABLE FOR
INVESTMENT AND IS UNMANAGED. THE COMPARISON IS SHOWN FOR ILLUSTRATIVE
PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement One Year ended
of operations 2/29/96
through 2/29/96
Maximum 3.5% Sales Load 17.63% 14.40%
No Sales Load 21.32% 18.59%
(bullet) The graph assumes an initial $10,000 investment at January 3, 1995
($9,650 after maximum sales load of 3.5%). All dividends and
distributions are reinvested.
(bullet) At February 29, 1996, the Investor Shares of the Fund would have
grown to $12,066 - total investment return of 20.66% since
January 3, 1995. Without the deduction of the 3.5% maximum sales
load, the Investor Shares of the Fund would have grown to $12,530 -
total investment return of 25.03% since January 3, 1995. The sales
load may be reduced or eliminated for larger purchases.
(bullet) At February 29, 1996, a similar investment in the S&P 500 Index(after
maximum sales load of 3.5%) would have grown to $13,461 - total
investment return of 34.61% since January 3, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual
fund's share price and investment return will vary with market
conditions, and the principal value of shares, when redeemed,
may be worth more or less than the original cost. Average annual
returns are historical in nature and measure net investment income
and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - 96.86%
Beverages - 0.66%
Coca-Cola Bottling Company 400 $12,600
Building Materials - 2.22%
Martin Marietta Materials, Inc. 1,900 42,750
Commercial Services - 3.78%
(a) Quintiles Transnational Corporation 1,100 72,600
Computer Software & Services - 4.15%
(a) Medic Computer Systems, Inc. 500 33,750
(a) Policy Management Systems Corporation 900 46,012
79,762
Electrical Equipment - 4.37%
AVX Corporation 1,700 41,650
(a) Kemet Corporation 1,800 42,300
83,950
Electronics - Semiconductor - 0.31%
(a) Cree Research, Inc. 400 6,050
Entertainment - 1.57%
(a) Speedway Motorsports, Inc. 700 30,275
Financial Services - 0.37%
(a) World Acceptance Corporation 700 7,088
Financial - Banks, Commercial - 20.39%
CCB Financial Corporation 700 35,175
Centura Banks, Inc. 900 31,162
First Citizens BancShares, Inc. 400 23,800
First Union Corporation 1,200 72,600
NationsBank Corporation 1,000 73,750
Southern National Corporation 2,100 58,800
United Carolina Bancshares 1,050 26,775
Wachovia Corporation 1,500 69,750
391,812
Food - Processing - 0.75%
Lance, Inc. 900 14,400
Forest Products & Paper - 2.50%
Bowater, Inc. 1,300 48,100
</TABLE>
(Continued)
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Insurance - Life & Health - 5.49%
Jefferson-Pilot Corporation 1,350 $75,094
Liberty Corporation 900 30,487
105,581
Insurance - Property & Casualty - 3.11%
Integon Corporation 700 14,000
United Dominion Industries, Ltd. 1,900 45,838
59,838
Iron & Steel - 2.80%
Nucor Corporation 1,000 53,875
Manufactured Housing - 2.55%
Oakwood Homes Corp 1,100 49,087
Medical - Hospital Mgmt & Service - 0.14%
(a) Coastal Physician Group 200 2,600
Packaging & Containers - 3.04%
Sonoco Products Company 2,135 58,446
Real Estate - 0.42%
(a) Insignia Financial Group, Inc. 400 8,150
Real Estate Investment Trust - 1.56%
Highwoods Properties, Inc. 600 18,000
Summit Properties, Inc. 600 12,075
30,075
Restaurants & Food Service - 0.62%
(a) Ryan's Family Steak Houses, Inc. 1,800 11,925
Retail - General Merchandise - 2.36%
Family Dollar Stores, Inc. 3,300 45,375
Retail - Grocery - 3.89%
Food Lion, Inc. 9,700 53,956
Ruddick Corporation 1,900 20,900
74,856
Retail - Specialty Line - 4.49%
(a) Baby Superstore, Inc. 800 33,700
Lowe's Companies, Inc. 1,700 52,700
86,400
Telecommunications - 1.95%
(a) Vanguard Cellular Systems, Inc. 1,700 37,400
</TABLE>
(Continued)
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Telecommunications Equipment - 7.42%
(a) BroadBand Technologies, Inc. 100 $2,450
(a) Glenayre Technologies, Inc. 1,925 84,941
SCANA Corporation 2,000 55,000
142,391
Textiles - 7.31%
(a) Burlington Industries, Inc. 3,000 34,125
(a) Collins & Aikman Corporation 2,800 18,550
(a) Cone Mills Corporation 800 9,100
Guilford Mills, Inc. 500 10,500
Springs Industries, Inc. 400 17,300
Unifi, Inc. 2,100 50,925
140,500
Utilities - Electric - 6.72%
Carolina Power & Light Company 1,800 65,700
Duke Power Company 1,300 63,538
129,238
Utilities - Gas - 1.92%
Piedmont Natural Gas Company, Inc. 1,200 27,000
Public Service Company of North Carolina, Inc. 600 9,900
36,900
Total Common Stocks (Cost $1,660,731) 1,862,024
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
REPURCHASE AGREEMENT (b) - 3.19%
Wachovia Bank $61,370 61,370
5.23%, due March 1, 1996
(Cost $61,370)
Total Value of Investments (Cost $1,722,101) 100.05% 1,923,394
Liabilities In Excess of Other Assets (0.05)% (1,004)
Net Assets 100.00% $1,922,390
</TABLE>
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into February 29, 1996, with a
maturity value of $68,302,116 collateralized by $71,660,000 U.S.
Treasury Bills, due September 19, 1996. The aggregate market value
of the collateral at February 29, 1996 was $69,697,130. The Fund's
pro rata interest in the market value of the collateral at February
29, 1996 was $62,658. The Fund's pro rata interest in the joint
repurchase agreement collateral is taken into possession by the
Fund's custodian upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is
at least 102 percent of the sales price of the repurchase agreement.
(Continued)
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
(c) Aggregate cost for federal income tax purposes is $1,722,188.
Unrealized appreciation (depreciation) of investments for federal
income tax purposes is as follows:
Unrealized appreciation $249,160
Unrealized depreciation (47,954)
Net unrealized appreciation $201,206
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
ASSETS
Investments at value (cost $1,722,101) $1,923,394
Receivable for fund shares sold 9,650
Dividends receivable 4,050
Interest receivable 230
Other assets 257
Due from advisor (note 2) 1,821
Deferred organization expenses, net (note 4) 35,680
Total assets 1,975,082
LIABILITIES
Payable for investment purchases 36,411
Accrued professional fees 8,500
Accrued expenses 7,781
Total liabilities 52,692
NET ASSETS $1,922,390
NET ASSETS CONSIST OF:
Paid-in capital $1,720,832
Undistributed net realized gain on investments 265
Net unrealized appreciation on investments 201,293
$1,922,390
INVESTOR CLASS
Net asset value ($1,897,814 (division sign) 152,513
shares outstanding) $12.44
Maximum offering price per share (100 (division sign)
96.5 of $12.44) $12.89
INSTITUTIONAL CLASS
Net asset value and offering price per share ($24,576
(division sign) 1,955 shares outstanding) $12.57
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
STATEMENT OF OPERATIONS
Year ended February 29, 1996
INVESTMENT INCOME
Income
Dividends $22,903
Interest 2,476
Total income 25,379
Expenses
Fund accounting fees (note 2) 29,250
Professional fees 14,107
Investment advisory fees (note 2) 11,386
Custody fees 8,150
Distribution fees (note 3) 5,651
Fund administration fees (note 2) 4,120
Securities pricing fees 3,056
Registration and filing administration fees 1,422
Shareholder recordkeeping fees 1,208
Amortization of deferred organization expenses (note 4) 9,326
Trustee fees and meeting expenses 7,199
Shareholder servicing expenses 4,551
Registration and filing expenses 2,588
Printing expenses 1,614
Other operating expenses 3,493
Total expenses 107,121
Less:
Expense reimbursements (note 2) (69,248)
Investment advisory fees waived (note 2) (11,386)
Distribution fees waived (note 3) (1,860)
Net expenses 24,627
Net investment income 752
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 3,855
Increase in unrealized appreciation on investments 190,112
Net realized and unrealized gain on investments 193,967
Net increase in net assets resulting from operations $194,719
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period from
January 3, 1995
(commencement
Year ended of operations) to
February 29, February 28,
1996 1995
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income $752 $987
Net realized gain from investment transactions 3,855 0
Increase in unrealized appreciation on investments 190,112 11,181
Net increase in net assets resulting from operations 194,719 12,168
Distributions to shareholders from
Net investment income - Investor Class (1,987) 0
Net investment income - Institutional Class (1) 0
Net realized gain from investment transactions - Investor Class (3,336) 0
Net realized gain from investment transactions - Institutional Class (5) 0
Decrease in net assets resulting from distributions (5,329) 0
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 1,460,617 260,215
Total increase in net assets 1,650,007 272,383
NET ASSETS
Beginning of period 272,383 0
End of period $1,922,390 $272,383
</TABLE>
(a) A summary of capital share activity follows:
<TABLE>
<CAPTION>
INVESTOR CLASS INSTITUTIONAL CLASS
Year ended For the period from For the period from May 22, 1995
February 29, 1996 January 3, 1995 to (commencement of operations)
February 28, 1995 to February 29, 1996
Shares Value Shares Value Shares Value
<S> <C> <C> <C> <C> <C> <C>
Shares sold 135,220 $1,540,284 25,836 $260,215 1,954 $23,186
Shares issued for reinvestment
of distributions 329 3,765 0 0 1 6
135,549 1,544,049 25,836 260,215 1,955 23,192
Shares redeemed (8,872) (106,624) 0 0 0 0
Net increase 126,677 $1,437,425 25,836 $260,215 1,955 $23,192
</TABLE>
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
INVESTOR INVESTOR INSTITUTIONAL
CLASS CLASS CLASS
For the For the
period from period from
January 3, 1995 May 22, 1995
(commencement (commencement
Year ended of operations) to of operations) to
February 29, February 28, February 29,
1996 1995 1996
<S> <C> <C> <C>
Net asset value, beginning of period $10.54 $10.00 $10.72
Income from investment operations
Net investment income 0.01(a) 0.04 0.02
Net realized and unrealized gain on investments 1.95 0.50 1.88
Total from investment operations 1.96 0.54 1.90
Distributions to shareholders from
Net investment income (0.03) 0.00 (0.02)
Net realized gain from investment transactions (0.03) 0.00 (0.03)
Total distributions (0.06) 0.00 (0.05)
Net asset value, end of period $12.44 $10.54 $12.57
Total return 18.59%(b) 5.40%(d) 17.68%(c)
Ratios/supplemental data
Net assets, end of period $1,897,814 $272,383 $24,576
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 9.45% 37.10%(e) 8.40%(e)
After expense reimbursements and waived fees 2.17% 2.21%(e) 1.69%(e)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (7.21)% (32.27)%(e) (6.07)%(e)
After expense reimbursements and waived fees 0.06% 2.62%(e) 0.64%(e)
Portfolio turnover rate 16.35% 0.00% 16.35%
</TABLE>
(a) Calculation based upon average shares outstanding for the year.
(b) Total return does not reflect payment of a sales charge.
(c) Annualized total return is 23.44%.
(d) Total return does not reflect payment of a sales charge. Annualized
total return was 35.20%
(e) Annualized.
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The CarolinasFund (the "Fund") is a non-diversified series of shares of
beneficial interest of The Nottingham Investment Trust (the "Trust"), formerly
known as Amelia Earhart Eagle Investments. The Trust, an open-end investment
company, was organized on August 12, 1992 as a Massachusetts Business Trust
and is registered under the Investment Company Act of 1940. The Fund began
operations on January 3, 1995. The Fund is currently authorized to issue two
classes of shares - Investor shares and Institutional shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge structures
and ongoing distribution fees. Income, expenses (other than distribution fees,
which are attributable to each class based upon a set percentage of its net
assets), and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets. Investor
shares purchased are subject to a maximum sales charge of 3.50 percent. Both
classes have equal voting privileges, except where otherwise required by law
or when the Board of Trustees determines that the matter to be voted on
affects only the interests of the shareholders of a particular class. The
following is a summary of significant accounting policies followed by the
Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m. New York
time on the day of valuation. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. The Fund may
make a supplemental distribution subsequent to the end of its
fiscal year ended February 29, 1996.
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from those estimates.
(Continued)
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Morehead Capital Advisors
LLC. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its investment
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of securities. As
compensation for its services, the Advisor receives a fee at the annual rate
of 1.00% of the Fund's average daily net assets.
The Advisor has voluntarily agreed to reimburse expenses of the Fund if
the Fund's total expenses, exclusive of interest, taxes, brokerage
commissions, sales charges, and extraordinary expenses, exceed 2.25% of the
average daily value of Investor shares outstanding for any fiscal year, or
exceed 1.75% of the average daily value of Institutional shares outstanding
for any fiscal year, or the limits set by applicable state securities laws or
other applicable laws if such limits are lower.
Currently, the Fund does not offer its shares for sale in states which
require limitations to be placed on its expenses. The Advisor has voluntarily
waived its fee amounting to $11,386 ($0.12 per share) and has agreed to
reimburse a portion of the Fund's operating expenses for the fiscal year ended
February 29, 1996. The total fees waived and expenses to be reimbursed
amounted to $80,634. There can be no assurance that the foregoing voluntary
fee waiver or expense reimbursements will continue.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for the
overall management and day-to-day operations of the Fund pursuant to an
accounting and administrative agreement with the Trust. As compensation for
its services, the Administrator receives a fee at the annual rate of 0.20% of
the Fund's first $50 million of average daily net assets, 0.175% on the next
$50 million of average daily net assets, and 0.15% on average daily net assets
over $100 million. The Administrator also receives a monthly fee of $2,750 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The contract with the Administrator provides that the aggregate fees
for the aforementioned administration, accounting and recordkeeping services
shall not be less than $3,000 per month. The Administrator also charges the
Fund for certain expenses involved with the daily valuation of portfolio
securities.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any sales
charges imposed on purchases of shares and re-allocates a portion of such
charges to dealers through whom the sale was made, if any. For the year ended
February 29, 1996, the Distributor retained sales charges in the amount of
$5,198.
Certain Trustees and officers of the Trust are also officers or directors
of the Advisor or the Administrator.
(Continued)
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 3 - DISTRIBUTION FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a distribution plan with respect to Investor shares
pursuant to Rule 12b-1 of the Act (the "Plan"). Rule 12b-1 regulates the
manner in which a regulated investment company may assume costs of
distributing and promoting the sales of its shares.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.50% per annum of the Fund's average daily net asset value of Investor
shares, for each year elapsed subsequent to adoption of the Plan for payment
to the Distributor for items such as advertising expenses, selling expenses,
commissions, travel, or other expenses reasonably intended to result in sales
of Investor shares. The Fund incurred $3,791 of such expenses, net of a fee
waiver, under the Plan for the year ended February 29, 1996.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization and
the registration of its shares have been assumed by the Fund. The organization
expenses are being amortized over a period of sixty months. Investors
purchasing shares of the Fund bear such expenses only as they are amortized
against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
of the Fund outstanding at the time of the redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases of investments other than short-term investments aggregated
$1,605,570 during the year ended February 29, 1996. Other than short-term
investments, investments sold aggregated $170,800 during the year ended
February 29, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
All distributions from net realized gain from investment transactions for
the year ended February 29, 1996 represent short-term capital gain
distributions, and are taxable as ordinary income to shareholders for federal
income tax purposes. Shareholders should consult a tax advisor on how to
report distributions for state and local income tax purposes.
<PAGE>
(KPMG Peat Marwick LLP logo)
Independent Auditors' Report
To the Board of Trustees and Shareholders
The Nottingham Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The CarolinasFund (the "Fund"), a
series of The Nottingham Investment Trust, as of February 29, 1996, the
related statement of operations for the year then ended, and the statements of
changes in net assets and financial highlights for the year ended February 29,
1996 and the period from January 3, 1995 (commencement of operations) to
February 28, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the The CarolinasFund as of February 29, 1996, the results of its
operations for the year then ended, and the changes in its net assets and
financial highlights for the year ended February 29, 1996 and the period from
January 3, 1995 (commencement of operations) to February 28, 1995 in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
April 5, 1996
April 30, 1996
Dear CarolinasFund Shareholder:
Your Fund ended the fiscal year on February 29, 1996 with an annualized
total return of 18.59% in Investor Class Shares. Institutional Shares, first
issued May 22, 1995, had a total investment return of 17.68% through the end
of the fiscal year.
Based on the strength and diversity of the Carolinas' economies, as
reflected in the Fund's portfolio, we remain optimistic that it will continue
to reward our shareholders.
The CarolinasFund is a modified index fund containing the 50 largest
market capitalization companies in North and South Carolina. Companies are
ranked, or indexed, quarterly according to market capitalization (share price
times number of shares outstanding). The amount invested in any company
depends on its percentage of the total market capitalization with no company
receiving more than 3% of total dollars available; The 15 biggest companies
are capped at 3%. As a result of this investment strategy, smaller companies
are "overweighted", taking advantage of their historical tendency to
outperform large cap stocks.
Thank you for your confidence in The CarolinasFund. I trust it will
continue to be merited.
Bob Thompson
President
<PAGE>
THE CAROLINASFUND
INSTITUTIONAL SHARES
Performance Update - $10,000 Investment
For the period from May 22, 1995 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
CarolinasFund -
Date Intstitutional shares S&P 500 Index
22-May-95 10000 10000
31-May-95 10064 10186
31-Aug-95 11125 10730
30-Nov-95 11284 11561
29-Feb-96 11768 12230
THIS GRAPH DEPICTS THE PERFORMANCE OF THE CAROLINASFUND INSTITUTIONAL SHARES
VERSUS THE S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE CAROLINASFUND IS A
PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS NOT AVAILABLE FOR
INVESTMENT AND IS UNMANAGED. THE COMPARISON IS SHOWN FOR ILLUSTRATIVE
PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement of operations through 2/29/96 23.44%
(bullet) The graph assumes an initial $10,000 investment at May 22, 1995.
All dividends and distributions are reinvested.
(bullet) At February 29, 1996, the Institutional Shares of the Fund would have
grown to $11,768 - total investment return of 17.68% since
May 22, 1995.
(bullet) At February 29, 1996, a similar investment in the S&P 500 Index would
have grown to $12,230 - total investment return of 22.30% since
May 22, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions,
and the principal value of shares, when redeemed, may be worth more or
less than the original cost. Average annual returns are historical in
nature and measure net investment income and capital gain or loss from
portfolio investments assuming reinvestments of dividends.
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - 96.86%
Beverages - 0.66%
Coca-Cola Bottling Company 400 $12,600
Building Materials - 2.22%
Martin Marietta Materials, Inc. 1,900 42,750
Commercial Services - 3.78%
(a) Quintiles Transnational Corporation 1,100 72,600
Computer Software & Services - 4.15%
(a) Medic Computer Systems, Inc. 500 33,750
(a) Policy Management Systems Corporation 900 46,012
79,762
Electrical Equipment - 4.37%
AVX Corporation 1,700 41,650
(a) Kemet Corporation 1,800 42,300
83,950
Electronics - Semiconductor - 0.31%
(a) Cree Research, Inc. 400 6,050
Entertainment - 1.57%
(a) Speedway Motorsports, Inc. 700 30,275
Financial Services - 0.37%
(a) World Acceptance Corporation 700 7,088
Financial - Banks, Commercial - 20.39%
CCB Financial Corporation 700 35,175
Centura Banks, Inc. 900 31,162
First Citizens BancShares, Inc. 400 23,800
First Union Corporation 1,200 72,600
NationsBank Corporation 1,000 73,750
Southern National Corporation 2,100 58,800
United Carolina Bancshares 1,050 26,775
Wachovia Corporation 1,500 69,750
391,812
Food - Processing - 0.75%
Lance, Inc. 900 14,400
Forest Products & Paper - 2.50%
Bowater, Inc. 1,300 48,100
</TABLE>
(Continued)
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Insurance - Life & Health - 5.49%
Jefferson-Pilot Corporation 1,350 $75,094
Liberty Corporation 900 30,487
105,581
Insurance - Property & Casualty - 3.11%
Integon Corporation 700 14,000
United Dominion Industries, Ltd. 1,900 45,838
59,838
Iron & Steel - 2.80%
Nucor Corporation 1,000 53,875
Manufactured Housing - 2.55%
Oakwood Homes Corp 1,100 49,087
Medical - Hospital Mgmt & Service - 0.14%
(a) Coastal Physician Group 200 2,600
Packaging & Containers - 3.04%
Sonoco Products Company 2,135 58,446
Real Estate - 0.42%
(a) Insignia Financial Group, Inc. 400 8,150
Real Estate Investment Trust - 1.56%
Highwoods Properties, Inc. 600 18,000
Summit Properties, Inc. 600 12,075
30,075
Restaurants & Food Service - 0.62%
(a) Ryan's Family Steak Houses, Inc. 1,800 11,925
Retail - General Merchandise - 2.36%
Family Dollar Stores, Inc. 3,300 45,375
Retail - Grocery - 3.89%
Food Lion, Inc. 9,700 53,956
Ruddick Corporation 1,900 20,900
74,856
Retail - Specialty Line - 4.49%
(a) Baby Superstore, Inc. 800 33,700
Lowe's Companies, Inc. 1,700 52,700
86,400
Telecommunications - 1.95%
(a) Vanguard Cellular Systems, Inc. 1,700 37,400
</TABLE>
(Continued)
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS (Continued)
Telecommunications Equipment - 7.42%
(a) BroadBand Technologies, Inc. 100 $2,450
(a) Glenayre Technologies, Inc. 1,925 84,941
SCANA Corporation 2,000 55,000
142,391
Textiles - 7.31%
(a) Burlington Industries, Inc. 3,000 34,125
(a) Collins & Aikman Corporation 2,800 18,550
(a) Cone Mills Corporation 800 9,100
Guilford Mills, Inc. 500 10,500
Springs Industries, Inc. 400 17,300
Unifi, Inc. 2,100 50,925
140,500
Utilities - Electric - 6.72%
Carolina Power & Light Company 1,800 65,700
Duke Power Company 1,300 63,538
129,238
Utilities - Gas - 1.92%
Piedmont Natural Gas Company, Inc. 1,200 27,000
Public Service Company of North Carolina, Inc. 600 9,900
36,900
Total Common Stocks (Cost $1,660,731) 1,862,024
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
REPURCHASE AGREEMENT (b) - 3.19%
Wachovia Bank $61,370 61,370
5.23%, due March 1, 1996
(Cost $61,370)
Total Value of Investments (Cost $1,722,101) 100.05% 1,923,394
Liabilities In Excess of Other Assets (0.05)% (1,004)
Net Assets 100.00% $1,922,390
<FN>
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into February 29, 1996, with a
maturity value of $68,302,116 collateralized by $71,660,000 U.S.
Treasury Bills, due September 19, 1996. The aggregate market value
of the collateral at February 29, 1996 was $69,697,130. The Fund's
pro rata interest in the market value of the collateral at February
29, 1996 was $62,658. The Fund's pro rata interest in the joint
repurchase agreement collateral is taken into possession by the
Fund's custodian upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is
at least 102 percent of the sales price of the repurchase agreement.
(Continued)
</FN>
</TABLE>
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 29, 1996
(c) Aggregate cost for federal income tax purposes is $1,722,188.
Unrealized appreciation (depreciation) of investments for federal
income tax purposes is as follows:
Unrealized appreciation $249,160
Unrealized depreciation (47,954)
Net unrealized appreciation $201,206
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
ASSETS
Investments at value (cost $1,722,101) $1,923,394
Receivable for fund shares sold 9,650
Dividends receivable 4,050
Interest receivable 230
Other assets 257
Due from advisor (note 2) 1,821
Deferred organization expenses, net (note 4) 35,680
Total assets 1,975,082
LIABILITIES
Payable for investment purchases 36,411
Accrued professional fees 8,500
Accrued expenses 7,781
Total liabilities 52,692
NET ASSETS $1,922,390
NET ASSETS CONSIST OF:
Paid-in capital $1,720,832
Undistributed net realized gain on investments 265
Net unrealized appreciation on investments 201,293
$1,922,390
INVESTOR CLASS
Net asset value ($1,897,814 (division sign) 152,513
shares outstanding) $12.44
Maximum offering price per share (100 (division sign)
96.5 of $12.44) $12.89
INSTITUTIONAL CLASS
Net asset value and offering price per share ($24,576
(division sign) 1,955 shares outstanding) $12.57
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
STATEMENT OF OPERATIONS
Year ended February 29, 1996
INVESTMENT INCOME
Income
Dividends $22,903
Interest 2,476
Total income 25,379
Expenses
Fund accounting fees (note 2) 29,250
Professional fees 14,107
Investment advisory fees (note 2) 11,386
Custody fees 8,150
Distribution fees (note 3) 5,651
Fund administration fees (note 2) 4,120
Securities pricing fees 3,056
Registration and filing administration fees 1,422
Shareholder recordkeeping fees 1,208
Amortization of deferred organization expenses (note 4) 9,326
Trustee fees and meeting expenses 7,199
Shareholder servicing expenses 4,551
Registration and filing expenses 2,588
Printing expenses 1,614
Other operating expenses 3,493
Total expenses 107,121
Less:
Expense reimbursements (note 2) (69,248)
Investment advisory fees waived (note 2) (11,386)
Distribution fees waived (note 3) (1,860)
Net expenses 24,627
Net investment income 752
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 3,855
Increase in unrealized appreciation on investments 190,112
Net realized and unrealized gain on investments 193,967
Net increase in net assets resulting from operations $194,719
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period from
January 3, 1995
(commencement
Year ended of operations) to
February 29, February 28,
1996 1995
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income $752 $987
Net realized gain from investment transactions 3,855 0
Increase in unrealized appreciation on investments 190,112 11,181
Net increase in net assets resulting from operations 194,719 12,168
Distributions to shareholders from
Net investment income - Investor Class (1,987) 0
Net investment income - Institutional Class (1) 0
Net realized gain from investment transactions - Investor Class (3,336) 0
Net realized gain from investment transactions - Institutional Class (5) 0
Decrease in net assets resulting from distributions (5,329) 0
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 1,460,617 260,215
Total increase in net assets 1,650,007 272,383
NET ASSETS
Beginning of period 272,383 0
End of period $1,922,390 $272,383
<FN>
(a) A summary of capital share activity follows:
</FN>
</TABLE>
<TABLE>
<CAPTION>
INVESTOR CLASS INSTITUTIONAL CLASS
Year ended For the period from For the period from May 22, 1995
February 29, 1996 January 3, 1995 to (commencement of operations)
February 28, 1995 to February 29, 1996
Shares Value Shares Value Shares Value
<S> <C> <C> <C> <C> <C>
Shares sold 135,220 $1,540,284 25,836 $260,215 1,954 $23,186
Shares issued for reinvestment
of distributions 329 3,765 0 0 1 6
135,549 1,544,049 25,836 260,215 1,955 23,192
Shares redeemed (8,872) (106,624) 0 0 0 0
Net increase 126,677 $1,437,425 25,836 $260,215 1,955 $23,192
</TABLE>
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
INVESTOR INVESTOR INSTITUTIONAL
CLASS CLASS CLASS
For the For the
period from period from
January 3, 1995 May 22, 1995
(commencement (commencement
Year ended of operations) to of operations) to
February 29, February 28, February 29,
1996 1995 1996
<S> <C> <C> <C>
Net asset value, beginning of period $10.54 $10.00 $10.72
Income from investment operations
Net investment income 0.01(a) 0.04 0.02
Net realized and unrealized gain on investments 1.95 0.50 1.88
Total from investment operations 1.96 0.54 1.90
Distributions to shareholders from
Net investment income (0.03) 0.00 (0.02)
Net realized gain from investment transactions (0.03) 0.00 (0.03)
Total distributions (0.06) 0.00 (0.05)
Net asset value, end of period $12.44 $10.54 $12.57
Total return 18.59%(b) 5.40%(d) 17.68%(c)
Ratios/supplemental data
Net assets, end of period $1,897,814 $272,383 $24,576
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 9.45% 37.10%(e) 8.40%(e)
After expense reimbursements and waived fees 2.17% 2.21%(e) 1.69%(e)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (7.21)% (32.27)%(e) (6.07)%(e)
After expense reimbursements and waived fees 0.06% 2.62%(e) 0.64%(e)
Portfolio turnover rate 16.35% 0.00% 16.35%
<FN>
(a) Calculation based upon average shares outstanding for the year.
(b) Total return does not reflect payment of a sales charge.
(c) Annualized total return is 23.44%.
(d) Total return does not reflect payment of a sales charge. Annualized
total return was 35.20%
(e) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The CarolinasFund (the "Fund") is a non-diversified series of shares of
beneficial interest of The Nottingham Investment Trust (the "Trust"), formerly
known as Amelia Earhart Eagle Investments. The Trust, an open-end investment
company, was organized on August 12, 1992 as a Massachusetts Business Trust
and is registered under the Investment Company Act of 1940. The Fund began
operations on January 3, 1995. The Fund is currently authorized to issue two
classes of shares - Investor shares and Institutional shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge structures
and ongoing distribution fees. Income, expenses (other than distribution fees,
which are attributable to each class based upon a set percentage of its net
assets), and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets. Investor
shares purchased are subject to a maximum sales charge of 3.50 percent. Both
classes have equal voting privileges, except where otherwise required by law
or when the Board of Trustees determines that the matter to be voted on
affects only the interests of the shareholders of a particular class. The
following is a summary of significant accounting policies followed by the
Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m. New York
time on the day of valuation. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. The Fund may
make a supplemental distribution subsequent to the end of its
fiscal year ended February 29, 1996.
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from those estimates.
(Continued)
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Morehead Capital Advisors
LLC. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its investment
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies, and the purchase and sale of securities. As
compensation for its services, the Advisor receives a fee at the annual rate
of 1.00% of the Fund's average daily net assets.
The Advisor has voluntarily agreed to reimburse expenses of the Fund if
the Fund's total expenses, exclusive of interest, taxes, brokerage
commissions, sales charges, and extraordinary expenses, exceed 2.25% of the
average daily value of Investor shares outstanding for any fiscal year, or
exceed 1.75% of the average daily value of Institutional shares outstanding
for any fiscal year, or the limits set by applicable state securities laws or
other applicable laws if such limits are lower.
Currently, the Fund does not offer its shares for sale in states which
require limitations to be placed on its expenses. The Advisor has voluntarily
waived its fee amounting to $11,386 ($0.12 per share) and has agreed to
reimburse a portion of the Fund's operating expenses for the fiscal year ended
February 29, 1996. The total fees waived and expenses to be reimbursed
amounted to $80,634. There can be no assurance that the foregoing voluntary
fee waiver or expense reimbursements will continue.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for the
overall management and day-to-day operations of the Fund pursuant to an
accounting and administrative agreement with the Trust. As compensation for
its services, the Administrator receives a fee at the annual rate of 0.20% of
the Fund's first $50 million of average daily net assets, 0.175% on the next
$50 million of average daily net assets, and 0.15% on average daily net assets
over $100 million. The Administrator also receives a monthly fee of $2,750 for
accounting and recordkeeping services. Additionally, the Administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The contract with the Administrator provides that the aggregate fees
for the aforementioned administration, accounting and recordkeeping services
shall not be less than $3,000 per month. The Administrator also charges the
Fund for certain expenses involved with the daily valuation of portfolio
securities.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any sales
charges imposed on purchases of shares and re-allocates a portion of such
charges to dealers through whom the sale was made, if any. For the year ended
February 29, 1996, the Distributor retained sales charges in the amount of
$5,198.
Certain Trustees and officers of the Trust are also officers or directors
of the Advisor or the Administrator.
(Continued)
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 3 - DISTRIBUTION FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a distribution plan with respect to Investor shares
pursuant to Rule 12b-1 of the Act (the "Plan"). Rule 12b-1 regulates the
manner in which a regulated investment company may assume costs of
distributing and promoting the sales of its shares.
The Plan provides that the Fund may incur certain costs, which may not
exceed 0.50% per annum of the Fund's average daily net asset value of Investor
shares, for each year elapsed subsequent to adoption of the Plan for payment
to the Distributor for items such as advertising expenses, selling expenses,
commissions, travel, or other expenses reasonably intended to result in sales
of Investor shares. The Fund incurred $3,791 of such expenses, net of a fee
waiver, under the Plan for the year ended February 29, 1996.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization and
the registration of its shares have been assumed by the Fund. The organization
expenses are being amortized over a period of sixty months. Investors
purchasing shares of the Fund bear such expenses only as they are amortized
against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
of the Fund outstanding at the time of the redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases of investments other than short-term investments aggregated
$1,605,570 during the year ended February 29, 1996. Other than short-term
investments, investments sold aggregated $170,800 during the year ended
February 29, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
All distributions from net realized gain from investment transactions for
the year ended February 29, 1996 represent short-term capital gain
distributions, and are taxable as ordinary income to shareholders for federal
income tax purposes. Shareholders should consult a tax advisor on how to
report distributions for state and local income tax purposes.
<PAGE>
(KPMG Peat Marwick LLP logo)
Independent Auditors' Report
To the Board of Trustees and Shareholders
The Nottingham Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The CarolinasFund (the "Fund"), a
series of The Nottingham Investment Trust, as of February 29, 1996, the
related statement of operations for the year then ended, and the statements of
changes in net assets and financial highlights for the year ended February 29,
1996 and the period from January 3, 1995 (commencement of operations) to
February 28, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the The CarolinasFund as of February 29, 1996, the results of its
operations for the year then ended, and the changes in its net assets and
financial highlights for the year ended February 29, 1996 and the period from
January 3, 1995 (commencement of operations) to February 28, 1995 in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
April 5, 1996
STATEMENT OF ADDITIONAL INFORMATION
LEGACY EQUITY FUND
June 20, 1996
A Series of
MAPLEWOOD INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-580-4799
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES......................................... 2
INVESTMENT LIMITATIONS.....................................................4
TRUSTEES AND OFFICERS......................................................7
INVESTMENT ADVISOR AND SUB-ADVISOR.........................................9
ADMINISTRATOR.............................................................10
DISTRIBUTOR...............................................................11
OTHER SERVICES............................................................12
BROKERAGE.................................................................12
DISTRIBUTION PLAN UNDER RULE 12b-1........................................15
SPECIAL SHAREHOLDER SERVICES .............................................16
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................17
HOW PUBLIC OFFERING PRICE IS DETERMINED...................................18
ADDITIONAL TAX INFORMATION................................................18
DESCRIPTION OF THE TRUST..................................................21
CALCULATION OF PERFORMANCE DATA...........................................22
APPENDIX A - DESCRIPTION OF RATINGS.......................................26
FINANCIAL STATEMENTS AND REPORTS..........................................31
This Statement of Additional Information ("SAI") is not a prospectus and
should be read in conjunction with the Prospectus dated June 20, 1996 for the
Legacy Equity Fund (the "Fund"). Copies of the Fund's Prospectus may be
obtained at no charge from the Fund, at the address and phone number shown
above.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used but not defined have the same meaning as in the
Prospectus. A description of the various ratings used by the nationally
recognized statistical rating organizations ("NRSROs") for securities in which
the Fund may invest is included in this SAI as Appendix A.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve System or a registered Government Securities
dealer) and must deliver the security (and/or securities substituted for them
under the repurchase agreement) to the vendor on an agreed upon date in the
future. Such securities, including any securities so substituted, are referred
to as the "Repurchase Securities." The repurchase price exceeds the purchase
price by an amount which reflects an agreed upon market interest rate
effective for the period of time during which the repurchase agreement is in
effect.
The majority of these transactions run day to day and the delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Fund's risk is limited to the ability of the vendor to pay the
agreed upon sum upon the delivery date; in the event of bankruptcy or other
default by the vendor, there may be possible delays and expenses in
liquidating the instrument purchased, decline in its value and loss of
interest. These risks are minimized when the Fund holds a perfected security
interest in the Repurchase Securities and can therefore sell the instrument
promptly. Under guidelines issued by the Trustees, the Advisor will carefully
consider the creditworthiness during the term of the repurchase agreement.
Repurchase agreements are considered as loans collateralized by the Repurchase
Securities, such agreements being defined as "loans" under the Investment
Company Act of 1940 (the "1940 Act"). The return on such "collateral" may be
more or less than that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the "collateral" is
at all times as least equal to the value of the loan, including the accrued
interest earned thereon. All Repurchase Securities will be held by the Fund's
custodian either directly or through a securities depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market
instruments may include U.S. Government Securities or corporate
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<PAGE>
debt securities (including those subject to repurchase agreements) as
described herein, provided that they mature in thirteen months or less from
the date of acquisition and are otherwise eligible for purchase by the Fund.
Money market instruments also may include Bankers' Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper
and Variable Amount Demand Master Notes ("Master Notes"). BANKERS' ACCEPTANCES
are time drafts drawn on and "accepted" by a bank, are the customary means of
effecting payment for merchandise sold in import-export transactions and are a
source of financing used extensively in international trade. When a bank
"accepts" such a time draft, it assumes liability for its payment. When the
Fund acquires a Bankers' Acceptance, the bank which "accepted" the time draft
is liable for payment of interest and principal when due. The Bankers'
Acceptance, therefore, carries the full faith and credit of such bank. A
CERTIFICATE OF DEPOSIT ("CD") is an unsecured interest-bearing debt obligation
of a bank. COMMERCIAL PAPER is an unsecured, short term debt obligation of a
bank, corporation or other borrower. Commercial Paper maturity generally
ranges from two to 270 days and is usually sold on a discounted basis rather
than as an interest-bearing instrument. The Fund will invest in Commercial
Paper only if it is rated in one of the two highest rating categories by any
NRSRO or, if not rated, is of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. MASTER NOTES
are unsecured obligations which are redeemable upon demand of the holder and
which permit the investment of fluctuating amounts at varying rates of
interest. Master Notes are acquired by the Fund only through the Master Note
program of the Fund's custodian, acting as administrator thereof. The Advisor
will monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of
in the ordinary course of business within seven days at approximately the
prices at which they are valued. Under the supervision of the Board of
Trustees, the Advisor determines the liquidity of the Fund's investments and,
through reports from the Advisor, the Board monitors investments in illiquid
instruments. In determining the liquidity of the Fund's investments, the
Advisor may consider various factors including (1) the frequency of trades and
quotations, (2) the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4) the nature of the
security (including any demand or tender features) and (5) the nature of the
marketplace for trades (including the ability to assign or offset the Fund's
rights and obligations relating to the investment). Investments currently
considered by the Fund to be illiquid include repurchase agreements not
entitling the holder
- 3 -
<PAGE>
to payment of principal and interest within seven days and restricted
securities. If through a change in values, net assets or other circumstances,
the Fund were in a position where more than 10% of its net assets were
invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.
RESTRICTED SECURITIES. Within its limitation on investments in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time the Fund may be
permitted to sell a security under an effective registration statement. If
during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations,
which cannot be changed without approval of the holders of a majority of the
outstanding voting shares of the Fund. When used in the Prospectus or this
SAI, a "majority" of shareholders means the vote of the lesser of (1) 67% of
the shares of the Trust (or the Fund) present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
(2) more than 50% of the outstanding shares of the Trust (or the Fund). Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund MAY NOT:
(1) Issue senior securities, borrow money, or pledge its assets,
except that it may borrow from banks as a temporary measure
(a) for extraordinary or emergency purposes, in amounts not
exceeding 5% of its total assets or (b) in order to meet
redemption requests in amounts not exceeding 15% of its
total assets. The Fund will not make any investments if
borrowing exceeds 5% of its total assets until such time as
total borrowing represents less than 5% of Fund assets.
(2) With respect to 75% of its assets, invest more that 5% of the value
of its total assets in the securities of any one issuer or purchase
more than 10% of the outstanding voting securities of any class of
securities of any one issuer (except that securities of the U.S.
Government, its agencies and instrumentalities are not subject to
this limitation);
- 4 -
<PAGE>
(3) Invest 25% or more of the value of its total assets in any
one industry or group of industries (except that securities
of the U.S. Government, its agencies and instrumentalities
are not subject to this limitation);
(4) Invest for the purpose of exercising control or management
of another issuer;
(5) Purchase or sell commodities or commodities contracts, real
estate, (including limited partnership interests, but
excluding readily marketable securities secured by real
estate or interests therein, readily marketable interests
in real estate investment trusts, or readily marketable
securities issued by companies that invest in real estate or
interests therein) or interests in oil, gas or other mineral
exploration or development programs or leases (although it
may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases).
(6) Underwrite securities issued by others, except to the extent that the
disposition of portfolio securities, either directly from an issuer or
from an underwriter for an issuer may be deemed to be an underwriter
under the federal securities laws.
(7) Invest in warrants, valued at the lower of cost or market,
exceeding more than 5% of the value of the Fund's net
assets. Included within this amount, but not to exceed 2%
of the value of the Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchange;
warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
(8) Participate on a joint or joint and several basis in any
trading account in securities;
(9) Invest more than 10% of its assets in the securities of one
or more investment companies; or
(10) Make loans of money or securities, except that the Fund may (i) invest
in repurchase agreements and commercial paper; (ii) purchase a portion
of an issue of publicly distributed bonds, debentures or other debt
securities; and (iii) acquire private issues of debt securities
subject to the limitations on investments in illiquid securities.
The following investment limitations are not fundamental, and may be
changed without shareholder approval. As a matter of nonfundamental policy,
the Fund MAY NOT:
- 5 -
<PAGE>
(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be
invested in such securities;
(2) Invest more than 10% of its net assets in illiquid
securities. For this purpose, illiquid securities include,
among others (a) securities for which no readily available
market exists or which have legal or contractual
restrictions on resale, (b) fixed time deposits that are
subject to withdrawal penalties and have maturities of more
than seven days, and (c) repurchase agreements not
terminable within seven days;
(3) Invest in the securities of any issuer if those officers or Trustees of
the Trust and those officers and directors of the Advisor who
individually own more than 1/2 of 1% of the outstanding securities of
such issuer together own more than 5% of such issuer's securities;
(4) Write, purchase, or sell puts, calls, straddles, spreads, or
combinations thereof or futures contracts or related
options;
(5) Make short sales of securities or maintain a short position,
except short sales "against the box." A short sale is made
by selling a security the Fund does not own. A short sale
is "against the box" to the extent that the Fund
contemporaneously owns or has the right to obtain at no
additional cost securities identical to those sold short.
(While the Fund has reserved the right to make short sales
"against the box", the Advisor has no present intention of
engaging in such transactions at this time or during the
coming year); or
(6) Purchase any securities on margin except in connection with
such short-term credits as may be necessary for the
clearance of transactions.
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of assets, it is intended that if the percentage limitation
is met at the time the investment is made, a later change in percentage
resulting from changing total or net asset values will not be considered a
violation of such policy.
- 6 -
<PAGE>
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Trust, their
present position with the Trust or Fund, age, principal occupations during the
past 5 years and their aggregate compensation from the Trust for the fiscal
year ended February 29, 1996:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- - ------------------ -------------------- --------------
<C> <C> <C>
John P. Boone (age 64) President None
Trustee* Legacy Advisors, Inc. and
President Legacy Global Advisors, Inc.
Legacy Equity Fund Dallas, Texas
2911 Turtle Creek Boulevard Executive Vice President
Suite 400 Forum Securities, Inc.
Dallas, Texas 75219 Dallas, Texas
Jack E. Brinson (age 64) President, Brinson Investment Co. $6,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886 Trustee, Williamsburg Investment Trust
Cincinnati, Ohio
O. James Peterson III (age 59) Chief Financial Officer $6,000
Trustee Pimlico Race Course
Five Bellona Arsenal Laurel, Maryland; previously
Midlothian, Virginia Senior Vice President, Chief Financial Officer
Dominion Resources, Inc.
Richmond, Virginia
Christopher J. Smith (age 29) President None
Trustee* ObjectTiger Ltd.
867 Thorn Tree Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel
Seligman & Associates
Director, Amelia Earhart
Capital Management, Inc.
Southfield, Michigan
Ashby M. Foote III (age 44) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
One Jackson Place, Suite 1070
Jackson, Mississippi 39201
- 7 -
<PAGE>
Jasen M. Snelling (age 32 ) President
President CityFund Advisory, Inc; previously
Regional Opportunity Fund: Registered Representative
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 Registered Representative
Cincinnati, Ohio 45254 Provident Securities Investment Co.
Cincinnati, Ohio
Robert B. Thompson (age 49) Chief Executive Officer
President Morehead Capital Advisors LLC
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 47) President
President Amelia Earhart Capital Management, Inc.
Amelia Earhart: Eagle Equity Fund Southfield, Michigan
One Towne Square President
Suite 1913 Jill H. Travis, CFP
Southfield, Michigan 48076 Shelby Township, Michigan; previously
Senior Vice President
Huntington Banks, Troy, Michigan
Robert G. Dorsey (age 39) President and Treasurer, MGF Service Corp.;
Vice President Treasurer, Midwest Group Financial Services,
312 Walnut Street, 21st Floor Inc.; Treasurer and Director, Leshner Financial,
Cincinnati, Ohio 45202 Inc.;
John F. Splain (age 39) Secretary and General Counsel,
Secretary MGF Service Corp., Midwest
312 Walnut Street, 21st Floor Group Financial Services, Inc. and
Cincinnati, Ohio 45202 Leshner Financial, Inc.; Secretary
Midwest Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust
Mark J. Seger (age 34) Vice President, MGF Service Corp.
Treasurer and Leshner Financial, Inc.; Treasurer,
312 Walnut Street, 21st Floor Midwest Trust, Midwest Group
Cincinnati, Ohio 45202 Tax Free Trust and Midwest Strategic Trust
- - -------------------------------------
<FN>
* Indicates that Trustee is an "interested person" for purposes of the
1940 Act because of his position with one of the investment advisors to the
Trust.
</FN>
</TABLE>
The officers of the Trust do not receive compensation from the
Trust for performing the duties of their office. Each
- 8 -
<PAGE>
disinterested Trustee receives an annual retainer of $2,000 plus $250
from each series of the Trust for each Board meeting attended in person and
$100 from each series of the Trust for each meeting attended by telephone. All
Trustees are reimbursed for any out-of-pocket expenses incurred in connection
with their attendance at Board meetings.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 7, 1996, the Trustees
and officers of the Trust as a group owned beneficially (i.e., had voting
and/or investment power) less than 1% of the then outstanding shares of the
Fund. On the same date, Belmont Ventures, Inc., 2911 Turtle Creek Blvd.,
Dallas, Texas 75219 owned of record 36.3% of the then outstanding shares of
the Fund; Donaldson Lufkin Jenrette Securities Corporation, P.O. Box 2052,
Jersey City, New Jersey 07303, owned of record 23.6% of the then outstanding
shares of the Fund; and William & Glyns, Victory House, Prospect Hill,
Douglas, Isle of Man owned of record 19.5% of the then outstanding shares of
the Fund. Belmont Ventures, Inc. may be deemed to control the Fund by virtue
of its owning more than 25% of the outstanding shares of the Fund.
INVESTMENT ADVISOR AND SUB-ADVISOR
Legacy Advisors, Inc. (the "Advisor") performs general supervisory
services for the Fund pursuant to an Investment Advisory Agreement (the
"Advisory Agreement") described in the Prospectus. The Advisory Agreement will
be renewed for one year periods only so long as such renewal and continuance
is specifically approved at least annually by the Board of Trustees or by vote
of a majority of the Fund's outstanding voting securities, provided the
continuance is also approved by a majority of the Trustees who are not
"interested persons" of the Trust or the Advisor by vote cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement is terminable without penalty on sixty days notice by the Board of
Trustees of the Trust or by the Advisor. The Advisory Agreement provides that
it will terminate automatically in the event of its assignment.
Compensation of the Advisor is at the annual rate of 1% of the Fund's
average daily net assets. The Advisor may be required to reimburse the Fund if
the Fund's annual ordinary operating expenses exceed certain limits. This
expense limitation is calculated and administered in accordance with the
requirements of state securities authorities. For the fiscal period ended
February 28, 1995, the Advisor voluntarily waived its entire advisory fee of
$634 and reimbursed the Fund $8,689 of expenses in order to voluntarily reduce
the operating expenses of the Fund. For the fiscal year ended February 29,
1996, the Advisor voluntarily waived its entire advisory fee of $10,328 and
reimbursed the Fund $73,223 of expenses in order to voluntarily reduce the
operating expenses of the Fund.
- 9 -
<PAGE>
The Advisor is controlled by John B. Boone, a director and
President of the Advisor. Mr. Boone is Executive Vice President
of the Sub-Advisor, a Trustee of the Trust and the President of
the Fund.
Forum Securities, Inc. d.b.a. Crestwood Asset Management (the
"Sub-Advisor") has been retained by the Advisor to manage the Fund's
portfolio. The Sub-Advisor receives a fee at the annual rate of .6% of the
Fund's average daily net assets. The Advisor is responsible for paying the
subadvisory fees of the Sub-Advisor from the fees the Advisor receives from
the Fund. For the fiscal year ended February 29, 1996, the Advisor paid
subadvisory fees of $5,187 to the Sub-Advisor. In addition to providing
investment advisory services to the Fund, the Advisor and the Sub-Advisor also
provide investment advice to individuals, bank and thrift institutions,
pension and profit sharing plans, trusts, estates, charitable organizations
and corporations.
The Sub-Advisor provides a continuous investment program for the Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents of the Fund. The Sub-Advisor determines
what securities and other investments will be purchased, retained or sold by
the Fund, and does so in accordance with the investment objective and policies
of the Fund as described herein and in the Prospectus. The Sub- Advisor places
all securities orders for the Fund, determining with which broker, dealer, or
issuer to place the orders. The Advisor and the Sub-Advisor also provide, at
their own expense, certain Executive Officers to the Trust.
The Sub-Advisor must adhere to the brokerage policies of the Fund in
placing all orders, the substance of which policies are that the Advisor
attempts to obtain the best execution for all securities brokerage
transactions.
Under the Advisory Agreement, the Advisor is not responsible for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of the Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Advisor in the performance of its duties or from
the reckless disregard of its duties and obligations under the Agreement.
Comparable provisions are applicable to the Sub-Advisor under its Sub-Advisory
Agreement.
ADMINISTRATOR
MGF Service Corp. (the "Administrator") maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The
- 10 -
<PAGE>
Administrator receives for its services as transfer agent a fee payable
monthly at an annual rate of $17 per account, provided, however, that the
minimum fee is $1,000 per month. In addition, the Fund pays out-of-pocket
expenses, including but not limited to, postage, envelopes, checks, drafts,
forms, reports, record storage and communication lines.
The Administrator also provides accounting and pricing services to the Fund. The
Administrator receives $2,000 per month from the Fund for calculating daily net
asset value per share and maintaining such books and records as are necessary to
enable the Administrator to perform its duties.
In addition, the Administrator has been retained to provide
administrative services to the Fund. In this capacity, the Administrator
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services. The
Administrator supervises the preparation of tax returns, reports to
shareholders of the Fund, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for
meetings of the Board of Trustees. For the performance of these administrative
services, the Fund pays the Administrator a fee at the annual rate of .15% of
the average value of its daily net assets up to $50,000,000, .125% of such
assets from $50,000,000 to $100,000,000 and .1% of such assets in excess of
$100,000,000.
Prior to June 1, 1996 the administrator to the Fund was The Nottingham
Company, Rocky Mount, North Carolina. For the fiscal year ended February 29,
1996, The Nottingham Company received from the Fund a fee of $36,000.
DISTRIBUTOR
Midwest Group Financial Services, Inc. (the "Distributor") is the
principal underwriter of the Fund and, as such, the exclusive agent for
distribution of shares of the Fund. The Distributor is obligated to sell the
shares on a best efforts basis only against purchase orders for the shares.
Shares of the Fund are offered to the public on a continuous basis.
The Distributor currently allows concessions to dealers who sell shares of the
Fund. The Distributor retains the entire sales charge on all direct investments
in the Fund and on all investments in accounts with no designated dealer of
record. Prior to June 1, 1996, Capital Investment Group, Inc. served as the
distributor for the Fund. For the fiscal year ended February 29, 1996, Capital
Investment Group, Inc. retained $96 in underwriting commissions.
The Fund may compensate dealers, including the Distributor and
- 11 -
<PAGE>
its affiliates, based on the average balance of all accounts in the Fund
for which the dealer is designated as the party responsible for the account.
See "Distribution Plan Under Rule 12b-1" below.
OTHER SERVICES
AUDITORS. The firm of KPMG Peat Marwick LLP, 201 East Fifth Street,
Cincinnati, Ohio 45202, has been retained by the Board of Trustees to perform
an independent audit of the financial statements of the Fund and to prepare the
Fund's federal and state tax returns.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank, 38
Fountain Square Plaza, Cincinnati, Ohio 45263. The Custodian holds all cash
and securities of the Fund (either in its possession or in its favor through
"book entry systems" authorized by the Trustees in accordance with the 1940
Act), collects all income and effects all securities transactions on behalf of
the Fund. For its services as Custodian, the Custodian receives an annual fee
from the Fund based on the average net assets of the Fund held by the
Custodian.
BROKERAGE
It is the Fund's practice to seek to obtain the best overall terms
available in executing Fund transactions and selecting brokers or dealers.
Subject to the general supervision of the Board of Trustees, the Advisor is
responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for the Fund. The Advisor has the
authority to and has delegated responsibilities for execution of the Fund's
portfolio transactions to the Sub-Advisor.
In assessing the best overall terms available for any transaction, the
Sub-Advisor shall consider factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and on a continuing
basis. In addition, the Sub-Advisor may cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission than that
which might be charged by another broker-dealer for effecting the same
transaction, provided the Sub-Advisor determines in good faith that such
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of either
the particular transaction or the overall responsibilities of the Sub-Advisor
to the Fund. Such brokerage and research services may consist of reports and
statistics relating to specific companies or industries, general
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summaries of groups of stocks or bonds and their comparative earnings and
yields, or broad overviews of the economy and the stock, bond and government
securities markets.
Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by the Sub- Advisor and does not
reduce the advisory fees payable by the Fund. The Trustees will periodically
review any commissions paid by the Fund to consider whether the commissions
paid over representative periods of time appear to be reasonable in relation
to the benefits received by the Fund. It is possible that certain of the
supplementary research or other services received will primarily benefit one
or more other accounts for which investment discretion is exercised by the
Sub-Advisor. Conversely, the Fund may be the primary beneficiary of the
research or other services received as a result of securities transactions
effected for such other accounts.
The Sub-Advisor may also utilize a brokerage firm affiliated with the
Trust, the Advisor or the Sub-Advisor if it believes it can obtain the best
execution from such firm. The Sub-Advisor is also a registered broker-dealer
and it is anticipated that the Sub-Advisor, in its capacity as broker-dealer,
will execute securities transactions on behalf of the Fund for which it will
receive brokerage commissions and fees, subject to its obligation of best
execution.
The Fund will not execute portfolio transactions through, acquire
securities issued by, make savings deposits in or enter into repurchase
agreements with the Advisor, the Sub-Advisor or an affiliated person thereof
(as such term is defined in the 1940 Act) acting as principal, except to the
extent permitted by the Securities and Exchange Commission ("SEC"). In
addition, the Fund will not purchase securities during the existence of any
underwriting or selling group relating thereto of which the Advisor, the
Sub-Advisor or an affiliated person thereof, is a member, except to the extent
permitted by the SEC. Under certain circumstances, the Fund may be at a
disadvantage because of these limitations in comparison with other investment
companies that have similar investment objectives but are not subject to such
limitations.
The Fund purchases money market instruments from dealers, underwriters
and issuers. The Fund does not expect to incur any brokerage commissions on
such purchases because money market instruments are generally traded on a net
basis by a dealer acting as principal for its own account without a stated
commission. The price of the security, however, usually includes a profit to
the dealer. Securities purchased in underwritten offerings include a fixed
amount of compensation to the underwriter, generally referred to as the
underwriter's
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<PAGE>
concession or discount. When securities are purchased directly from or
sold directly to an issuer, no commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e. without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. The Fund's fixed income portfolio transactions will normally be
principal transactions executed in the over-the-counter market and will be
executed on a net basis, which may include a dealer markup. With respect to
securities traded only in the over-the-counter market, orders will be executed
on a principal basis with primary market makers in such securities except
where better prices or executions may be obtained on an agency basis or by
dealing with other than a primary market maker.
The Fund may participate, if and when practicable, in bidding for the
purchase of Fund securities directly from an issuer in order to take advantage
of the lower purchase price available to members of a bidding group. The Fund
will engage in this practice, however, only when the Sub-Advisor, in its sole
discretion, believes such practice to be otherwise in the Fund's interest.
Investment decisions for the Fund will be made independently from any
other accounts advised or managed by the Sub-Advisor. Such other accounts may
also invest in the same securities as the Fund. To the extent permitted by
law, the Sub-Advisor may aggregate the securities to be sold or purchased for
the Fund with those to be sold or purchased for other accounts in executing
transactions. When a purchase or sale of the same security is made at
substantially the same time on behalf of the Fund and other accounts, the
transaction will be averaged as to price and available investments allocated
as to amount, in the manner which the Sub-Advisor believes to be equitable to
the Fund and such other accounts. In some instances, this investment procedure
may adversely affect the price paid or received by the Fund or the size of the
position obtained or sold by the Fund.
For the fiscal year ended February 29, 1996 and for the fiscal period ended
February 28, 1995, the total amount of brokerage commissions paid by the Fund
were $2,900 and $1,180, respectively.
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DISTRIBUTION PLAN UNDER RULE 12B-1
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule
12b-1 under the 1940 Act which permits the Fund to pay for expenses incurred
in the distribution and promotion of the Fund's shares. Under the Plan, the
Fund may expend in any fiscal year up to .50% of its average daily net assets
to finance any activity which is primarily intended to result in the sale of
shares of the Fund and the servicing of shareholder accounts, provided the
Board of Trustees has approved the category of expenses for which payment is
being made. Expenditures under the Plan as service fees to any person who
sells shares of the Fund may not exceed an annual rate of .25% of the average
daily net assets of such shares. Potential benefits to the Fund from the Plan
include improved shareholder servicing, savings in transfer agency costs,
benefits to the investment process from growth and stability of assets and
maintenance of a financially healthy management organization.
During the fiscal year ended February 29, 1996, the Fund incurred $93 in
distribution expenses under the Plan for payments to broker-dealers and others
for the sale or retention of assets.
Mr. Boone, as the director, President and controlling shareholder of the
Advisor, may be deemed to have a financial interest in the operation of the
Plan and the Implementation Agreements.
The Plan, the Underwriting Agreement with the Distributor and the form of Dealer
Agreement with broker-dealers have all been approved by the Board of Trustees of
the Trust, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust and who have no direct or indirect
financial interest in the Plan or any related agreements, by vote cast in person
or at a meeting duly called for the purpose of voting on the Plan and such
Agreements. Continuation of the Plan, the Underwriting Agreement and the form of
Dealer Agreement must be approved annually by the Board of Trustees in the same
manner as specified above.
Each year the Trustees must determine that continuation of the Plan is in
the best interests of shareholders of the Fund and there is a reasonable
likelihood that the Plan will benefit the Fund. The Board of Trustees has made
such a determination for the current year of operations under the Plan. The
Plan, the Underwriting Agreement and the Dealer Agreements may be terminated
at any time without penalty by a majority of those trustees who are not
"interested persons" or by a majority of the Fund's outstanding shares. Any
amendment materially increasing the maximum percentage payable under the Plan
must likewise be approved by a majority of the Fund's outstanding shares as
well as a majority of the Trustees who are not "interested persons" and have
no direct or indirect financial interest in the Plan
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(the "Independent Trustees"). In order for the Plan to remain effective, the
selection and nomination of those Trustees who are not interested persons
of the Trust must be effected by the Independent Trustees during such period.
All amounts spent by the Fund pursuant to the Plan must be reported
quarterly in a written report to the Trustees for their review.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder
services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be
made at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to
date.
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment
for the purchase of shares of the Fund. The acceptance of such securities is
at the sole discretion of the Advisor based upon the suitability of the
securities accepted for inclusion as a long term investment of the Fund, the
marketability of such securities, and other factors which the Advisor may deem
appropriate. If accepted, the securities will be valued using the same
criteria and methods as described in "How Shares are Valued" in the
Prospectus. Transactions involving the issuance of shares in the Fund for
securities in lieu of cash will be limited to acquisitions of securities
(except for municipal debt securities issued by state political subdivisions
or their agencies or instrumentalities) which: (a) meet the investment
objective and policies of the Fund; (b) are acquired for investment and not
for resale; (c) are liquid securities which are not restricted as to transfer
either by law or liquidity of market; and (d) have a value which is readily
ascertainable (and not established only by evaluation procedures) as evidenced
by a listing on the American Stock Exchange, the New York Stock Exchange or
NASDAQ.
REDEMPTION IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the
Trustees, make it undesirable for the Fund to pay for all redemptions in cash.
In such case,
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the Board of Trustees may authorize payment to be made in readily marketable
portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing
the net asset value per share. Shareholders receiving such securities would
incur brokerage costs when the securities are sold. An irrevocable election
has been filed under Rule 18f-1 of the 1940 Act, wherein the Fund is committed
to pay redemptions in cash, rather than in kind, to any shareholder of record
of the Fund who redeems during any ninety day period, the lesser of (a)
$250,000 or (b) one percent (1%) of the Fund's net assets at the beginning of
such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund's Administrator at the address shown herein. Your request
should include the following: (1) the Fund name and existing account
registration; (2) signature(s) of the registered owner(s) exactly as the
signature(s) appear(s) on the account registration; (3) the new account
registration, address, social security or taxpayer identification number and
how dividends and capital gains are to be distributed; (4) signature
guarantees (see the Prospectus under the heading "Signature Guarantees"); and
(5) any additional documents which are required for transfer by corporations,
administrators, executors, trustees, guardians, etc. If you have any questions
about transferring shares, call or write the Administrator.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
PURCHASES. Shares of the Fund are offered and sold on a continuous basis and
may be purchased through authorized dealers or directly by contacting the
Distributor or the Administrator. Selling dealers have the responsibility of
transmitting orders promptly to the Fund's Administrator. The public offering
price of shares of the Fund equals the net asset value plus a sales charge.
The Distributor receives this sales charge as Distributor and may reallow it
in the form of dealer discounts and brokerage commissions. The current
schedule of sales charges and related dealer discounts and brokerage
commissions is set forth in the Prospectus. See "How to Purchase Shares" in
the Prospectus.
REDEMPTIONS. Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading
on the New York Stock Exchange is restricted by applicable rules and
regulations of the SEC; (b) the Exchange is closed for other than customary
weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC. The Fund may
also suspend or postpone the recordation of the transfer of shares upon the
occurrence of any of the foregoing conditions.
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In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of an investor to make full
payment for shares purchased by the investor or to collect any charge relating
to a transaction effected for the benefit of an investor which is applicable
to Fund shares as provided in the Prospectus from time to time.
HOW PUBLIC OFFERING PRICE IS DETERMINED
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund and they have
adopted procedures to do so as follows:
The public offering price (net asset value plus applicable sales charge) per
share of the Fund is determined as of 4:00 p.m., Eastern time, Monday through
Friday, except on business holidays when the New York Stock Exchange is
closed. The New York Stock Exchange recognizes the following holidays: New
Year's Day, President's Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Thanksgiving Day and Christmas Day. Any other holiday recognized by the
New York Stock Exchange will be considered a business holiday on which the
Fund's net asset value will not be determined.
The net asset value per share of the Fund is calculated by adding the value of
the Fund's securities and other assets belonging to the Fund, subtracting the
liabilities charged to the Fund and dividing the result by the number of
outstanding shares of the Fund. Assets belonging to the Fund consist of the
consideration received upon the issuance of shares of the Fund together with
all net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular Fund.
Assets belonging to the Fund are charged with the direct liabilities of the
Fund and with a share of the general liabilities of the Trust, which are
normally allocated in proportion to the number of or the relative net assets
of all series in the Trust at the time of allocation or in accordance with
other allocation methods approved by the Board of Trustees.
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is
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based on tax laws and regulations that are in effect on the date hereof; such
laws and regulations may be changed by legislative, judicial or administrative
action. Investors are advised to consult their tax advisors with specific
reference to their own tax situations.
Each series of the Trust, including the Fund, will be treated as a separate
entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source
of its income for a taxable year. At least 90% of the gross income of the Fund
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities or
foreign currencies, and other income derived with respect to the Fund's
business of investing in such stock, securities or currencies. Any income
derived by the Fund from a partnership or trust is derived with respect to the
Fund's business of investing in such stock, securities or currencies only to
the extent that such income is attributable to items of income that would have
been qualifying income if realized by the Fund in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of the Fund's gross income for a taxable year
must be derived from gains realized on the sale or other disposition of the
following investments held for less than three months: (1) stock and
securities (as defined in Section 2(a)(36) of the 1940 Act); (2) options,
futures and forward contracts other than those on foreign currencies; or (3)
foreign currencies (or options, futures or forward contracts on foreign
currencies) that are not directly related to the Fund's principal business of
investing in stocks or securities (or options and futures with respect to
stocks or securities). Interest (including original issue discount and, with
respect to certain debt securities, accrued market discount) received by the
Fund upon maturity or disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of such security within the meaning of this requirement. However,
any other income which is attributable to realized market appreciation will be
treated as gross income from the sale or other disposition of securities for
this purpose.
An investment company may not qualify as a regulated investment company for
any taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
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represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more that 5% of the total assets of the
investment company nor more than 10% of the outstanding voting securities of
such issuer. In addition, not more than 25% of the value of the investment
company's total assets may be invested in the securities (other than
government securities or the securities of other regulated investment
companies) of any one issuer. The Fund intends to satisfy all requirements on
an ongoing basis for continued qualification as a regulated investment
company.
The Fund will designate any distribution of long term capital gains as a
capital gain dividend in a written notice mailed to shareholders within 60
days after the close of the Fund's taxable year. Shareholders should note
that, upon the sale or exchange of shares, if the shareholder has not held
such shares for at least six months, any loss on the sale or exchange of those
shares will be treated as a long term capital loss to the extent of the
capital gain dividends with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies
that fail to currently distribute an amount equal to specified percentages of
their ordinary taxable income and capital gain net income (excess of capital
gains over capital losses). The Fund intends to make sufficient distributions
or deemed distributions of its ordinary taxable income and any capital gain
net income prior to the end of each calendar year to avoid liability for this
excise tax.
If for any taxable year the Fund does not qualify for the special federal
income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate
rates (without any deduction for distributions to its shareholders). In such
event, dividend distributions (whether or not derived from interest on
tax-exempt securities) would be taxable as ordinary income to shareholders to
the extent of the Fund's current and accumulated earnings and profits, and
would be eligible for the dividends received deduction for corporations.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the
Internal Revenue Service for failure to properly include on their tax return
payments of taxable interest or dividends, or who have failed to certify to
the Fund that they are not subject to backup withholding when required to do
so or that they are "exempt recipients."
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Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent
contractors are located or in which it is otherwise deemed to be conducting
business, the Fund may be subject to the tax laws of such states or
localities. In addition, in those states and localities that have income tax
laws, the treatment of the Fund and its shareholders under such laws may
differ from their treatment under federal income tax laws.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Massachusetts
law on August 12, 1992. The Trust's Declaration of Trust authorizes the Board
of Trustees to divide shares into series, each series relating to a separate
portfolio of investments. The Declaration of Trust currently provides for the
shares of five series: the Amelia Earhart: Eagle Equity Fund managed by Amelia
Earhart Capital Management, Inc. of Southfield Michigan; The CarolinasFund
managed by Morehead Capital Advisors LLC of Charlotte, North Carolina; the
Regional Opportunity Fund: Ohio Indiana Kentucky managed by CityFund Advisory,
Inc. of Cincinnati, Ohio; the Mississippi Opportunity Fund managed by Vector
Money Management, Inc. of Jackson, Mississippi; and the Fund. The Board of
Trustees has authorized separate classes of shares for the Amelia Earhart:
Eagle Equity Fund, The CarolinasFund, the Regional Opportunity Fund: Ohio
Indiana Kentucky and the Mississippi Opportunity Fund.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be
entitled to receive the assets available for distribution belonging to such
series. Shareholders of a series are entitled to participate equally in the
net distributable assets of the particular series involved on liquidation,
based on the number of shares of the series that are held by each shareholder.
If any assets, income, earnings, proceeds, funds or payments are not readily
identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more series as they, in their sole discretion,
deem fair and equitable.
Shares of the Fund, when issued, are fully paid and non-assessable. Shareholders
are entitled to one vote for each full share held and a fractional vote for each
fractional share held. Shareholders of all series in the Trust, including the
Fund, will vote together and not separately, except as otherwise required by law
or when the Board of Trustees determines that the matter to be voted upon
affects only the interests of the shareholders of a particular series. Rule
18f-2 under the 1940 Act provides that any matter required to be submitted to
the holders of the outstanding voting securities of an investment company such
as
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the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each series
affected by the matter. A series is affected by a matter unless it is clear
that the interests of each series in the matter are substantially identical or
that the matter does not affect any interest of the series. Under Rule 18f-2
of the 1940 Act, the approval of an investment advisory agreement, a material
change to a Rule 12b-1 Plan or any change in a fundamental investment policy
would be effectively acted upon with respect to a series only if approved by a
majority of the outstanding shares of such series. However, the Rule also
provides that the ratification of the appointment of independent accountants,
the approval of principal underwriting contracts and the election of Trustees
may be effectively acted upon by shareholders of the Trust voting together,
without regard to a particular series.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as
such liability may arise from his or her own bad faith, willful misfeasance,
gross negligence or reckless disregard of duties. It also provides that all
third parties shall look solely to the Trust property for satisfaction of
claims arising in connection with the affairs of the Trust. With the
exceptions stated, the Declaration of Trust provides that a Trustee or officer
is entitled to be indemnified against all liability in connection with the
affairs of the Trust.
Prior to June 1, 1996 the Trust was named The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end
of the period (after adjusting for the reinvestment of any income dividends
and capital gain distributions), and dividing the result by the net asset
value per share at the beginning of the period. In particular, the average
annual total return of the Fund ("T") is computed by using the redeemable
value at the end of a specified period of time ("ERV") of a hypothetical
initial investment of $1,000 ("P") over a period of time ("n") according to
the formula P(l+T)n=ERV. The calculation of average annual total return
assumes the reinvestment of all dividends and distributions and the deduction
of the current maximum sales load from the initial $1,000 payment. The average
annual total returns of the Fund for the one year period ended February 29,
1996 and for the period since inception (January 2, 1995) to February 29, 1996
are 22.60% and 23.03%, respectively.
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In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return.
Nonstandardized Return may consist of a cumulative percentage of return,
actual year-by-year rates or any combination thereof. The cumulative total
return of the Fund for the period since inception (January 2, 1995) to
February 29, 1996 is 27.08%. The average annual Nonstandardized Returns of the
Fund (computed without the applicable sales load) for the one year period
ended February 29, 1996 and for the period since inception (January 2, 1995)
to February 29, 1996 are 26.47% and 26.31%, respectively. A nonstandardized
quotation of total return will always be accompanied by the Fund's average
annual total return as described above.
From time to time, the Fund may advertise its yield. A yield quotation is
based on a 30-day (or one month) period and is computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity
of each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day
prior to the start of the 30-day (or one month) period for which yield is
being calculated, or, with respect to obligations purchased during the month,
the purchase price (plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other
mutual funds having similar objectives or to standardized indices or other
measures of investment performance.
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In particular, the Fund may compare its performance to the S&P 500 Index,
which is generally considered to be representative of the performance of
unmanaged common stocks that are publicly traded in the United States
securities markets. Comparative performance may also be expressed by reference
to a ranking prepared by a mutual fund monitoring service, such as Lipper
Analytical Services, Inc. or Morningstar, Inc. or by one or more newspapers,
newsletters or financial periodicals. The Fund may also occasionally cite
statistics to reflect its volatility and risk. Performance comparisons may be
useful to investors who wish to compare the Fund's past performance to that of
other mutual funds and investment products. Of course, past performance is not
a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net
earnings and net asset value per share fluctuate daily. Both net earnings and
net asset value per share are factors in the computation of total return as
described above.
As indicated, from time to time, the Fund may advertise its performance
compared to similar funds or portfolios using certain indices, reporting
services, and financial publications. These may include the following:
O LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain
a more complete view of the Fund's performance before investing. Of course,
when comparing the Fund's performance to any index, factors such as
composition of the index and prevailing market conditions should be considered
in assessing the significance of such comparisons. When comparing funds using
reporting services, or total return, investors should take into consideration
any relevant differences in funds such as permitted portfolio compositions and
methods used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote total returns
that are calculated on nonstandardized base periods. The total returns
represent the historic change in the value of an investment in the Fund based
on monthly reinvestment of dividends over a specified period of time.
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From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation
and the effects of inflation on the dollar, including the purchasing power of
the dollar at various rates of inflation. The Fund may also disclose from time
to time information about its portfolio allocation and holdings at a
particular date (including ratings of securities assigned by independent
rating services such as S&P and Moody's). The Fund may also depict the
historical performance of the securities in which the Fund may invest over
periods reflecting a variety of market or economic conditions either alone or
in comparison with alternative investments, performance indices of those
investments, or economic indicators. The Fund may also include in
advertisements and in materials furnished to present and prospective
shareholders statements or illustrations relating to the appropriateness of
types of securities and/or mutual funds that may be employed to meet specific
financial goals, such as saving for retirement, children's education, or other
future needs.
- 25 -
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
Under normal market conditions, at least 90% of the Fund's net assets will be
invested in equities. As a temporary defensive position, however, the Fund may
invest up to 100% of its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements or money market instruments
("Investment-Grade Debt Securities"). When the Fund invests in
Investment-Grade Debt Securities as a temporary defensive measure, it is not
pursuing its investment objective. Under normal circumstances, however, the
Fund may invest in money market or repurchase agreement instruments as
described in the Prospectus.
The various ratings used by the NRSROs are described below. A rating by an
NRSRO represents the organization's opinion as to the credit quality of the
security being rated. However, the ratings are general and are not absolute
standards of quality or guarantees as to the creditworthiness of an issuer.
Consequently, the Advisor believes that the quality of fixed-income securities
in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved
in credit analysis. A rating is not a recommendation to purchase, sell or hold
a security because it does not take into account market value or suitability
for a particular investor. When a security has received a rating from more
than one NRSRO, each rating is evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the NRSROs from
other sources that they consider reliable. Ratings may be changed, suspended
or withdrawn as a result of changes in or unavailability of such information,
or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS:
The following summarizes the four highest ratings used by Moody's Investors
Service, Inc. ("Moody's") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are
- 26 -
<PAGE>
generally known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long term risks appear somewhat larger
than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to
be considered upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
that suggest a susceptibility to impairment sometime in the future.
BAA: Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated
Aa, A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
Investment-Grade Debt Securities by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because
the protection of interest and principal payments often may be very moderate
and not well safeguarded. Bonds which are rated B generally lack
characteristics of a desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the security over any long period
of time may be small. Bonds which are rated Caa are of poor standing. Such
securities may be in default or there may be present elements of danger with
respect to principal or interest. Bonds which are rated Ca represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. Bonds which are rated C are the
lowest rated class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have superior capacity
- 27 -
<PAGE>
for repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) are considered to have a strong capacity for
repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics of issuers rated Prime-1 but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriated
may be more affected by external conditions. Ample alternate liquidity is
maintained.
The following summarizes the highest rating used by Moody's for short-term
notes and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S RATINGS:
The following summarizes the four highest ratings used by Standard & Poor's
Ratings Group ("S&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within these major rating categories.
- 28 -
<PAGE>
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
Investment-Grade Debt Securities and are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay
interest and principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds may have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted A-1+. Capacity for timely
payment on commercial paper rated A-2 is satisfactory, but the relative degree
of safety is not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are give a
plus (+) designation.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S RATINGS:
The following summarizes the four highest ratings used by Fitch Investors
Service, Inc. ("Fitch") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA: Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated
in the AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-1+.
A: Bonds are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB: Bonds are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances,
- 29 -
<PAGE>
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings of these bonds will
fall below investment grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within a rating category.
Bonds rated BB, B and CCC by Fitch are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for
short-term notes, municipal notes, variable rate demand instruments and
commercial paper.
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S RATINGS:
The following summarizes the four highest ratings used by Duff & Phelps Credit
Rating Co. ("D&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating credit quality. The risk
factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit
quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A: Bonds rated A have average but adequate protection
factors. However risk factors are more variable and greater in
periods of economic stress.
- 30 -
<PAGE>
BBB: Bonds rated BBB have below average protection factors,
but are still considered sufficient for prudent investment.
There is considerable variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The rating Duff 1 is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff 1+, Duff 1
and Duff 1- within the highest rating category. Duff 1+ indicates highest
certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is judged to
be outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1 indicates very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are considered to be minor. Duff 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
FINANCIAL STATEMENTS AND REPORTS
The Financial Statements of the Fund will be audited at least once each
year by independent public accountants. Shareholders will receive annual
audited and semiannual (unaudited) reports when published, and will receive
written confirmation of all confirmable transactions in their account. A copy
of the Annual Report will accompany the Statement of Additional Information
whenever the Statement of Additional Information is requested by a shareholder
or prospective investor. The Financial Statements of the Fund as of February
29, 1996, together with the report of the independent accountants thereon, are
included on the following pages.
- 31 -
<PAGE>
[The Nottingham Investment Trust Letterhead]
LEGACY EQUITY FUND COMMENTARY
QUARTER ENDED FEBRUARY 29, 1996
In its first full fiscal year ended February 29, 1996, the Legacy Equity Fund
provided a satisfactory return of 26.47%, but lagged the S&P 500 which
provided a 31.40% total return during the same fiscal year.
The Fund experienced a slow start in the first quarter, did well overall in
the second and third quarters, but sharply underperformed in the last couple
of months of 1995 when the technology sector began to underperform and the
focus of the market became very narrow in the last quarter of 1995.
Feeling that corporate profit growth would slow considerably for most
corporations in the first half of 1996, we have maintained the heaviest
exposure to industries which would continue to show the best relative earnings
gains in this environment, i.e., financial services, health care and consumer
staples. The easing actions by the Federal Reserve in late 1995 and early 1996
should help the economy begin to improve in the second half of 1996 and into
1997. Therefore, selected economically sensitive issues such as autos,
retailers, industrial equipment and depressed technology stocks have been
purchased to give the portfolio more balance in what will probably be a very
volatile transition from a slow stumbling period of economic activity to a
time of better economic comparisons.
The impending economic weakness and subsequent earnings difficulties will lead
to the long anticipated correction. However, the magnitude should be confined
to rolling industry-by-industry adjustments, and not a significant sell-off
due to the enormous amounts of cash that corporations and individuals have
available to put into the equity markets.
<PAGE>
LEGACY EQUITY FUND
Performance Update - $10,000 Investment
For the period from January 2, 1995 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
LEGACY EQUITY FUND S&P 500
03-Jan-95 9700 9700
28-Feb-95 10048 10298
31-May-95 11012 11270
31-Aug-95 11650 11871
30-Nov-95 12203 12790
29-Feb-96 12708 13531
THIS GRAPH DEPICTS THE PERFORMANCE OF THE LEGACY EQUITY FUND VERSUS THE
S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE LEGACY EQUITY FUND IS A
PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS NOT AVAILABLE FOR
INVESTMENT AND IS UNMANAGED. THE COMPARISON IS SHOWN FOR ILLUSTRATIVE
PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement One Year ended
of operations 2/29/96
through 2/29/96
Maximum 3% Sales Load 23.03% 22.60%
No Sales Load 26.31% 26.47%
(bullet) The graph assumes an initial $10,000 investment at January 2, 1995
($9,700 after maximum sales load of 3%). All dividends and
distributions are reinvested.
(bullet) At February 29, 1996, the Fund would have grown to $12,708 - total
investment return of 27.08% since January 2, 1995. Without the
deduction of the 3% maximum sales load, the Fund would have grown
to $13,101 - total investment return of 31.01% since January 2, 1995.
The sales load may be reduced or eliminated for larger purchases.
(bullet) At February 29, 1996, a similar investment in the S&P 500 Index
(after maximum sales load of 3%) would have grown to $13,531 - total
investment return of 35.31% since January 2, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions,
and the principal value of shares, when redeemed, may be worth more
or less than the original cost. Average annual returns are
historical in nature and measure net investment income and capital
gain or loss from portfolio investments assuming reinvestments of
dividends.
<PAGE>
<TABLE>
<CAPTION>
LEGACY EQUITY FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
NUMBER OF VALUE
SHARES (NOTE 1)
------------- -------------
<S> <C> <C>
COMMON STOCKS - 91.94%
AUTO & TRUCKS - 2.71%
Ford Motor Company 1,400 $43,750
-------------
BEVERAGES - 6.85%
Coca-Cola Enterprises, Inc. 2,000 56,750
PepsiCo, Inc. 850 53,763
-------------
110,513
-------------
CHEMICALS - 4.97%
Mallinckrodt Group, Inc. 1,100 43,175
PPG Industries, Inc. 800 37,100
-------------
80,275
-------------
COMPUTER SOFTWARE & SERVICES - 4.79%
General Motors Corporation Class E 750 42,844
(a) Microsoft Corporation 350 34,541
-------------
77,385
-------------
COMPUTERS - 2.67%
(a) Compaq Computer Corporation 850 43,031
-------------
ELECTRONICS - 4.70%
General Electric Company 500 37,750
Motorola, Inc. 700 38,062
-------------
75,812
-------------
ELECTRONICS - SEMICONDUCTOR - 2.19%
Intel Corporation 600 35,288
-------------
FINANCIAL - BANKS, COMMERCIAL - 2.43%
Banc One Corporation 1,100 39,188
-------------
FINANCIAL SERVICES - 9.11%
Federal National Mortgage Association 1,400 44,275
Protective Life Corporation 1,300 45,662
Sunamerica, Inc. 1,050 57,225
-------------
147,162
-------------
FOOD - PROCESSING - 2.57%
CPC International, Inc. 600 41,550
-------------
HOLDING COMPANIES - DIVERSIFIED - 2.93%
Textron, Inc. 600 47,250
-------------
HOUSEHOLD PRODUCTS & HOUSEWARES - 2.67%
Colgate-Palmolive Company 550 43,038
-------------
</TABLE>
(CONTINUED)
<TABLE>
<CAPTION>
LEGACY EQUITY FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
NUMBER OF VALUE
SHARES (NOTE 1)
------------- -------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
INSURANCE - MULTILINE - 4.59%
Aetna Life and Casualty Company 500 $37,812
American International Group, Inc. 375 36,234
-------------
74,046
-------------
MEDICAL - HOSPITAL MANAGEMENT & SERVICE - 2.54%
Columbia/HCA Healthcare Corporation 750 41,062
-------------
MEDICAL SUPPLIES - 2.69%
Baxter International, Inc. 950 43,462
-------------
METAL FABRICATION & HARDWARE - 3.01%
Kennametal, Inc. 1,500 48,563
-------------
MISCELLANEOUS - DISTRIBUTION & WHOLESALE - 3.25%
(a) ProNet, Inc. 2,000 52,500
-------------
OIL & GAS - INTERNATIONAL - 2.58%
Chevron Corporation 750 41,719
-------------
PHARMACEUTICALS - 11.18%
Johnson & Johnson 450 42,075
Merck & Company, Inc. 700 46,375
Mylan Laboratories 2,400 46,800
Schering-Plough Corporation 800 45,400
-------------
180,650
-------------
RESTAURANTS & FOOD SERVICE - 2.25%
Wendy's International, Inc. 2,000 36,250
-------------
TEXTILES - 2.27%
Pillowtex 3,300 36,712
-------------
TRANSPORTATION - AIR - 2.29%
Southwest Airlines Company 1,200 36,900
-------------
TRUCKING & LEASING - 1.90%
(a) Celadon Group Inc. 3,000 30,750
-------------
</TABLE>
<TABLE>
<CAPTION>
(CONTINUED)
LEGACY EQUITY FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996
NUMBER OF VALUE
SHARES (NOTE 1)
------------- -------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
UTILITIES - TELECOMMUNICATIONS - 4.80%
A T & T Corporation 600 $38,175
U S West, Inc. 1,200 39,300
-------------
77,475
-------------
TOTAL COMMON STOCKS (COST $1,261,443) 1,484,331
-------------
PRINCIPAL
AMOUNT
-------------
REPURCHASE AGREEMENT (B) - 13.46%
Wachovia Bank
5.32%, due March 1, 1996 $217,295 217,295
(COST $217,295) -------------
TOTAL VALUE OF INVESTMENTS (COST $1,478,738 (C)) 105.40% 1,701,626
Liabilities In Excess of Other Assets (5.40)% (87,147)
------------- -------------
NET ASSETS 100.00% $1,614,479
============= =============
<FN>
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into February 29, 1996, with a
maturity value of $68,302,116 collateralized by $71,660,000 U.S.
Treasury Bills, due September 19, 1996. The aggregate market value of
the collateral at February 29, 1996 was $69,697,130. The Fund's pro
rata interest in the market value of the collateral at February 29,
1996 was $221,776. The Fund's pro rata interest in the joint
repurchase agreement collateral is taken into possession by the
Fund's custodian upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is at
least 102 percent of the sales price of the repurchase agreement.
(c) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation)
of investments for financial reporting and federal income tax
purposes is as follows:
Unrealized appreciation $253,135
Unrealized depreciation (30,247)
-------------
NET UNREALIZED APPRECIATION $222,888
=============
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
LEGACY EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
<TABLE>
<S> <C>
ASSETS
Investments in common stocks at value (cost $1,261,443) $1,484,331
Repurchase agreement 217,295
Cash 400
Dividends receivable 1,911
Interest receivable 409
Due from advisor (note 2) 23,406
Other assets 252
-------------
Total assets 1,728,004
-------------
LIABILITIES
Accrued expenses 16,160
Payable for investment purchases 97,365
-------------
Total liabilities 113,525
-------------
NET ASSETS
(applicable to 126,045 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $1,614,479
=============
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($1,614,479 net assets / 126,045 shares) $12.81
=============
OFFERING PRICE PER SHARE
(100 / 97 of $12.81) $13.21
=============
NET ASSETS CONSIST OF:
Paid-in capital $1,388,077
Undistributed net investment income 113
Undistributed net realized gain on investments 3,401
Net unrealized appreciation on investments 222,888
-------------
$1,614,479
=============
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
LEGACY EQUITY FUND
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 1996
INVESTMENT INCOME
<S> <C>
INCOME
Dividends $17,521
Interest 3,240
------------
TOTAL INCOME 20,761
------------
EXPENSES
Fund accounting fees (note 2) 24,000
Professional fees 11,920
Investment advisory fees (note 2) 10,328
Fund administration fees (note 2) 9,115
Distribution and service fees (note 3) 5,164
Custody fees 3,889
Registration and filing administration fees 2,821
Securities pricing fees 2,290
Shareholder recordkeeping fees 64
Trustee fees and meeting expenses 7,236
Registration and filing expenses 3,958
Shareholder servicing expenses 3,459
Printing expenses 312
Other operating expenses 4,066
------------
TOTAL EXPENSES 88,622
------------
Less:
Expense reimbursements (note 2) (73,223)
Investment advisory fees waived (note 2) (10,328)
Distribution and service fees waived (note 3) (5,071)
------------
NET EXPENSES 0
------------
NET INVESTMENT INCOME 20,761
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 5,857
Increase in unrealized appreciation on investments 209,288
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 215,145
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $235,906
============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
LEGACY EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE
PERIOD FROM
JANUARY 2, 1995
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------- ---------------
INCREASE IN NET ASSETS
<S> <C> <C>
OPERATIONS
Net investment income $20,761 $621
Net realized gain (loss) from investment transactions 5,857 (2,456)
Increase in unrealized appreciation on investments 209,288 13,600
------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 235,906 11,765
------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (21,269) 0
------------- ---------------
CAPITAL SHARE TRANSACTIONS
Increase in net assets resulting from
capital share transactions (a) 778,274 609,803
------------- ---------------
TOTAL INCREASE IN NET ASSETS 992,911 621,568
NET ASSETS
Beginning of period 621,568 0
------------- ---------------
End of period (including undistributed net investment income
of $113 in 1996) $1,614,479 $621,568
============= ===============
</TABLE>
<TABLE>
<CAPTION>
(a) A summary of capital share activity follows: FOR THE PERIOD FROM JANUARY 2, 1995
YEAR ENDED (COMMENCEMENT OF OPERATIONS) TO
FEBRUARY 29, 1996 FEBRUARY 28, 1995
SHARES VALUE SHARES VALUE
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 114,039 $1,388,319 60,001 $609,803
Shares issued for reinvestment
of distributions 1,743 21,269 0 0
------------- ------------- ------------- ---------------
115,782 1,409,588 60,001 609,803
Shares redeemed (49,738) (631,314) 0 0
------------- ------------- ------------- ---------------
Net increase 66,044 $778,274 60,001 $609,803
============= ============= ============= ===============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
LEGACY EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
FOR THE
PERIOD FROM
JANUARY 2, 1995
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
FEBRUARY 29, FEBRUARY 28,
1996 1995
------------- -------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.36 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.28 0.01
Net realized and unrealized gain on investments 2.46 0.35
------------- ------------
TOTAL FROM INVESTMENT OPERATIONS 2.74 0.36
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (0.29) 0.00
------------- ------------
NET ASSET VALUE, END OF PERIOD $12.81 $10.36
============= ============
TOTAL RETURN (a) 26.47% 3.60% (b)
============= ============
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $1,614,479 $621,568
============= ============
RATIO OF EXPENSES TO AVERAGE NET ASSETS
Before expense reimbursements and waived fees 8.60% 19.58% (c)
After expense reimbursements and waived fees 0.00% 1.47% (c)
RATIO OF NET INVESTMENT INCOME(LOSS) TO AVERAGE NET ASSETS
Before expense reimbursements and waived fees (6.59)% (17.14)% (c)
After expense reimbursements and waived fees 2.02% 0.98% (c)
PORTFOLIO TURNOVER RATE 43.22% 8.53%
</TABLE>
(a) Total return does not reflect payment of a sales charge.
(b) Annualized total return was 23.05%.
(c) Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
LEGACY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
Legacy Equity Fund (the "Fund") is a diversified series of shares of
beneficial interest of The Nottingham Investment Trust (the "Trust"). The
Trust, an open-end investment company, was organized on August 12, 1992 as a
Massachusetts Business Trust and is registered under the Investment Company
Act of 1940. The Fund began operations on January 2, 1995. The following is a
summary of significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., New York
time, on the day of valuation. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by an independent
pricing service or by following procedures approved by the
Board of Trustees. Short- term investments are valued at cost
which approximates value.
B. Federal Income Taxes - The Fund is considered a personal
holding company as defined under Section 542 of the Internal
Revenue Code since 50% of the value of the Fund's shares were
owned directly or indirectly by five or fewer individuals at
certain times during the last half of the year. As a personal
holding company the Fund is subject to federal income taxes on
undistributed personal holding company income at the maximum
individual income tax rate. No provision has been made for
federal income taxes since all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest
income is recorded daily on the accrual basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. The Fund may
make a supplemental distribution subsequent to the end of its
fiscal year ending February 29th.
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE, RELATED PARTY AND OTHER TRANSACTIONS
Pursuant to an investment advisory agreement, Legacy Advisors, Inc. (the
"Advisor") provides the Fund with a continuous program of supervision of the
Fund's assets, including the composition of its portfolio, and furnishes
advice and recommendations with respect to investments, investment policies,
and the purchase and sale of securities. As compensation for its services, the
Investment Advisor receives a fee at the annual rate of 1.00% of the Fund's
average daily net assets.
(Continued)
<PAGE>
LEGACY EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
The Advisor has voluntarily agreed to waive all or a portion of its fee and
reimburse expenses of the Fund to limit total Fund operating expenses,
exclusive of interest, taxes, brokerage commissions, sales charges and
extraordinary expenses, to a maximum of 2.00% of the Fund's average daily net
assets for any fiscal year, or the limits set by applicable state securities
laws or other applicable laws if such limits are lower.
Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor has voluntarily waived
its fee amounting to $10,328 ($0.12 per share) and agreed to reimburse $73,223
of the Fund's operating expenses for the year ended February 29, 1996. There
can be no assurance that the foregoing voluntary fee waiver or expense
reimbursements will continue.
The Nottingham Company (the "Administrator") provides administrative services
to and is generally responsible for the overall management and day-to-day
operations of the Fund pursuant to an accounting and administrative agreement
with the Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.20% of the Fund's first $50 million of average
daily net assets, 0.175% of the next $50 million of average daily net assets,
and 0.15% of average daily net assets over $100 million. The Administrator
also receives a monthly fee of $2,000 for accounting and recordkeeping
services. Additionally, the Administrator charges the Fund for servicing of
shareholder accounts and registration of the Fund's shares. The contract with
the Administrator provides that the aggregate fees for the aforementioned
administration, accounting and recordkeeping services shall not be less than
$3,000 per month. The Administrator also charges the Fund for certain expenses
involved with the daily valuation of portfolio securities.
At February 29, 1996 the Advisor and its officers held 36,021 shares or 29% of
the Fund shares outstanding. Another shareholder held 47,085 shares or 37% of
the Fund shares outstanding.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any sales
charges imposed on purchases of shares and re-allocates a portion of such
charges to dealers through whom the sale was made, if any. For the year ended
February 29, 1996, the Distributor retained sales charges in the amount of
$96.
Certain Trustees and officers of the Trust are also officers or directors of
the Advisor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a distribution plan pursuant to Rule 12b-1 of the
Act (the "Plan"). Rule 12b-1 regulates the manner in which a regulated
investment company may assume costs of distributing and promoting the sales of
its shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, which may not exceed
0.50% per annum of the Fund's average daily net assets for each year elapsed
subsequent to adoption of the Plan, for payment to the Distributor for items
such as advertising expenses, selling expenses, commissions, travel, or other
expenses reasonably intended to result in sales of shares of the Fund or
support servicing of shareholder accounts. Expenditures paid as service fees
to any person who sells Fund shares may not exceed 0.25% per annum of the
Fund's average daily net assets. The Fund incurred $5,164 in distribution and
service fees for the year ended February 29, 1996, of which $5,071 ($0.06 per
share) has been voluntarily waived by the Distributor.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $1,096,465 and $421,166, respectively, for the year ended February
29, 1996.
<PAGE>
[KPMG PEAT MARWICK LLP LETTERHEAD]
Independent Auditors' Report
To the Board of Trustees and Shareholders
The Nottingham Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Legacy Equity Fund (the
"Fund"), a series of The Nottingham Investment Trust, as of February 29, 1996,
the related statement of operations for the year then ended, and the
statements of changes in net assets and financial highlights for the year
ended February 29, 1996 and the period from January 2, 1995 (commencement of
operations) to February 28, 1995. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Legacy Equity Fund as of February 29, 1996, the results of its operations for
the year then ended, and the changes in its net assets and financial
highlights for the year ended February 29, 1996 and the period from January 2,
1995 (commencement of operations) to February 28, 1995 in conformity with
generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
Richmond, Virginia
April 5, 1996
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MISSISSIPPI OPPORTUNITY FUND
June 20, 1996
A Series of
MAPLEWOOD INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-800-580-4820
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES.........................................2
INVESTMENT LIMITATIONS....................................................5
TRUSTEES AND OFFICERS.....................................................8
INVESTMENT ADVISOR.......................................................10
ADMINISTRATOR........................................................... 11
DISTRIBUTOR..............................................................12
OTHER SERVICES.......................................................... 13
BROKERAGE................................................................13
DISTRIBUTION PLANS UNDER RULE 12b-1......................................15
SPECIAL SHAREHOLDER SERVICES.............................................17
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................19
HOW SHARE PRICE IS DETERMINED............................................20
ADDITIONAL TAX INFORMATION...............................................21
DESCRIPTION OF THE TRUST.................................................23
CALCULATION OF PERFORMANCE DATA..........................................24
APPENDIX A - DESCRIPTION OF RATINGS......................................28
FINANCIAL STATEMENTS AND REPORTS.........................................33
This Statement of Additional Information ("SAI") is not a prospectus and
should be read in conjunction with the Prospectus dated June 20, 1996 for the
Mississippi Opportunity Fund (the "Fund"). Copies of the Fund's Prospectus may
be obtained at no charge from the Fund, at the address and phone number shown
above.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used but not defined have the same meaning as in the
Prospectus. A description of the various ratings used by the nationally
recognized statistical rating organizations ("NRSROs") for securities in which
the Fund may invest is included in this SAI as Appendix A.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve System or a registered Government Securities
dealer) and must deliver the security (and/or securities substituted for them
under the repurchase agreement) to the vendor on an agreed upon date in the
future. Such securities, including any securities so substituted, are referred
to as the "Repurchase Securities." The repurchase price exceeds the purchase
price by an amount which reflects an agreed upon market interest rate
effective for the period of time during which the repurchase agreement is in
effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the
instrument purchased, decline in its value and loss of interest. These risks
are minimized when the Fund holds a perfected security interest in the
Repurchase Securities and can therefore sell the instrument promptly. Under
guidelines issued by the Trustees, the Advisor will carefully consider the
creditworthiness during the term of the repurchase agreement. Repurchase
agreements are considered as loans collateralized by the Repurchase
Securities, such agreements being defined as "loans" under the Investment
Company Act of 1940 (the "1940 Act"). The return on such "collateral" may be
more or less than that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the "collateral" is
at all times as least equal to the value of the loan, including the accrued
interest earned thereon. All Repurchase Securities will be held by the Fund's
custodian either directly or through a securities depository.
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market
instruments may include U.S. Government Securities or corporate
- 2 -
<PAGE>
debt securities (including those subject to repurchase agreements) as
described herein, provided that they mature in thirteen months or less from
the date of acquisition and are otherwise eligible for purchase by the Fund.
Money market instruments also may include Bankers' Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper
and Variable Amount Demand Master Notes ("Master Notes"). BANKERS' ACCEPTANCES
are time drafts drawn on and "accepted" by a bank, are the customary means of
effecting payment for merchandise sold in import-export transactions and are a
source of financing used extensively in international trade. When a bank
"accepts" such a time draft, it assumes liability for its payment. When the
Fund acquires a Bankers' Acceptance, the bank which "accepted" the time draft
is liable for payment of interest and principal when due. The Bankers'
Acceptance, therefore, carries the full faith and credit of such bank. A
CERTIFICATE OF DEPOSIT ("CD") is an unsecured interest-bearing debt obligation
of a bank. COMMERCIAL PAPER is an unsecured, short term debt obligation of a
bank, corporation or other borrower. Commercial Paper maturity generally
ranges from two to 270 days and is usually sold on a discounted basis rather
than as an interest-bearing instrument. The Fund will invest in Commercial
Paper only if it is rated in one of the two highest rating categories by any
NRSRO or, if not rated, is of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. MASTER NOTES
are unsecured obligations which are redeemable upon demand of the holder and
which permit the investment of fluctuating amounts at varying rates of
interest. Master Notes are acquired by the Fund only through the Master Note
program of the Fund's custodian, acting as administrator thereof. The Advisor
will monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of
in the ordinary course of business within seven days at approximately the
prices at which they are valued. Under the supervision of the Board of
Trustees, the Advisor determines the liquidity of the Fund's investments and,
through reports from the Advisor, the Board monitors investments in illiquid
instruments. In determining the liquidity of the Fund's investments, the
Advisor may consider various factors including (1) the frequency of trades and
quotations, (2) the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4) the nature of the
security (including any demand or tender features) and (5) the nature of the
marketplace for trades (including the ability to assign or offset the Fund's
rights and obligations relating to the investment). Investments currently
considered by the Fund to be illiquid include repurchase agreements not
entitling the holder
- 3 -
<PAGE>
to payment of principal and interest within seven days and restricted
securities. If through a change in values, net assets or other circumstances,
the Fund were in a position where more than 10% of its net assets were
invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.
RESTRICTED SECURITIES. Within its limitation on investments in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time the Fund may be
permitted to sell a security under an effective registration statement. If
during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.
WRITING COVERED CALL OPTIONS. When the Advisor believes that individual
portfolio securities are approaching the top of the Advisor's growth and price
expectations, covered call options ("calls") may be written (sold) against
such securities in a disciplined approach to selling portfolio securities. The
Fund writes options only for hedging purposes and not for speculation. When
the Fund writes a call, it receives a premium and agrees to sell the
underlying securities to a purchaser of a corresponding call at any time
during the call period (usually not more than 9 months) at a fixed exercise or
"strike" price (which may, and often does, differ from the market price of the
underlying securities at the time of writing the call). The strike price
remains the same throughout the option period, regardless of market price
changes. To terminate its obligation on a call the Fund has written, it may
purchase a corresponding call in a "closing purchase transaction." A profit or
loss will be realized, depending upon whether the price of the closing
purchase transaction is more or less than the premium (net of transaction
costs) previously received on the call written. The Fund may also realize a
profit if the call it has written lapses unexercised, in which case the Fund
keeps the premium and retains the underlying securities as well. If a call
written by the Fund is exercised the Fund forgoes any possible profit from an
increase in the market price of the underlying security over the exercise
price plus the premium received.
Utilizing the facilities of the Options Clearing Corporation ("OCC"), the
Custodian or a securities depository acting for the Custodian, will, as the
Fund's escrow agent, hold the securities underlying calls written by the Fund,
so that no margin will be required for such transactions. OCC will release the
securities
- 4 -
<PAGE>
on the expiration of the calls or upon the Fund's entering into a closing
purchase transaction. Call writing affects the Fund's portfolio turnover rate
and the brokerage commissions it pays. Commissions for options, which are
normally higher than for general securities transactions, are payable when
writing calls and when purchasing closing purchase transactions. The writing
of call options by the Fund is subject to limitations established by each of
the exchanges governing the maximum number of options which may be written or
held by a single investor or group of investors acting in concert, regardless
of whether the options were written or purchased on the same or different
exchanges or are held in one or more accounts or through one or more different
exchanges or through one or more brokers. Therefore the number of calls the
Fund may write (or purchase in closing transactions) may be affected by
options written or held by other entities, including other clients of the
Advisor. An exchange may order the liquidation of positions found to be in
violation of these limits and may impose certain other sanctions.
Profits on closing purchase transactions and premiums on lapsed calls written
are considered capital gains for financial reporting purposes and are
short-term gains for federal income tax purposes. When short-term gains are
distributed to shareholders, they are taxed as ordinary income. If the Fund
desires to enter into a closing purchase transaction, but there is no market
when it desires to do so, it would have to hold the securities underlying the
call until the call lapses or until the call is exercised. The Fund intends to
remain qualified as a "regulated investment company" under Subchapter M of the
Internal Revenue Code. One of the requirements for such qualification is that
gains realized from the sale of securities held by the Fund less than three
months must comprise less than 30% of the Fund's gross income. Due to this
requirement, the Fund will limit the extent to which it writes call options on
investments held less than 3 months.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval of the holders of a majority of the
outstanding voting shares of the Fund. When used in the Prospectus or this
SAI, a "majority" of shareholders means the vote of the lesser of (1) 67% of
the shares of the Trust (or the Fund) present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
(2) more than 50% of the outstanding shares of the Trust (or the Fund). Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund MAY NOT:
- 5 -
<PAGE>
(1) Issue senior securities, borrow money, or pledge its assets,
except that it may borrow from banks as a temporary measure
(a) for extraordinary or emergency purposes, in amounts not
exceeding 5% of its total assets or (b) in order to meet
redemption requests in amounts not exceeding 15% of its
total assets. The Fund will not make any further
investments if borrowing exceeds 5% of its total assets
until such time as total borrowing represents less than 5%
of Fund assets.
(2) Invest for the purpose of exercising control or management
of another issuer;
(3) Purchase or sell commodities or commodities contracts, real
estate, (including limited partnership interests, but
excluding readily marketable securities secured by real
estate or interests therein, readily marketable interests
in real estate investment trusts, or readily marketable
securities issued by companies that invest in real estate or
interests therein) or interests in oil, gas or other mineral
exploration or development programs or leases (although it
may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases).
(4) Underwrite securities issued by others, except to the extent that the
disposition of portfolio securities, either directly from an issuer or
from an underwriter for an issuer may be deemed to be an underwriter
under the federal securities laws.
(5) Invest in warrants, valued at the lower of cost or market,
exceeding more than 5% of the value of the Fund's net
assets. Included within this amount, but not to exceed 2%
of the value of the Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchange;
warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
(6) Participate on a joint or joint and several basis in any
trading account in securities;
(7) Purchase foreign securities;
(8) Invest more than 10% of its total assets in the securities
of one or more investment companies;
(9) Make loans of money or securities, except that the Fund may (i) invest
in repurchase agreements and commercial paper; (ii) purchase a portion
of an issue of publicly distributed bonds, debentures or other debt
securities; and (iii) acquire private issues of debt securities subject
to the limitations on investments in illiquid securities; or
- 6 -
<PAGE>
(10) Write, purchase or sell puts, calls, straddles, or combinations thereof
or futures contracts or related options (but the Fund may write covered
call options as described in the Prospectus).
The following investment limitations are not fundamental, and may be changed
without shareholder approval. As a matter of nonfundamental policy, the Fund
MAY NOT:
(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be
invested in such securities;
(2) Invest more than 10% of its net assets in illiquid
securities. For this purpose, illiquid securities include,
among others (a) securities for which no readily available
market exists or which have legal or contractual
restrictions on resale, (b) fixed time deposits that are
subject to withdrawal penalties and have maturities of more
than seven days, and (c) repurchase agreements not
terminable within seven days;
(3) Invest in the securities of any issuer if those officers or Trustees of
the Trust and those officers and directors of the Advisor who
individually own more than 1/2 of 1% of the outstanding securities of
such issuer together own more than 5% of such issuer's securities;
(4) Make short sales of securities or maintain a short position, except
short sales "against the box." A short sale is made by selling a
security the Fund does not own. A short sale is "against the box"
to the extent that the Fund contemporaneously owns or has the right
to obtain at no additional cost securities identical to those sold
short. (While the Fund has reserved the right to make short sales
"against the box", the Advisor has no present intention of engaging
in such transactions at this time or during the coming year); or
(5) Purchase any securities on margin except in connection with
such short-term credits as may be necessary for the
clearance of transactions.
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of assets, it is intended that if the percentage limitation
is met at the time the investment is made, a later change in percentage
resulting from changing total or net asset values will not be considered a
violation of such policy.
- 7 -
<PAGE>
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Trust, their present
position with the Trust or Fund, age, principal occupations during the past 5
years and their aggregate compensation from the Trust for the fiscal year
ended February 29, 1996:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- - ------------------ -------------------- --------------
<C> <C> <C>
John P. Boone (age 64) President None
Trustee* Legacy Advisors, Inc. and
President Legacy Global Advisors, Inc.
Legacy Equity Fund Dallas, Texas
2911 Turtle Creek Boulevard Executive Vice President
Suite 400 Forum Securities, Inc.
Dallas, Texas 75219 Dallas, Texas
Jack E. Brinson (age 64) President, Brinson Investment Co. $6,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886 Trustee, Williamsburg Investment Trust
Cincinnati, Ohio
O. James Peterson III (age 59) Chief Financial Officer $6,000
Trustee Pimlico Race Course
Five Bellona Arsenal Laurel, Maryland; previously
Midlothian, Virginia Senior Vice President, Chief Financial Officer
Dominion Resources, Inc.
Richmond, Virginia
Christopher J. Smith (age 29) President None
Trustee* ObjectTiger Ltd.
867 Thorn Tree Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel
Seligman & Associates
Director, Amelia Earhart
Capital Management, Inc.
Southfield, Michigan
Ashby M. Foote III (age 44) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
One Jackson Place, Suite 1070
Jackson, Mississippi 39201
- 8 -
<PAGE>
Jasen M. Snelling (age 32 ) President
President CityFund Advisory, Inc; previously
Regional Opportunity Fund: Registered Representative
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 Registered Representative
Cincinnati, Ohio 45254 Provident Securities Investment Co.
Cincinnati, Ohio
Robert B. Thompson (age 49) Chief Executive Officer
President Morehead Capital Advisors LLC
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 47) President
President Amelia Earhart Capital Management, Inc.
Amelia Earhart: Eagle Equity Fund Southfield, Michigan
One Towne Square President
Suite 1913 Jill H. Travis, CFP
Southfield, Michigan 48076 Shelby Township, Michigan; previously
Senior Vice President
Huntington Banks, Troy, Michigan
Robert G. Dorsey (age 39) President and Treasurer, MGF Service Corp.;
Vice President Treasurer, Midwest Group Financial Services,
312 Walnut Street, 21st Floor Services, Inc.; Treasurer and Director
Cincinnati, Ohio 45202 Leshner Financial, Inc.
John F. Splain (age 39) Secretary and General Counsel,
Secretary MGF Service Corp., Midwest
312 Walnut Street, 21st Floor Group Financial Services, Inc. and
Cincinnati, Ohio 45202 Leshner Financial, Inc.; Secretary
Midwest Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust
Mark J. Seger (age 34) Vice President, MGF Service Corp.
Treasurer and Leshner Financial, Inc.; Treasurer,
312 Walnut Street, 21st Floor Midwest Trust, Midwest Group
Cincinnati, Ohio 45202 Tax Free Trust and Midwest Strategic Trust
- - -----------------------------------
<FN>
* Indicates that Trustee is an "interested person" for purposes of the 1940
Act because of his position with one of the investment advisors to the Trust.
</FN>
</TABLE>
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. Each disinterested Trustee receives an
annual retainer of $2,000 plus
- 9 -
<PAGE>
$250 from each series of the Trust for each Board meeting attended in person
and $100 from each series of the Trust for each meeting attended by telephone.
All Trustees are reimbursed for any out-of-pocket expenses incurred in
connection with their attendance at Board meetings.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 7, 1996, the Trustees and
officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund. On
the same date, Sta-Home Health Agency Inc. Pension Plan, 406 Briarwood Drive,
Jackson, Mississippi 39206, owned of record 17.3% of the then outstanding
Class A shares of the Fund; Nancy S. Speed, 1220 Luse Road, Benton,
Mississippi 39039, owned of record 7.9% of the then outstanding Class A shares
of the Fund; Gus A. Primos, 2829 Lakeland Drive, Jackson, Mississippi 39208,
owned of record 7.0% of the then outstanding Class A shares of the Fund; Gus
Primos Family Trust, P.O. Box 22567, Jackson, Mississippi 39225, owned of
record 7.0% of the then outstanding Class A shares of the Fund; Capital
Investors, Inc. P.O. Box 1683, Jackson, Mississippi 39215, owned of record
7.0% of the then outstanding Class A shares of the Fund; Gulf Guaranty Life
Insurance Company, P.O. Box 12409, Jackson, Mississippi 39236, owned of record
6.5% of the then outstanding Class A shares of the Fund; Harmon & Co. c/o
Trustmark National Bank Trust Dept., P.O. Box 291, Jackson, Mississippi 39205,
owned of record 41.8% of the then outstanding Class C shares of the Fund;
Raymond James & Associates, Inc. CDSN William F. Lynch Jr. IRA, P.O. Box
12749, St. Petersburg, Florida 33733, owned of record 12.0% of the then
outstanding Class C shares of the Fund; and John McMichael c/o MC's Air
Conditioner, 609 Lakeridge Lane, Clinton, Mississippi 39056, owned of record
6.5% of the then outstanding Class C shares of the Fund. Harmon & Co. may be
deemed to control the Class C shares of the Fund by virtue of its owning more
than 25% of the outstanding Class C shares.
INVESTMENT ADVISOR
Vector Money Management, Inc. (the "Advisor") supervises the Fund's
investments pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") described in the Prospectus. The Advisory Agreement will be
renewed for one year periods only so long as such renewal and continuance is
specifically approved at least annually by the Board of Trustees or by vote of
a majority of the Fund's outstanding voting securities, provided the
continuance is also approved by a majority of the Trustees who are not
"interested persons" of the Trust or the Advisor by vote cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement is terminable without penalty on sixty days notice by the Board of
Trustees of the Trust or by the Advisor. The Advisory Agreement provides that
it will terminate automatically in the event of its assignment.
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Compensation of the Advisor is at the annual rate of .875% of the Fund's
average daily net assets. The Advisor may be required to reimburse the Fund if
the Fund's annual ordinary operating expenses exceed certain limits. This
expense limitation is calculated and administered in accordance with the
requirements of state securities authorities. For the fiscal period ended
February 29, 1996, the Advisor waived its entire advisory fee of $11,633 and
reimburse the Fund $50,193 of expenses in order to voluntarily reduce the
operating expenses of the Fund.
The Advisor is controlled by Ashby M. Foote III, President of the Advisor and
Vice President of the Trust. In addition to acting as Advisor to the Fund, the
Advisor provides investment advice to individuals, bank and thrift
institutions, pension and profit sharing plans, trusts, estates, charitable
organizations and corporations.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities,
investments, cash and cash equivalents of the Fund. The Advisor determines
what securities and other investments will be purchased, retained or sold by
the Fund, and does so in accordance with the investment objective and policies
of the Fund as described herein and in the Prospectus. The Advisor places all
securities orders for the Fund, determining with which broker, dealer, or
issuer to place the orders. The Advisor also provides, at its own expense,
certain Executive Officers to the Trust.
The Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Advisor attempts to
obtain the best execution for all securities brokerage transactions.
Under the Advisory Agreement, the Advisor is not responsible for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of the Agreement, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services or
a loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Advisor in the performance of its duties or from the reckless
disregard of its duties and obligations under the Agreement.
ADMINISTRATOR
MGF Service Corp. (the "Administrator") maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator receives for its services as transfer
agent a fee payable monthly at an annual rate of $17 per account, provided,
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however, that the minimum fee is $1,000 per month for each class of shares. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage, envelopes, checks, drafts, forms, reports, record storage and
communication lines.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives $3,000 per month from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable the Administrator to perform its duties.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies
non-investment related statistical and research data, internal regulatory
compliance services and executive and administrative services. The
Administrator supervises the preparation of tax returns, reports to
shareholders of the Fund, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for
meetings of the Board of Trustees. For the performance of these administrative
services, the Fund pays the Administrator a fee at the annual rate of .15% of
the average value of its daily net assets up to $50,000,000, .125% of such
assets from $50,000,000 to $100,000,000 and .1% of such assets in excess of
$100,000,000.
Prior to June 1, 1996 the administrator to the Fund was The Nottingham
Company, Rocky Mount, North Carolina. For the fiscal period ended February 29,
1996, The Nottingham Company received from the Fund a fee of $33,000.
DISTRIBUTOR
Midwest Group Financial Services, Inc. (the "Distributor") is the principal
underwriter of the Fund and, as such, the exclusive agent for distribution of
shares of the Fund. The Distributor is obligated to sell the shares on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
The Distributor currently allows concessions to dealers who sell shares of the
Fund. The Distributor retains the entire sales charge on all direct
investments in the Fund and on all investments in accounts with no designated
dealer of record. Prior to June 1, 1996, Capital Investment Group, Inc. served
as the distributor for the Fund. For the fiscal period ended February 29,
1996, Capital Investment Group, Inc. retained $7,050 in underwriting
commissions.
The Fund may compensate dealers, including the Distributor and its affiliates,
based on the average balance of all accounts in
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the Fund for which the dealer is designated as the party
responsible for the account. See "Distribution Plans Under Rule
12b-1" below.
OTHER SERVICES
AUDITORS. The firm of KPMG Peat Marwick LLP, 201 East Fifth Street,
Cincinnati, Ohio 45202, has been retained by the Board of Trustees to perform
an independent audit of the financial statements of the Fund and to prepare the
Fund's federal and state tax returns.
CUSTODIAN. The Custodian of the Fund's assets is Trustmark National Bank, 248
East Capitol Street, Jackson, Mississippi 39205. The Custodian holds all cash
and securities of the Fund (either in its possession or in its favor through
"book entry systems" authorized by the Trustees in accordance with the 1940
Act), collects all income and effects all securities transactions on behalf of
the Fund. For its services as Custodian, the Custodian receives an annual fee
from the Fund based on the average net assets of the Fund held by the
Custodian.
BROKERAGE
It is the Fund's practice to seek to obtain the best overall terms available
in executing Fund transactions and selecting brokers or dealers. Subject to
the general supervision of the Board of Trustees, the Advisor is responsible
for, makes decisions with respect to, and places orders for all purchases and
sales of portfolio securities for the Fund.
In assessing the best overall terms available for any transaction, the Advisor
shall consider factors it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In addition, the Advisor may cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission than that
which might be charged by another broker-dealer for effecting the same
transaction, provided the Advisor determines in good faith that such
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of either
the particular transaction or the overall responsibilities of the Advisor to
the Fund. Such brokerage and research services may consist of reports and
statistics relating to specific companies or industries, general summaries of
groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the economy and the
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stock, bond and government securities markets.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review
any commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits received by the Fund. It is possible that certain of the
supplementary research or other services received will primarily benefit one
or more other accounts for which investment discretion is exercised by the
Advisor. Conversely, the Fund may be the primary beneficiary of the research
or other services received as a result of securities transactions effected for
such other accounts.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution from such firm. The
Fund will not execute portfolio transactions through, acquire securities
issued by, make savings deposits in or enter into repurchase agreements with
the Advisor or an affiliated person of the Advisor (as such term is defined in
the 1940 Act) acting as principal, except to the extent permitted by the
Securities and Exchange Commission ("SEC"). In addition, the Fund will not
purchase securities during the existence of any underwriting or selling group
relating thereto of which the Advisor or an affiliated person of the Advisor,
is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations
in comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.
The Fund purchases money market instruments from dealers, underwriters and
issuers. The Fund does not expect to incur any brokerage commissions on such
purchases because money market instruments are generally traded on a net basis
by a dealer acting as principal for its own account without a stated
commission. The price of the security, however, usually includes a profit to
the dealer. Securities purchased in underwritten offerings include a fixed
amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. When securities are purchased directly
from or sold directly to an issuer, no commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary
among different brokers. Transactions in the over-the-counter
market are generally on a net basis (i.e. without commission)
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through dealers, or otherwise involve transactions directly with the issuer of
an instrument.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole
discretion, believes such practice to be otherwise in the Fund's interest.
Investment decisions for the Fund will be made independently from those for
any other accounts advised or managed by the Advisor. Such other accounts may
also invest in the same securities as the Fund. To the extent permitted by
law, the Advisor may aggregate the securities to be sold or purchased for the
Fund with those to be sold or purchased for other accounts in executing
transactions. When a purchase or sale of the same security is made at
substantially the same time on behalf of the Fund and other accounts, the
transaction will be averaged as to price and available investments allocated
as to amount, in the manner which the Advisor believes to be equitable to the
Fund and such other accounts. In some instances, this investment procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtained or sold by the Fund.
For the fiscal period ended February 29, 1996, the total amount of brokerage
commissions paid by the Fund were $7,178.
DISTRIBUTION PLANS UNDER RULE 12B-1
The Fund has adopted a Plan of Distribution for Class A shares (the "Class A
Plan") and for Class C shares (the "Class C Plan") pursuant to Rule 12b-1
under the 1940 Act (collectively, the "Plans"). The Plans permit the Fund to
pay for expenses incurred in the distribution and promotion of each class of
the Fund's shares.
Under the Class A Plan, the Fund may expend in any fiscal year up to .50% of
the Class A shares' average daily net assets to finance any activity which is
primarily intended to result in the sale of Class A shares and the servicing
of shareholder accounts, provided the Board of Trustees has approved the
category of expenses for which payment is being made. Expenditures under the
Class A Plan as service fees to any person who sells Class A shares may not
exceed an annual rate of .25% of the average daily net assets of such shares.
Under the Class C Plan, the Fund may expend in any fiscal year up to 1% of the
Class C shares' average daily net assets to finance any activity which is
primarily intended to result in the sale of Class C shares and the servicing
of shareholder accounts, provided the Board of Trustees has approved the
category of
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expenses for which payment is being made. Expenditures under the Class C Plan
as service fees to any person who sells Class C shares may not exceed an
annual rate of .25% of the average net assets of such shares. Expenditures
under the Class C Plan for distribution activities as an asset-based sales
charge may not exceed an annual rate of .75% of the average net assets of
Class C shares.
Potential benefits to the Fund from the Plans include improved shareholder
servicing, savings in transfer agency costs, benefits to the investment
process from growth and stability of assets and maintenance of a financially
healthy management organization. Subject to its practice of seeking to obtain
best execution, the Fund may, from time to time, buy or sell portfolio
securities from or to firms which receive payments under the Plans.
During the fiscal period ended February 29, 1996, Class A and Class C shares
incurred $3,912 and $2,458, respectively, in distribution costs under the
Plans for payments to broker-dealers and others for the sale or retention of
assets.
Mr. Foote, as the President and controlling shareholder of the Advisor, may be
deemed to have a financial interest in the operation of the Plans and the
Implementation Agreements.
The Plans, the Underwriting Agreement with the Distributor and the form of
Dealer Agreement with broker-dealers have all been approved by the Board of
Trustees of the Trust, including a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in the Plans or any related agreements,
by vote cast in person or at a meeting duly called for the purpose of voting
on the Plans and such Agreements. Continuation of the Plans, the Underwriting
Agreement and the form of Dealer Agreement must be approved annually by the
Board of Trustees in the same manner as specified above.
Each year the Trustees must determine that continuation of the Plans is in the
best interests of shareholders of the Fund and there is a reasonable
likelihood that the Plans will benefit the Fund. The Board of Trustees has
made such a determination for the current year of operations under the Plans.
The Plans, the Underwriting Agreement and the Dealer Agreements may be
terminated at any time without penalty by a majority of those trustees who are
not "interested persons" or by a majority of the outstanding shares of each
class. Any amendment materially increasing the maximum percentage payable
under the Plans must likewise be approved by a majority of the outstanding
shares of the applicable class as well as a majority of the Trustees who are
not "interested persons" and have no direct or indirect financial interest in
the Plans (the "Independent Trustees"). In order for the Plans to remain
effective, the selection and nomination of those Trustees who are not
interested persons of
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<PAGE>
the Trust must be effected by the Independent Trustees during such period. All
amounts spent by the Fund pursuant to the Plans must be reported quarterly in
a written report to the Trustees for their review.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be
made at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to
date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bi-monthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum) which will be automatically invested in
shares at the public offering price on or about the fifteenth day or the last
business day of the month. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the
Administrator.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $5,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $50 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and
December). Payments in amounts over $5,000 may be made directly to an
investor's account with a commercial bank or other depository institution via
an Automated Clearing House ("ACH") transaction. Instructions for establishing
this service are included in the Application contained in the Prospectus or
are available by calling the Fund. Payment may also be made by check made
payable to the designated recipient and mailed within 7 days of the valuation
date. If the designated recipient is other than the registered shareholder,
the signature of each shareholder must be guaranteed on the application (see
"Signature Guarantees"
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<PAGE>
in the Prospectus). A corporation (or partnership) must also submit a
"Corporate Resolution" (or "Certification of Partnership") indicating the
names, titles and required number of signatures authorized to act on its
behalf. The application must be signed by a duly authorized officer(s) and the
corporate seal affixed. No redemption fees are charged to shareholders under
this plan. Costs in conjunction with the administration of the plan are borne
by the Fund. Investors should be aware that such systematic withdrawals may
deplete or use up entirely their initial investment and may result in realized
long-term or short-term capital gains or losses. The Systematic Withdrawal
Plan may be terminated at any time by the Fund upon sixty days' written notice
or by an investor upon written notice to the Fund. Applications and further
details may be obtained by calling the Funds at 1-800-580-4820, or by writing
to:
Mississippi Opportunity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment
for the purchase of shares of the Fund. The acceptance of such securities is
at the sole discretion of the Advisor based upon the suitability of the
securities accepted for inclusion as a long term investment of the Fund, the
marketability of such securities, and other factors which the Advisor may deem
appropriate. If accepted, the securities will be valued using the same
criteria and methods as described in "How Shares are Valued" in the
Prospectus. Transactions involving the issuance of shares in the Fund for
securities in lieu of cash will be limited to acquisitions of securities
(except for municipal debt securities issued by state political subdivisions
or their agencies or instrumentalities) which: (a) meet the investment
objective and policies of the Fund; (b) are acquired for investment and not
for resale; (c) are liquid securities which are not restricted as to transfer
either by law or liquidity of market; and (d) have a value which is readily
ascertainable (and not established only by evaluation procedures) as evidenced
by a listing on the American Stock Exchange, the New York Stock Exchange or
NASDAQ.
REDEMPTION IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the
Trustees, make it undesirable for the Fund to pay for all redemptions in cash.
In such case, the Board of Trustees may authorize payment to be made in
readily marketable portfolio securities of the Fund. Securities delivered in
payment of redemptions would be valued at the same value assigned to them in
computing the net asset value per share. Shareholders receiving such
securities would incur
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brokerage costs when the securities are sold. An irrevocable election has been
filed under Rule 18f-1 of the 1940 Act, wherein the Fund is committed to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety day period, the lesser of (a) $250,000 or
(b) one percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund's Administrator at the address shown herein. Your request
should include the following: (1) the Fund name and existing account
registration; (2) signature(s) of the registered owner(s) exactly as the
signature(s) appear(s) on the account registration; (3) the new account
registration, address, social security or taxpayer identification number and
how dividends and capital gains are to be distributed; (4) signature
guarantees (see the Prospectus under the heading "Signature Guarantees"); and
(5) any additional documents which are required for transfer by corporations,
administrators, executors, trustees, guardians, etc. If you have any questions
about transferring shares, call or write the Administrator.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
PURCHASES. Shares of the Fund are offered and sold on a continuous basis and
may be purchased through authorized dealers or directly by contacting the
Distributor or the Administrator. Selling dealers have the responsibility of
transmitting orders promptly to the Fund's Administrator. The public offering
price of Class A shares equals net asset value plus a sales charge. Class C
shares are sold at net asset value. The Distributor receives the sales charge
on Class A shares as Distributor and may reallow it in the form of dealer
discounts and brokerage commissions. The current schedule of sales charges and
related dealer discounts and brokerage commissions for Class A shares is set
forth in the Prospectus. See "How to Purchase Shares" in the Prospectus.
REDEMPTIONS. Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading
on the New York Stock Exchange is restricted by applicable rules and
regulations of the SEC; (b) the Exchange is closed for other than customary
weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC. The Fund may
also suspend or postpone the recordation of the transfer of shares upon the
occurrence of any of the foregoing conditions.
In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of an investor to make full
payment for shares purchased
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by the investor or to collect any charge relating to a transaction effected
for the benefit of an investor which is applicable to Fund shares as provided
in the Prospectus from time to time.
HOW SHARE PRICE IS DETERMINED
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund and they have
adopted procedures to do so as follows:
The public offering price (net asset value plus applicable sales charge) of
Class A shares and the net asset value of Class C shares of the Fund is
determined as of 4:00 p.m., Eastern time, Monday through Friday, except on
business holidays when the New York Stock Exchange is closed. The New York
Stock Exchange recognizes the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day
and Christmas Day. Any other holiday recognized by the New York Stock Exchange
will be considered a business holiday on which the Fund's share price will not
be determined.
The net asset value per share of each class of the Fund is calculated
separately by adding the value of the securities and other assets belonging to
the Fund and attributable to that class, subtracting the liabilities charged
to the Fund and to that class and dividing the result by the number of
outstanding shares of that class. Assets belonging to the Fund consist of the
consideration received upon the issuance of shares of the Fund together with
all net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular Fund.
Income, realized and unrealized capital gains and losses, and any expenses of
the Fund not allocable to a particular class of shares will be allocated to
each class based on the net assets of that class in relation to the net assets
of the Fund. Assets belonging to the Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net assets of all series in the Trust at the time of allocation or in
accordance with other allocation methods approved by the Board of Trustees.
Certain expenses attributable to a particular class of shares (such as
distribution fees) will be charged to that class. Certain other expenses
attributable to a particular class of shares (such as registration fees,
professional fees and certain printing and postage expenses) may be charged to
that class if such expenses are actually incurred in a different amount by
that class or if the class receives services of a different kind or to a
different degree than another class and the Board of Trustees approves such
allocation. Subject to the provisions of the
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Declaration of Trust, determinations by the Board of Trustees as to the direct
and allocable liabilities and the allocable portion of any general assets,
with respect to the Fund and its classes are conclusive.
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is
based on tax laws and regulations that are in effect on the date hereof; such
laws and regulations may be changed by legislative, judicial or administrative
action. Investors are advised to consult their tax advisors with specific
reference to their own tax situations.
Each series of the Trust, including the Fund, will be treated as a separate
entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source
of its income for a taxable year. At least 90% of the gross income of the Fund
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities or
foreign currencies, and other income derived with respect to the Fund's
business of investing in such stock, securities or currencies. Any income
derived by the Fund from a partnership or trust is derived with respect to the
Fund's business of investing in such stock, securities or currencies only to
the extent that such income is attributable to items of income that would have
been qualifying income if realized by the Fund in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of the Fund's gross income for a taxable year
must be derived from gains realized on the sale or other disposition of the
following investments held for less than three months: (1) stock and
securities (as defined in Section 2(a)(36) of the 1940 Act); (2) options,
futures and forward contracts other than those on foreign currencies; or (3)
foreign currencies (or options, futures or forward contracts on foreign
currencies) that are not directly related to the Fund's principal business of
investing in stocks or securities (or options and futures with respect to
stocks or securities). Interest (including original issue discount and, with
respect to
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certain debt securities, accrued market discount) received by the Fund upon
maturity or disposition of a security held for less than three months will not
be treated as gross income derived from the sale or other disposition of such
security within the meaning of this requirement. However, any other income
which is attributable to realized market appreciation will be treated as gross
income from the sale or other disposition of securities for this purpose.
An investment company may not qualify as a regulated investment company for
any taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more that 5% of the total assets of the
investment company nor more than 10% of the outstanding voting securities of
such issuer. In addition, not more than 25% of the value of the investment
company's total assets may be invested in the securities (other than
government securities or the securities of other regulated investment
companies) of any one issuer. The Fund intends to satisfy all requirements on
an ongoing basis for continued qualification as a regulated investment
company.
The Fund will designate any distribution of long term capital gains as a
capital gain dividend in a written notice mailed to shareholders within 60
days after the close of the Fund's taxable year. Shareholders should note
that, upon the sale or exchange of shares, if the shareholder has not held
such shares for at least six months, any loss on the sale or exchange of those
shares will be treated as a long term capital loss to the extent of the
capital gain dividends with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies
that fail to currently distribute an amount equal to specified percentages of
their ordinary taxable income and capital gain net income (excess of capital
gains over capital losses). The Fund intends to make sufficient distributions
or deemed distributions of its ordinary taxable income and any capital gain
net income prior to the end of each calendar year to avoid liability for this
excise tax.
If for any taxable year the Fund does not qualify for the special federal
income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate
rates (without any deduction for distributions to its shareholders). In such
event, dividend distributions (whether or not derived from interest on
tax-exempt securities) would be taxable as ordinary income to shareholders
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to the extent of the Fund's current and accumulated earnings and profits, and
would be eligible for the dividends received deduction for corporations.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the
Internal Revenue Service for failure to properly include on their tax return
payments of taxable interest or dividends, or who have failed to certify to
the Fund that they are not subject to backup withholding when required to do
so or that they are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent
contractors are located or in which it is otherwise deemed to be conducting
business, the Fund may be subject to the tax laws of such states or
localities. In addition, in those states and localities that have income tax
laws, the treatment of the Fund and its shareholders under such laws may
differ from their treatment under federal income tax laws.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Massachusetts
law on August 12, 1992. The Trust's Declaration of Trust authorizes the Board
of Trustees to divide shares into series, each series relating to a separate
portfolio of investments. The Declaration of Trust currently provides for the
shares of five series: the Amelia Earhart: Eagle Equity Fund managed by Amelia
Earhart Capital Management, Inc. of Southfield Michigan; The Carolinas Fund
managed by Morehead Capital Advisors LLC of Charlotte, North Carolina; the
Regional Opportunity Fund: Ohio Indiana Kentucky managed by CityFund Advisory,
Inc. of Cincinnati, Ohio; the Legacy Equity Fund managed by Legacy Advisors,
Inc. of Dallas, Texas; and the Fund. The Board of Trustees has authorized
separate classes of shares for the Fund, The Carolinas Fund, the Regional
Opportunity Fund: Ohio Indiana Kentucky and the Amelia Earhart: Eagle Equity
Fund.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be
entitled to receive the assets available for distribution belonging to such
series. Shareholders of a series are entitled to participate equally in the
net distributable assets of the particular series involved on liquidation,
based on the number of shares of the series that are held by each shareholder.
If any assets, income, earnings, proceeds, funds or payments are not readily
identifiable as belonging to any particular series, the Trustees shall
allocate them among any one
- 23 -
<PAGE>
or more series as they, in their sole discretion, deem fair and equitable.
Shares of the Fund, when issued, are fully paid and non-assessable.
Shareholders are entitled to one vote for each full share held and a
fractional vote for each fractional share held. Shareholders of all series in
the Trust, including the Fund, will vote together and not separately, except
as otherwise required by law or when the Board of Trustees determines that the
matter to be voted upon affects only the interests of the shareholders of a
particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority
of the outstanding shares of each series or class affected by the matter. A
series or class is affected by a matter unless it is clear that the interests
of each series in the matter are substantially identical or that the matter
does not affect any interest of the series. Under Rule 18f-2 of the 1940 Act,
the approval of an investment advisory agreement, a material change to a Rule
12b-1 Plan or any change in a fundamental investment policy would be
effectively acted upon with respect to a series only if approved by a majority
of the outstanding shares of such series. However, the Rule also provides that
the ratification of the appointment of independent accountants, the approval
of principal underwriting contracts and the election of Trustees may be
effectively acted upon by shareholders of the Trust voting together, without
regard to a particular series.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as
such liability may arise from his or her own bad faith, willful misfeasance,
gross negligence or reckless disregard of duties. It also provides that all
third parties shall look solely to the Trust property for satisfaction of
claims arising in connection with the affairs of the Trust. With the
exceptions stated, the Declaration of Trust provides that a Trustee or officer
is entitled to be indemnified against all liability in connection with the
affairs of the Trust.
Prior to June 1, 1996 the Trust was named The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. Average annual total return and
yield are computed separately for Class A and Class C shares of the Fund. The
yield of Class A shares is expected to be higher than the yield of Class C
shares due to the
- 24 -
<PAGE>
higher distribution fees imposed on Class C shares. The average annual total
return of the Fund for a period is computed by subtracting the net asset value
per share at the beginning of the period from the net asset value per share at
the end of the period (after adjusting for the reinvestment of any income
dividends and capital gain distributions), and dividing the result by the net
asset value per share at the beginning of the period. In particular, the
average annual total return of the Fund ("T") is computed by using the
redeemable value at the end of a specified period of time ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time ("n")
according to the formula P(l+T)n=ERV. The calculation of average annual total
return assumes the reinvestment of all dividends and distributions and the
deduction of the current maximum sales load from the initial $1,000 payment.
The average annual total returns of Class A shares and Class C shares for the
period since inception (April 4, 1995) to February 29, 1996 are 9.39% and
13.15%, respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return.
Nonstandardized Return may consist of a cumulative percentage of return,
actual year-by-year rates or any combination thereof. The average annual
Nonstandardized Return of Class A shares (computed without the applicable
sales load) for the period since inception (April 4, 1995) to February 29,
1996 is 13.77%. A nonstandardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
From time to time, the Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
- 25 -
<PAGE>
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity
of each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day
prior to the start of the 30-day (or one month) period for which yield is
being calculated, or, with respect to obligations purchased during the month,
the purchase price (plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other
mutual funds having similar objectives or to standardized indices or other
measures of investment performance. In particular, the Fund may compare its
performance to the S&P 500 Index, which is generally considered to be
representative of the performance of unmanaged common stocks that are publicly
traded in the United States securities markets. Comparative performance may
also be expressed by reference to a ranking prepared by a mutual fund
monitoring service, such as Lipper Analytical Services, Inc. or Morningstar,
Inc. or by one or more newspapers, newsletters or financial periodicals. The
Fund may also occasionally cite statistics to reflect its volatility and risk.
The Fund may also compare its performance to published reports of the
performance of unmanaged portfolios of companies located in Mississippi. The
performance of such unmanaged portfolios generally does not reflect the
effects of dividends or dividend reinvestment. Performance comparisons may be
useful to investors who wish to compare the Fund's past performance to that of
other mutual funds and investment products. Of course, past performance is not
a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net
earnings and net asset value per share fluctuate daily. Both net earnings and
net asset value per share are factors in the computation of total return as
described above.
As indicated, from time to time, the Fund may advertise its performance
compared to similar funds or portfolios using certain indices, reporting
services, and financial publications. These may include the following:
O LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
o MORNINGSTAR, INC., an independent rating service, is the
publisher of the bi-weekly Mutual Fund Values. Mutual Fund
- 26 -
<PAGE>
Values rates more than 1,000 NASDAQ-listed mutual funds of all types,
according to their risk-adjusted returns. The maximum rating is five
stars, and ratings are effective for two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain
a more complete view of the Fund's performance before investing. Of course,
when comparing the Fund's performance to any index, factors such as
composition of the index and prevailing market conditions should be considered
in assessing the significance of such comparisons. When comparing funds using
reporting services, or total return, investors should take into consideration
any relevant differences in funds such as permitted portfolio compositions and
methods used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote total returns
that are calculated on nonstandardized base periods. The total returns
represent the historic change in the value of an investment in the Fund based
on monthly reinvestment of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation
and the effects of inflation on the dollar, including the purchasing power of
the dollar at various rates of inflation. The Fund may also disclose from time
to time information about its portfolio allocation and holdings at a
particular date (including ratings of securities assigned by independent
rating services such as S&P and Moody's). The Fund may also depict the
historical performance of the securities in which the Fund may invest over
periods reflecting a variety of market or economic conditions either alone or
in comparison with alternative investments, performance indices of those
investments, or economic indicators. The Fund may also include in
advertisements and in materials furnished to present and prospective
shareholders statements or illustrations relating to the appropriateness of
types of securities and/or mutual funds that may be employed to meet specific
financial goals, such as saving for retirement, children's education, or other
future needs.
- 27 -
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
Under normal market conditions, at least 90% of the Fund's net assets will be
invested in equities. As a temporary defensive position, however, the Fund may
invest up to 100% of its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements or money market instruments
("Investment-Grade Debt Securities"). When the Fund invests in
Investment-Grade Debt Securities as a temporary defensive measure, it is not
pursuing its investment objective. Under normal circumstances, however, the
Fund may invest in money market or repurchase agreement instruments as
described in the Prospectus.
The various ratings used by the NRSROs are described below. A rating by an
NRSRO represents the organization's opinion as to the credit quality of the
security being rated. However, the ratings are general and are not absolute
standards of quality or guarantees as to the creditworthiness of an issuer.
Consequently, the Advisor believes that the quality of fixed-income securities
in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved
in credit analysis. A rating is not a recommendation to purchase, sell or hold
a security because it does not take into account market value or suitability
for a particular investor. When a security has received a rating from more
than one NRSRO, each rating is evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the NRSROs from
other sources that they consider reliable. Ratings may be changed, suspended
or withdrawn as a result of changes in or unavailability of such information,
or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS:
The following summarizes the four highest ratings used by Moody's Investors
Service, Inc. ("Moody's") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA: Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be
- 28 -
<PAGE>
of greater amplitude or there may be other elements present which make the
long term risks appear somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to
be considered upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
that suggest a susceptibility to impairment sometime in the future.
BAA: Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
Investment-Grade Debt Securities by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because
the protection of interest and principal payments often may be very moderate
and not well safeguarded. Bonds which are rated B generally lack
characteristics of a desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the security over any long period
of time may be small. Bonds which are rated Caa are of poor standing. Such
securities may be in default or there may be present elements of danger with
respect to principal or interest. Bonds which are rated Ca represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. Bonds which are rated C are the
lowest rated class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics of issuers
rated Prime-1 but to a lesser degree.
- 29 -
<PAGE>
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriated may be
more affected by external conditions. Ample alternate liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term
notes and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S RATINGS:
The following summarizes the four highest ratings used by Standard & Poor's
Ratings Group ("S&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
Investment-Grade Debt Securities and are regarded, on balance, as predominately
speculative with respect to the issuer's capacity to pay interest and principal
in accordance with the terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation. While such bonds may
have some quality and protective characteristics,
- 30 -
<PAGE>
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted A-1+. Capacity for timely
payment on commercial paper rated A-2 is satisfactory, but the relative degree
of safety is not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are give a
plus (+) designation.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S RATINGS:
The following summarizes the four highest ratings used by Fitch Investors
Service, Inc. ("Fitch") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA: Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated
in the AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-1+.
A: Bonds are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within a rating category.
- 31 -
<PAGE>
Bonds rated BB, B and CCC by Fitch are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for
short-term notes, municipal notes, variable rate demand instruments and
commercial paper.
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S RATINGS:
The following summarizes the four highest ratings used by Duff & Phelps Credit
Rating Co. ("D&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating credit quality. The risk
factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit
quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A: Bonds rated A have average but adequate protection
factors. However risk factors are more variable and greater in
periods of economic stress.
BBB: Bonds rated BBB have below average protection factors,
but are still considered sufficient for prudent investment.
There is considerable variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
- 32 -
<PAGE>
The rating Duff 1 is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff 1+, Duff 1
and Duff 1- within the highest rating category. Duff 1+ indicates highest
certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is judged to
be outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1 indicates very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are considered to be minor. Duff 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
FINANCIAL STATEMENTS AND REPORTS
The Financial Statements of the Fund will be audited at least once each
year by independent public accountants. Shareholders will receive annual
audited and semiannual (unaudited) reports when published, and will receive
written confirmation of all confirmable transactions in their account. A copy
of the Annual Report will accompany the Statement of Additional Information
whenever the Statement of Additional Information is requested by a shareholder
or prospective investor. The Financial Statements of the Fund as of February
29, 1996, together with the report of the independent accountants thereon, are
included on the following pages.
- 33 -
<PAGE>
- - -
[VECTOR MONEY MANAGEMENT, INC. Letterhead]
1 May 1996
Dear Fellow Shareholders,
As the investment advisor to The Mississippi Opportunity Fund, Vector Money
Management is pleased to provide you with the first annual report for the
fund. Due to a February 29 1996 fiscal year end for our fund family, the
annual report covers only the 10.5 months in which the fund was operational.
For this period ending February 29, 1996 the raw performance numbers of 13.77%
for Class A shares and 13.07% for Class C shares compare with the S&P Index
returns of 23.43%. Our primary concern during the start up phase of the fund
was to identify companies we felt were undervalued by the markets and deploy
funds as investment opportunities presented themselves. As a consequence, the
fund was not fully invested until the fall of 1995.
The groundwork laid during the initial investment process has begun to bear
fruit during the first four months of 1996. The fund, on a year to date basis,
was up 13.23% versus the S&P Index performance of 6.98% through April 30,
1996.
The companies which provided the largest gains during our first year were
Delta & Pine Land, Gulf South Medical Supply, WorldCom, Microtek Medical,
First Mississippi and Belmont Homes.
Additionally, in an effort to improve shareholder services, the Trustees of
the fund have elected to change fund administrators to MGF Services Corp. You
will notice a new statement format at the end of the June quarter.
Thanks for your continued support.
Sincerely,
/s/ ASHBY M. FOOTE III
Ashby M. Foote III
President
Vector Money Management
Portfolio Manager - The Mississippi Opportunity Fund
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
CLASS A SHARES
Performance Update - $10,000 Investment
For the period from April 4, 1995 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
MISSISSIPPI OPPORTUNITY FUND -
Class A FUND S&P 500
04-Apr-95 9650 9650
31-May-95 9561 10188
31-Aug-95 10684 10732
30-Nov-95 10439 11562
29-Feb-96 10848 12232
THIS GRAPH DEPICTS THE PERFORMANCE OF THE CLASS A SHARES OF THE MISSISSIPPI
OPPORTUNITY FUND VERSUS THE S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE
MISSISSIPPI OPPORTUNITY FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND WHILE
THE INDEXES ARE NOT AVAILABLE FOR INVESTMENT AND ARE UNMANAGED. THE COMPARISON
IS SHOWN FOR ILLUSTRATIVE PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement
of operations
through 2/29/96
No Sales Load 13.77%
Maximum 3.5% Sales Load 9.39%
(bullet) The graph assumes an initial $10,000 investment at April 4, 1995
($9,650 after maximum sales load of 3.5%). All dividends and
distributions are reinvested.
(bullet) At February 29, 1996, the Class A Shares of the Fund would have
grown to $10,848 - total investment return of 8.48% since
April 4, 1995. Without the deduction of the 3.5% maximum sales
load, the Class A Shares of the Fund would have grown to $11,241 -
total investment return of 12.41% since April 4, 1995. The sales
load may be reduced or eliminated for larger purchases.
(bullet) At February 29, 1996, a similar investment in the S&P 500 Index
(after maximum sales load of 3.5%) would have grown to $12,232 -
total investment return of 22.32% since April 4, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions,
and the principal value of shares, when redeemed, may be worth more
or less than the original cost. Average annual returns are historical
in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestments of dividends.
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
Number of Value
Shares (note 1)
--------- ----------
COMMON STOCKS - 91.51%
Agriculture - 6.38%
Delta & Pine Land Company 2,666 $125,302
----------
Building Materials - 0.87%
Masco Corporation 600 17,100
----------
Chemicals - 9.91%
First Mississippi Corporation 4,500 117,562
Mississippi Chemical Corporation 3,500 77,000
----------
194,562
----------
Electrical Equipment - 0.36%
(a) MagneTek, Inc. 1,000 7,000
----------
Entertainment - 1.15%
(a) Boyd Gaming Corporation 2,000 22,500
----------
Financial Services - 2.99%
(a) MS Financial, Inc. 10,000 58,750
----------
Financial-Banks, Commercial - 7.95%
BancorpSouth, Inc. 1,400 33,075
Deposit Guaranty Corporation 500 23,625
Hancock Holding Company 1,000 37,250
Trustmark Corporation 1,500 31,125
Union Planters Corporation 1,000 30,875
----------
155,950
----------
Financial- Savings/Loans/Thrift - 2.22%
Magna Bancorp, Inc. 1,500 43,500
----------
Food-Processing - 2.42%
Sanderson Farms, Inc. 2,000 21,500
Sara Lee Corporation 800 25,900
----------
47,400
----------
Forest Products & Paper - 2.26%
Georgia Pacific Corporation 250 15,781
International Paper Company 800 28,600
----------
44,381
----------
Furniture & Home Appliances - 2.99%
(a) Chromcraft Revington, Inc. 1,000 23,000
National Presto Industries, Inc. 500 20,625
(a) River Oaks Furniture, Inc. 3,000 15,000
----------
58,625
----------
<PAGE>
(Continued)
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
Number of Value
Shares (note 1)
---------- ----------
COMMON STOCKS (Continued)
Household Products & Housewares - 1.82%
(a) National Picture & Frame Company 2,000 $ 19,625
Sunbeam Company, Inc. 1,000 16,125
----------
35,750
----------
Computer Software & Services - 0.52%
(a) Netscape Communications Corporation 200 10,200
----------
Manufactured Housing - 4.46%
(a) Belmont Homes, Inc. 5,000 87,500
----------
Medical Supplies - 12.37%
(a) American Medical Response, Inc. 1,500 50,625
Baxter International, Inc. 500 22,875
(a) Gulf South Medical Supply, Inc. 3,500 118,125
(a) Microtek Medical, Inc. 5,000 51,250
----------
242,875
----------
Miscellaneous - Manufacturing - 0.86%
Standex International Corporation 600 16,950
----------
Oil & Gas - Domestic - 3.48%
(a) Callon Petroleum Company 7,000 68,250
----------
Real Estate - 1.64%
Parkway Company 1,500 32,250
----------
Real Estate Investment Trust - 1.15%
Eastgroup Properties 1,000 22,500
----------
Retail - Department Stores - 6.14%
(a) Proffitt's, Inc. 3,000 78,750
Fred's, Inc. 4,000 29,500
(a) Stein Mart, Inc. 1,000 12,250
----------
120,500
----------
Iron & Steel - 1.52%
Birmingham Steel Corporation 2,000 29,750
----------
Telecommunications - 5.86%
(a) Mobile Telecommunication
Technologies Corp. 8,000 115,000
----------
Tire & Rubber - 1.30%
Cooper Tire and Rubber Company 1,000 25,500
----------
(Continued)
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
Number of Value
Shares (note 1)
---------- ----------
COMMON STOCKS (Continued)
Transportation - Air - 1.77%
(a) ValuJet, Inc. 1,500 $ 34,688
----------
Trucking & Leasing - 0.78%
(a) KLLM Transport Services, Inc. 1,500 15,375
----------
Utilities - Telecommunications - 6.02%
(a) WorldCom, Inc. 3,000 118,125
----------
Transportation - Marine - 2.32%
(a) Kirby Corporation 2,500 45,625
----------
Total Common Stocks (Cost $1,674,204) 1,795,908
----------
PREFERRED STOCK - 1.40%
Oil & Gas - Domestic
Callon Petroleum Company 1,000 27,500
----------
(Cost $25,000)
INVESTMENT COMPANY - 3.77%
Performance Funds Trust Money Market Fund "B" 73,986 73,986
----------
(Cost $73,986)
Total Value of Investments (Cost $1,773,190 (b)) 96.68% 1,897,394
Other Assets Less Liabilities 3.32% 65,223
-------- ----------
Net Assets 100.00% $1,962,617
========= ==========
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation)
of investments for financial reporting and federal income tax
purposes is as follows:
Unrealized appreciation $ 304,876
Unrealized depreciation (180,672)
-----------
Net unrealized appreciation $ 124,204
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
ASSETS
Investments at value (cost $1,773,190) $1,897,394
Dividends receivable 2,137
Receivable for fund shares sold 7,140
Due from advisor (note 2) 37,460
Deferred organization expenses, net (note 4) 37,117
Other asset 51
-------------
Total assets 1,981,299
-------------
LIABILITIES
Accrued professional fees 8,500
Accrued expenses 8,847
Disbursements in excess of cash on demand deposit 1,335
-------------
Total liabilities 18,682
-------------
NET ASSETS $1,962,617
=============
NET ASSETS CONSIST OF
Paid-in capital $1,816,678
Undistributed net realized gain on investments 21,735
Net unrealized appreciation on investments 124,204
-------------
$1,962,617
=============
CLASS A
Net asset value ($1,448,527 / 129,131 shares outstanding) $ 11.22
=============
Maximum offering price per share (100 / 96.5 of $11.22) $ 11.63
=============
CLASS C
Net asset value and offering price per share
($514,090 / 46,039 shares outstanding) $ 11.17
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF OPERATIONS
For the period from April 4, 1995
(commencement of operations)
to February 29, 1996
INVESTMENT INCOME
Income
Dividends $22,916
------------
Expenses
Fund accounting fees (note 2) 27,250
Professional fees 13,137
Investment advisory fees (note 2) 11,633
Distribution and service fees - Class A (note 3) 4,891
Distribution and service fees - Class C (note 3) 3,437
Fund administration fees (note 2) 3,892
Securities pricing fees 2,561
Custody fees 1,476
Registration and filing administration fees 952
Shareholder recordkeeping fees 906
Amortization of deferred organization expenses (note 4) 8,333
Trustee fees and meeting expenses 4,454
Shareholder servicing expenses 3,593
Registration and filing expenses 2,938
Printing expenses 897
Other operating expenses 2,867
------------
Total expenses 93,217
------------
Less:
Expense reimbursements (note 2) (50,193)
Investment advisory fees waived (note 2) (11,633)
Distribution and service fees waived (note 3) (1,958)
------------
Net expenses 29,433
------------
Net investment loss (6,517)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 30,359
Increase in unrealized appreciation on investments 124,204
------------
Net realized and unrealized gain on investments 154,563
------------
Net increase in net assets resulting from operations $148,046
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period from April 4, 1995
(commencement of operations)
to February 29, 1996
INCREASE IN NET ASSETS
Operations
Net investment loss $ (6,517)
Net realized gain from investment transactions 30,359
Increase in unrealized appreciation on investments 124,204
-----------
Net increase in net assets resulting from operations 148,046
-----------
Distributions to shareholders from
Net realized gain from investment transactions - Class A (1,707)
Net realized gain from investment transactions - Class C (400)
-----------
Decrease in net assets resulting from distributions (2,107)
-----------
Capital share transactions
Increase in net assets resulting from capital share
transactions (a) 1,816,678
-----------
Total increase in net assets 1,962,617
NET ASSETS
Beginning of period 0
-----------
End of period $1,962,617
===========
(a) A summary of capital share activity follows:
<TABLE>
<CAPTION>
CLASS A CLASS C
---------------------------------------------------------------------
For the period from April 4, 1995 For the period from April 4, 1995
(commencement of operations) (commencement of operations)
to February 29, 1996 to February 29, 1996
Shares Value Shares Value
----------------------------------- -------------------------
<S> <C> <C> <C> <C>
Shares sold 132,050 $1,369,689 47,103 $490,650
Shares issued for
reinvestment
of distributions 162 1,707 38 400
------------- -------------- ---------- ------------
132,212 1,371,396 47,141 491,050
Shares redeemed (3,081) (33,640) (1,102) (12,128)
------------- -------------- ---------- ------------
Net increase 129,131 $1,337,756 46,039 $478,922
============= ============== ========== ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
CLASS A CLASS C
------------- --------------
For the For the
period from period from
April 4, 1995 April 4, 1995
(commencement (commencement
of operations) to of operations) to
February 29, February 29,
1996 1996
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of period (initial offering price) $ 10.00 $ 10.00
Income (loss) from investment operations
Net investment loss (0.03) (0.05)
Net realized and unrealized gain on investments 1.27 1.24
----------------- --------------
Total from investment operations 1.24 1.19
----------------- --------------
Distributions to shareholders from
Net realized gain from investment transactions (0.02) (0.02)
----------------- --------------
Net asset value, end of period $ 11.22 $ 11.17
================= ==============
Total return 12.41%(a) 11.86%(b)
================= ==============
Ratios/supplemental data
Net assets, end of period $1,448,527 $514,090
================= ==============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 6.90% (c) 7.40% (c)
After expense reimbursements and waived fees 2.12% (c) 2.49% (c)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (5.20)% (c) (5.60)% (c)
After expense reimbursements and waived fees (0.42)% (c) (0.69)% (c)
Portfolio turnover rate 7.11% 7.11%
<FN>
(a) Total return does not reflect payment of a sales charge. Annualized
total return is 13.77%.
(b) Annualized total return is 13.15%.
(c) Annualized.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Mississippi Opportunity Fund (the "Fund") is a non-diversified
series of shares of beneficial interest of The Nottingham Investment
Trust (the "Trust"). The Trust, an open-end investment company, was
organized on August 12, 1992 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940. The Fund began
operations on April 4, 1995. The Fund has an unlimited number of
authorized shares, which are divided into two classes - Class A shares
and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are attributable to
each class based upon a set percentage of its net assets), and realized
and unrealized gains or losses on investments are allocated to each
class of shares based upon its relative net assets. Class A shares
purchased are subject to a maximum sales charge of 3.50 percent. Both
classes have equal voting privileges, except where otherwise required
by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of the shareholders of a particular
class. The following is a summary of significant accounting policies
followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
As a result of the Fund's ability to offset short-term capital
gains with its operating net investment loss for income tax
purposes, a reclassification adjustment has been made to
decrease accumulated net investment loss, bringing it to zero,
and to decrease undistributed net realized gain on investments
by $6,517.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest
income is recorded daily on the accrual basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually out of net realized gains
through October 31 of that year. The Fund may make a
supplemental distribution subsequent to the end of its fiscal
year ended February 29, 1996.
(Continued)
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from these estimates.
NOTE 2- INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Vector Money Management,
Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its
investment portfolio, and furnishes advice and recommendations with
respect to investments, investment policies, and the purchase and sale
of securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.875% of the Fund's average daily net
assets.
The Advisor has voluntarily agreed to reimburse expenses of the Fund to
limit total Fund operating expenses, exclusive of interest, taxes,
brokerage commissions, sales charges and extraordinary expenses, to a
maximum of 2.125% of the Class A shares' average daily net assets and
2.625% of the Class C shares' average daily net assets for any fiscal
year, or the limits set by applicable state securities laws or other
applicable laws if such limits are lower. Currently, the Fund does not
offer its shares for sale in states which require limitations to be
placed on its expenses. The Advisor has voluntarily waived its fee
amounting to $11,633 ($0.11 per share) and agreed to reimburse $50,193
of the Fund's operating expenses for the period from April 4, 1995 to
February 29, 1996.
The Fund's administrator, The Nottingham Company, (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to an accounting and administrative agreement with the
Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.20% of the Fund's first $50 million of
average daily net assets, 0.175% of the next $50 million of average
daily net assets, and 0.15% of average daily net assets over $100
million. The Administrator also receives a monthly fee of $2,750 for
accounting and recordkeeping services. Additionally, the Administrator
charges the Fund for servicing of shareholder accounts and registration
of the Fund's shares. The contract with the Administrator provides that
the aggregate fees for the aforementioned administration, accounting
and recordkeeping services shall not be less than $3,000 per month. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the period from April 4, 1995 to February 29, 1996, the Distributor
retained sales charges in the amount of $7,050.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor or the Administrator.
(Continued)
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company
Act of 1940 (the "Act"), adopted separate distribution plans with
respect to Class A and Class C shares of the Fund pursuant to Rule
12b-1 of the Act. Rule 12b-1 regulates the manner in which a regulated
investment company may assume costs of distributing and promoting the
sales of its shares and servicing of its shareholder accounts. Under
both distribution plans, the Fund may incur certain costs for payment
to the Distributor and others for items such as advertising expenses,
selling expenses or other expenses reasonably intended to result in
sales of Class A and Class C shares of the Fund or support servicing of
shareholder accounts.
Expenditures of the Fund pursuant to the distribution plans are accrued
based upon the Class A and Class C shares' average daily net assets and
may not exceed 0.50% per annum of the Class A shares' average daily net
assets and 1.00% per annum of the Class C shares' average daily net
assets, for each year elapsed subsequent to adoption of the plans.
Expenditures paid as service fees to any person who sells Fund shares
may not exceed 0.25% per annum of the Class A and Class C shares'
average daily net assets. Expenditures incurred for distribution
activities as an asset-based sales charge may not exceed 0.75% per
annum of the Class C shares' average daily net assets. Pursuant to the
Class A and Class C distribution plans, the Fund incurred $4,891 and
$3,437, respectively, for the period from April 4, 1995 to February 29,
1996, of which $1,958 ($0.02 per share) has been voluntarily waived by
the Distributor.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund.
Included in deferred organization expenses is a $45,000 organization
fee paid to the Administrator. The organization expenses are being
amortized over a period of sixty months. Investors purchasing Class A
and Class C shares of the Fund bear such expenses only as they are
amortized against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a
pro rata portion of any unamortized organization expenses in the same
proportion as the number of initial shares being redeemed bears to the
number of initial shares of the Fund outstanding at the time of the
redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $1,758,827 and $89,982, respectively, for the period from
April 4, 1995 to February 29, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
All distributions from net realized gain from investment transactions
for the period from April 4, 1995 to February 29, 1996 represent
short-term capital gain distributions, and are taxable as ordinary
income to shareholders for federal income tax purposes. Shareholders
should consult a tax advisor on how to report distributions for state
and local income tax purposes.
INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees and Shareholders
The Nottingham Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Mississippi Opportunity Fund
(the "Fund"), a series of The Nottingham Investment Trust, as of February 29,
1996, and the related statement of operations, statement of changes in net
assets and financial highlights for the period from April 4, 1995
(commencement of operations) to February 29, 1996. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Mississippi Opportunity Fund as of February 29, 1996, and the results of its
operations, the changes in its net assets and financial highlights for the
period from April 4, 1995 (commencement of operations) to February 29, 1996 in
conformity with generally accepted accounting principles.
Richmond, Virginia
April 5, 1996
[Vector Money Management, Inc. Letterhead]
1 May 1996
Dear Fellow Shareholders,
As the investment advisor to The Mississippi Opportunity Fund, Vector Money
Management is pleased to provide you with the first annual report for the
fund. Due to a February 29 1996 fiscal year end for our fund family, the
annual report covers only the 10.5 months in which the fund was operational.
For this period ending February 29, 1996 the raw performance numbers of 13.77%
for Class A shares and 13.07% for Class C Shares compare with the S&P Index
returns of 23.43%. Our primary concern during the start up phase of the fund
was to identify companies we felt were undervalued by the markets and deploy
funds as investment opportunities presented themselves. As a consequence, the
fund was not fully invested until the fall of 1995.
The groundwork laid during the initial investment process has begun to bear
fruit during the first four months of 1996. The fund, on a year to date basis,
was up 13.23% versus the S&P Index performance of 6.98% through April 30,
1996.
The companies which provided the largest gains during our first year were
Delta & Pine Land, Gulf South Medical Supply, WorldCom, Microtek Medical,
First Mississippi and Belmont Homes.
Additionally, in an effort to improve shareholder services, the Trustees of
the fund have elected to change fund administrators to MGF Services Corp. You
will notice a new statement format at the end of the June quarter.
Thanks for your continued support.
Sincerely,
/s/ ASHBY M. FOOTE III
Ashby M. Foote III
President
Vector Money Management
Portfolio Manager - The Mississippi Opportunity Fund
MISSISSIPPI OPPORTUNITY FUND
CLASS C SHARES
Performance Update - $10,000 Investment
For the period from April 4, 1995 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
MISSISSIPPI OPPORTUNITY FUND
Class C S&P 500
04-Apr-95 10000 10000
31-May-95 9898 10557
31-Aug-95 11046 11121
30-Nov-95 10775 11982
29-Feb-96 11186 12676
THIS GRAPH DEPICTS THE PERFORMANCE OF THE CLASS C SHARES OF THE MISSISSIPPI
OPPORTUNITY FUND VERSUS THE S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE
MISSISSIPPI OPPORTUNITY FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND WHILE
THE INDEXES ARE NOT AVAILABLE FOR INVESTMENT AND ARE UNMANAGED. THE
COMPARISON IS SHOWN FOR ILLUSTRATIVE PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement of operations through 2/29/96 13.15%
(bullet) The graph assumes an initial $10,000 investment at April 4, 1995.
All dividends and distributions are reinvested.
(bullet) At February 29, 1996, the Class C Shares of the Fund would have
grown to $11,186 - total investment return of 11.86% since
April 4, 1995.
(bullet) At February 29, 1995, a similar investment in the S&P 500 Index
would have grown to $12,676 - total investment return of 26.76%
since April 4, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions,
and the principal value of shares, when redeemed, may be worth more
or less than the original cost. Average annual returns are historical
in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestments of dividends.
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
----------- -----------------
<S> <C> <C>
COMMON STOCKS - 91.51%
Agriculture - 6.38%
Delta & Pine Land Company 2,666 $125,302
-----------------
Building Materials - 0.87%
Masco Corporation 600 17,100
-----------------
Chemicals - 9.91%
First Mississippi Corporation 4,500 117,562
Mississippi Chemical Corporation 3,500 77,000
-----------------
194,562
-----------------
Electrical Equipment - 0.36%
(a) MagneTek, Inc. 1,000 7,000
-----------------
Entertainment - 1.15%
(a) Boyd Gaming Corporation 2,000 22,500
-----------------
Financial Services - 2.99%
(a) MS Financial, Inc. 10,000 58,750
-----------------
Financial-Banks, Commercial - 7.95%
BancorpSouth, Inc. 1,400 33,075
Deposit Guaranty Corporation 500 23,625
Hancock Holding Company 1,000 37,250
Trustmark Corporation 1,500 31,125
Union Planters Corporation 1,000 30,875
-----------------
155,950
-----------------
Financial- Savings/Loans/Thrift - 2.22%
Magna Bancorp, Inc. 1,500 43,500
-----------------
Food-Processing - 2.42%
Sanderson Farms, Inc. 2,000 21,500
Sara Lee Corporation 800 25,900
-----------------
47,400
-----------------
Forest Products & Paper - 2.26%
Georgia Pacific Corporation 250 15,781
International Paper Company 800 28,600
-----------------
44,381
-----------------
Furniture & Home Appliances - 2.99%
(a) Chromcraft Revington, Inc. 1,000 23,000
National Presto Industries, Inc. 500 20,625
(a) River Oaks Furniture, Inc. 3,000 15,000
-----------------
58,625
-----------------
</TABLE>
(Continued)
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
----------- -----------------
COMMON STOCKS (Continued)
<S> <C> <C>
Household Products & Housewares - 1.82%
(a) National Picture & Frame Company 2,000 $19,625
Sunbeam Company, Inc. 1,000 16,125
-----------------
35,750
-----------------
Computer Software & Services - 0.52%
(a) Netscape Communications Corporation 200 10,200
-----------------
Manufactured Housing - 4.46%
(a) Belmont Homes, Inc. 5,000 87,500
-----------------
Medical Supplies - 12.37%
(a) American Medical Response, Inc. 1,500 50,625
Baxter International, Inc. 500 22,875
(a) Gulf South Medical Supply, Inc. 3,500 118,125
(a) Microtek Medical, Inc. 5,000 51,250
-----------------
242,875
-----------------
Miscellaneous - Manufacturing - 0.86%
Standex International Corporation 600 16,950
-----------------
Oil & Gas - Domestic - 3.48%
(a) Callon Petroleum Company 7,000 68,250
-----------------
Real Estate - 1.64%
Parkway Company 1,500 32,250
-----------------
Real Estate Investment Trust - 1.15%
Eastgroup Properties 1,000 22,500
-----------------
Retail - Department Stores - 6.14%
(a) Proffitt's, Inc. 3,000 78,750
Fred's, Inc. 4,000 29,500
(a) Stein Mart, Inc. 1,000 12,250
-----------------
120,500
-----------------
Iron & Steel - 1.52%
Birmingham Steel Corporation 2,000 29,750
-----------------
Telecommunications - 5.86%
(a) Mobile Telecommunication Technologies Corp. 8,000 115,000
-----------------
Tire & Rubber - 1.30%
Cooper Tire and Rubber Company 1,000 25,500
-----------------
</TABLE>
(Continued)
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
----------- -----------------
<S> <C> <C> <C>
COMMON STOCKS (Continued)
Transportation - Air - 1.77%
(a) ValuJet, Inc. 1,500 $34,688
-----------------
Trucking & Leasing - 0.78%
(a) KLLM Transport Services, Inc. 1,500 15,375
-----------------
Utilities - Telecommunications - 6.02%
(a) WorldCom, Inc. 3,000 118,125
-----------------
Transportation - Marine - 2.32%
(a) Kirby Corporation 2,500 45,625
-----------------
Total Common Stocks (Cost $1,674,204) 1,795,908
-----------------
PREFERRED STOCK - 1.40%
Oil & Gas - Domestic
Callon Petroleum Company 1,000 27,500
-----------------
(Cost $25,000)
INVESTMENT COMPANY - 3.77%
Performance Funds Trust Money Market Fund "B" 73,986 73,986
-----------------
(Cost $73,986)
Total Value of Investments (Cost $1,773,190 (b)) 96.68% 1,897,394
Other Assets Less Liabilities 3.32% 65,223
------------- -----------------
Net Assets 100.00% $1,962,617
============= =================
<FN>
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation)
of investments for financial reporting and federal income tax
purposes is as follows:
Unrealized appreciation $304,876
Unrealized depreciation (180,672)
-----------------
Net unrealized appreciation $124,204
=================
</FN>
</TABLE>
See accompanying notes to financial statements
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
<TABLE>
<S> <C>
ASSETS
Investments at value (cost $1,773,190) $1,897,394
Dividends receivable 2,137
Receivable for fund shares sold 7,140
Due from advisor (note 2) 37,460
Deferred organization expenses, net (note 4) 37,117
Other asset 51
-------------
Total assets 1,981,299
-------------
LIABILITIES
Accrued professional fees 8,500
Accrued expenses 8,847
Disbursements in excess of cash on demand deposit 1,335
-------------
Total liabilities 18,682
-------------
NET ASSETS $1,962,617
=============
NET ASSETS CONSIST OF
Paid-in capital $1,816,678
Undistributed net realized gain on investments 21,735
Net unrealized appreciation on investments 124,204
-------------
$1,962,617
=============
CLASS A
Net asset value ($1,448,527 / 129,131 shares outstanding) $11.22
=============
Maximum offering price per share (100 / 96.5 of $11.22) $11.63
=============
CLASS C
Net asset value and offering price per
share ($514,090 / 46,039 shares outstanding) $11.17
=============
</TABLE>
See accompanying notes to financial statements
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF OPERATIONS
For the period from April 4, 1995
(commencement of operations)
to February 29, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends $22,916
------------
Expenses
Fund accounting fees (note 2) 27,250
Professional fees 13,137
Investment advisory fees (note 2) 11,633
Distribution and service fees - Class A (note 3) 4,891
Distribution and service fees - Class C (note 3) 3,437
Fund administration fees (note 2) 3,892
Securities pricing fees 2,561
Custody fees 1,476
Registration and filing administration fees 952
Shareholder recordkeeping fees 906
Amortization of deferred organization expenses (note 4) 8,333
Trustee fees and meeting expenses 4,454
Shareholder servicing expenses 3,593
Registration and filing expenses 2,938
Printing expenses 897
Other operating expenses 2,867
------------
Total expenses 93,217
------------
Less:
Expense reimbursements (note 2) (50,193)
Investment advisory fees waived (note 2) (11,633)
Distribution and service fees waived (note 3) (1,958)
------------
Net expenses 29,433
------------
Net investment loss (6,517)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 30,359
Increase in unrealized appreciation on investments 124,204
------------
Net realized and unrealized gain on investments 154,563
------------
Net increase in net assets resulting from operations $148,046
============
</TABLE>
See accompanying notes to financial statements
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period from April 4, 1995
(commencement of operations)
to February 29, 1996
<TABLE>
<S> <C>
INCREASE IN NET ASSETS
Operations
Net investment loss $ (6,517)
Net realized gain from investment transactions 30,359
Increase in unrealized appreciation on investments 124,204
------------
Net increase in net assets resulting from operations 148,046
------------
Distributions to shareholders from
Net realized gain from investment transactions - Class A (1,707)
Net realized gain from investment transactions - Class C (400)
------------
Decrease in net assets resulting from distributions (2,107)
------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 1,816,678
------------
Total increase in net assets 1,962,617
NET ASSETS
Beginning of period 0
------------
End of period $ 1,962,617
============
</TABLE>
(a) A summary of capital share activity follows:
<TABLE>
<CAPTION>
CLASS A CLASS C
---------------------------------- ---------------------------------
Forthe period from April 4, 1995 For the period from April 4, 1995
(commencement of operations) (commencement of operations)
to February 29, 1996 to February 29, 1996
Shares Value Shares Value
-------------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
Shares sold 132,050 $1,369,689 47,103 $490,650
Shares issued for reinvestment
of distributions 162 1,707 38 400
------------- -------------- ------------ ------------
132,212 1,371,396 47,141 491,050
Shares redeemed (3,081) (33,640) (1,102) (12,128)
------------- -------------- ------------ ------------
Net increase 129,131 $1,337,756 46,039 $478,922
============= ============== ============ ============
</TABLE>
See accompanying notes to financial statements
MISSISSIPPI OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
CLASS A CLASS C
------------- --------------
For the For the
period from period from
April 4, 1995 April 4, 1995
(commencement (commencement
of operations) to of operations) to
February 29, February 29,
1996 1996
------------- --------------
<S> <C> <C>
Net asset value, beginning of period (initial offering price) $10.00 $10.00
Income (loss) from investment operations
Net investment loss (0.03) (0.05)
Net realized and unrealized gain on investments 1.27 1.24
------------- --------------
Total from investment operations 1.24 1.19
------------- --------------
Distributions to shareholders from
Net realized gain from investment transactions (0.02) (0.02)
------------- --------------
Net asset value, end of period $11.22 $11.17
============= ==============
Total return 12.41%(a) 11.86%(b)
============= ==============
Ratios/supplemental data
Net assets, end of period $1,448,527 $514,090
============== ==============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 6.00% (c) 7.40% (c)
After expense reimbursements and waived fees 2.12% (c) 2.49% (c)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (5.20%) (c) (5.60%) (c)
After expense reimbursements and waived fees (0.42%) (c) (0.69%) (c)
Portfolio turnover rate 7.11% 7.11%
<FN>
(a) Total return does not reflect payment of a sales charge. Annualized
total return is 13.77%.
(b) Annualized total return is 13.15%.
(c) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Mississippi Opportunity Fund (the "Fund") is a non-diversified
series of shares of beneficial interest of The Nottingham Investment
Trust (the "Trust"). The Trust, an open-end investment company, was
organized on August 12, 1992 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940. The Fund began
operations on April 4, 1995. The Fund has an unlimited number of
authorized shares, which are divided into two classes - Class A shares
and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are attributable to
each class based upon a set percentage of its net assets), and realized
and unrealized gains or losses on investments are allocated to each
class of shares based upon its relative net assets. Class A shares
purchased are subject to a maximum sales charge of 3.50 percent. Both
classes have equal voting privileges, except where otherwise required
by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of the shareholders of a particular
class. The following is a summary of significant accounting policies
followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
As a result of the Fund's ability to offset short-term capital
gains with its operating net investment loss for income tax
purposes, a reclassification adjustment has been made to
decrease accumulated net investment loss, bringing it to zero,
and to decrease undistributed net realized gain on investments
by $6,517.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest
income is recorded daily on the accrual basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually out of net realized gains
through October 31 of that year. The Fund may make a
supplemental distribution subsequent to the end of its fiscal
year ended February 29, 1996.
(Continued)
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from these estimates.
NOTE 2- INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Vector Money Management,
Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its
investment portfolio, and furnishes advice and recommendations with
respect to investments, investment policies, and the purchase and sale
of securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.875% of the Fund's average daily net
assets.
The Advisor has voluntarily agreed to reimburse expenses of the Fund to
limit total Fund operating expenses, exclusive of interest, taxes,
brokerage commissions, sales charges and extraordinary expenses, to a
maximum of 2.125% of the Class A shares' average daily net assets and
2.625% of the Class C shares' average daily net assets for any fiscal
year, or the limits set by applicable state securities laws or other
applicable laws if such limits are lower. Currently, the Fund does not
offer its shares for sale in states which require limitations to be
placed on its expenses. The Advisor has voluntarily waived its fee
amounting to $11,633 ($0.11 per share) and agreed to reimburse $50,193
of the Fund's operating expenses for the period from April 4, 1995 to
February 29, 1996.
The Fund's administrator, The Nottingham Company, (the
"Administrator"), provides administrative services to and is generally
responsible for the overall management and day-to-day operations of the
Fund pursuant to an accounting and administrative agreement with the
Trust. As compensation for its services, the Administrator receives a
fee at the annual rate of 0.20% of the Fund's first $50 million of
average daily net assets, 0.175% of the next $50 million of average
daily net assets, and 0.15% of average daily net assets over $100
million. The Administrator also receives a monthly fee of $2,750 for
accounting and recordkeeping services. Additionally, the Administrator
charges the Fund for servicing of shareholder accounts and registration
of the Fund's shares. The contract with the Administrator provides that
the aggregate fees for the aforementioned administration, accounting
and recordkeeping services shall not be less than $3,000 per month. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the period from April 4, 1995 to February 29, 1996, the Distributor
retained sales charges in the amount of $7,050.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor or the Administrator.
(Continued)
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company
Act of 1940 (the "Act"), adopted separate distribution plans with
respect to Class A and Class C shares of the Fund pursuant to Rule
12b-1 of the Act. Rule 12b-1 regulates the manner in which a regulated
investment company may assume costs of distributing and promoting the
sales of its shares and servicing of its shareholder accounts. Under
both distribution plans, the Fund may incur certain costs for payment
to the Distributor and others for items such as advertising expenses,
selling expenses or other expenses reasonably intended to result in
sales of Class A and Class C shares of the Fund or support servicing of
shareholder accounts.
Expenditures of the Fund pursuant to the distribution plans are accrued
based upon the Class A and Class C shares' average daily net assets and
may not exceed 0.50% per annum of the Class A shares' average daily net
assets and 1.00% per annum of the Class C shares' average daily net
assets, for each year elapsed subsequent to adoption of the plans.
Expenditures paid as service fees to any person who sells Fund shares
may not exceed 0.25% per annum of the Class A and Class C shares'
average daily net assets. Expenditures incurred for distribution
activities as an asset-based sales charge may not exceed 0.75% per
annum of the Class C shares' average daily net assets. Pursuant to the
Class A and Class C distribution plans, the Fund incurred $4,891 and
$3,437, respectively, for the period from April 4, 1995 to February 29,
1996, of which $1,958 ($0.02 per share) has been voluntarily waived by
the Distributor.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund.
Included in deferred organization expenses is a $45,000 organization
fee paid to the Administrator. The organization expenses are being
amortized over a period of sixty months. Investors purchasing Class A
and Class C shares of the Fund bear such expenses only as they are
amortized against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a
pro rata portion of any unamortized organization expenses in the same
proportion as the number of initial shares being redeemed bears to the
number of initial shares of the Fund outstanding at the time of the
redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $1,758,827 and $89,982, respectively, for the period from
April 4, 1995 to February 29, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
All distributions from net realized gain from investment transactions
for the period from April 4, 1995 to February 29, 1996 represent
short-term capital gain distributions, and are taxable as ordinary
income to shareholders for federal income tax purposes. Shareholders
should consult a tax advisor on how to report distributions for state
and local income tax purposes.
STATEMENT OF ADDITIONAL INFORMATION
REGIONAL OPPORTUNITY FUND:
OHIO INDIANA KENTUCKY
June 20, 1996
A Series of
MAPLEWOOD INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone 1-888-289-6465
TABLE OF CONTENTS
INVESTMENT OBJECTIVE AND POLICIES............................................2
INVESTMENT LIMITATIONS...................................................... 5
TRUSTEES AND OFFICERS........................................................8
INVESTMENT ADVISOR..........................................................10
ADMINISTRATOR...............................................................11
DISTRIBUTOR.................................................................12
OTHER SERVICES..............................................................12
BROKERAGE...................................................................13
DISTRIBUTION PLANS UNDER RULE 12b-1.........................................15
SPECIAL SHAREHOLDER SERVICES................................................17
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION..............................19
HOW SHARE PRICE IS DETERMINED...............................................20
ADDITIONAL TAX INFORMATION..................................................21
DESCRIPTION OF THE TRUST....................................................23
CALCULATION OF PERFORMANCE DATA.............................................25
APPENDIX A - DESCRIPTION OF RATINGS.........................................29
FINANCIAL STATEMENTS AND REPORTS............................................34
This Statement of Additional Information ("SAI") is not a prospectus and
should be read in conjunction with the Prospectus dated June 20, 1996 for the
Regional Opportunity Fund: Ohio Indiana Kentucky (the "Fund"). Copies of the
Fund's Prospectus may be obtained at no charge from the Fund, at the address
and phone number shown above.
- 1 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used but not defined have the same meaning as in the
Prospectus. A description of the various ratings used by the nationally
recognized statistical rating organizations ("NRSROs") for securities in which
the Fund may invest is included in this SAI as Appendix A.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve System or a registered Government Securities
dealer) and must deliver the security (and/or securities substituted for them
under the repurchase agreement) to the vendor on an agreed upon date in the
future. Such securities, including any securities so substituted, are referred
to as the "Repurchase Securities." The repurchase price exceeds the purchase
price by an amount which reflects an agreed upon market interest rate
effective for the period of time during which the repurchase agreement is in
effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the
instrument purchased, decline in its value and loss of interest. These risks
are minimized when the Fund holds a perfected security interest in the
Repurchase Securities and can therefore sell the instrument promptly. Under
guidelines issued by the Trustees, the Advisor will carefully consider the
creditworthiness during the term of the repurchase agreement. Repurchase
agreements are considered as loans collateralized by the Repurchase
Securities, such agreements being defined as "loans" under the Investment
Company Act of 1940 (the "1940 Act"). The return on such "collateral" may be
more or less than that from the repurchase agreement. The market value of the
resold securities will be monitored so that the value of the "collateral" is
at all times as least equal to the value of the loan, including the accrued
interest earned thereon. All Repurchase Securities will be held by the Fund's
custodian either directly or through a securities depository.
- 2 -
<PAGE>
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those
subject to repurchase agreements) as described herein, provided that they
mature in thirteen months or less from the date of acquisition and are
otherwise eligible for purchase by the Fund. Money market instruments also may
include Bankers' Acceptances and Certificates of Deposit of domestic branches
of U.S. banks, Commercial Paper and Variable Amount Demand Master Notes
("Master Notes"). BANKERS' ACCEPTANCES are time drafts drawn on and "accepted"
by a bank, are the customary means of effecting payment for merchandise sold
in import-export transactions and are a source of financing used extensively
in international trade. When a bank "accepts" such a time draft, it assumes
liability for its payment. When the Fund acquires a Bankers' Acceptance, the
bank which "accepted" the time draft is liable for payment of interest and
principal when due. The Bankers' Acceptance, therefore, carries the full faith
and credit of such bank. A CERTIFICATE OF DEPOSIT ("CD") is an unsecured
interest-bearing debt obligation of a bank. COMMERCIAL PAPER is an unsecured,
short term debt obligation of a bank, corporation or other borrower.
Commercial Paper maturity generally ranges from two to 270 days and is usually
sold on a discounted basis rather than as an interest-bearing instrument. The
Fund will invest in Commercial Paper only if it is rated in one of the two
highest rating categories by any NRSRO or, if not rated, is of equivalent
quality in the Advisor's opinion. Commercial Paper may include Master Notes of
the same quality. MASTER NOTES are unsecured obligations which are redeemable
upon demand of the holder and which permit the investment of fluctuating
amounts at varying rates of interest. Master Notes are acquired by the Fund
only through the Master Note program of the Fund's custodian, acting as
administrator thereof. The Advisor will monitor, on a continuous basis, the
earnings power, cash flow and other liquidity ratios of the issuer of a Master
Note held by the Fund.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of
in the ordinary course of business within seven days at approximately the
prices at which they are valued. Under the supervision of the Board of
Trustees, the Advisor determines the liquidity of the Fund's investments and,
through reports from the Advisor, the Board monitors investments in illiquid
instruments. In determining the liquidity of the Fund's investments, the
Advisor may consider various factors including (1) the frequency of trades and
quotations, (2) the number of dealers and prospective purchasers in the
marketplace, (3) dealer undertakings to make a market, (4) the nature of the
security (including any demand or tender features) and (5) the nature of the
marketplace for trades (including the ability to assign or offset the Fund's
rights and obligations relating to the
- 3 -
<PAGE>
investment). Investments currently considered by the Fund to be illiquid
include repurchase agreements not entitling the holder to payment of principal
and interest within seven days and restricted securities. If through a change
in values, net assets or other circumstances, the Fund were in a position
where more than 10% of its net assets were invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES. Within its limitation on investments in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time the Fund may be
permitted to sell a security under an effective registration statement. If
during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.
WRITING COVERED CALL OPTIONS. When the Advisor believes that individual
portfolio securities are approaching the top of the Advisor's growth and price
expectations, covered call options (calls) may be written (sold) against such
securities in a disciplined approach to selling portfolio securities. The Fund
writes options only for hedging purposes and not for speculation. When the
Fund writes a call, it receives a premium and agrees to sell the underlying
securities to a purchaser of a corresponding call at any time during the call
period (usually not more than 9 months) at a fixed exercise or "strike" price
(which may, and often does, differ from the market price of the underlying
securities at the time of writing the call). The strike price remains the same
throughout the option period, regardless of market price changes. To terminate
its obligation on a call the Fund has written, it may purchase a corresponding
call in a "closing purchase transaction." A profit or loss will be realized,
depending upon whether the price of the closing purchase transaction is more
or less than the premium (net of transaction costs) previously received on the
call written. The Fund may also realize a profit if the call it has written
lapses unexercised, in which case the Fund keeps the premium and retains the
underlying securities as well. If a call written by the Fund is exercised the
Fund forgoes any possible profit from an increase in the market price of the
underlying security over the exercise price plus the premium received.
Utilizing the facilities of the Options Clearing Corporation ("OCC"), the
Fund's Custodian or a securities depository acting for the Custodian will, as
the Fund's escrow agent, hold the securities underlying calls written by the
Fund, so that no
- 4 -
<PAGE>
margin will be required for such transactions. OCC will release the securities
on the expiration of the calls or upon the Fund's entering into a closing
purchase transaction. Call writing affects the Fund's portfolio turnover rate
and the brokerage commissions it pays. Commissions for options, which are
normally higher than for general securities transactions, are payable when
writing calls and when purchasing closing purchase transactions. The writing
of call options by the Fund is subject to limitations established by each of
the exchanges governing the maximum number of options which may be written or
held by a single investor or group of investors acting in concert, regardless
of whether the options were written or purchased on the same or different
exchanges or are held in one or more accounts or through one or more different
exchanges or through one or more brokers. Therefore the number of calls the
Fund may write (or purchase in closing transactions) may be affected by
options written or held by other entities, including other clients of the
Advisor. An exchange may order the liquidation of positions found to be in
violation of these limits and may impose certain other sanctions.
Profits on closing purchase transactions and premiums on lapsed calls written
are considered capital gains for financial reporting purposes and are
short-term gains for federal income tax purposes. When short-term gains are
distributed to shareholders, they are taxed as ordinary income. If the Fund
desires to enter into a closing purchase transaction, but there is no market
when it desires to do so, it would have to hold the securities underlying the
call until the call lapses or until the call is exercised. The Fund intends to
remain qualified as a "regulated investment company" under Subchapter M of the
Internal Revenue Code. One of the requirements for such qualification is that
gains realized from the sale of securities held by the Fund less than three
months must comprise less than 30% of the Fund's gross income. Due to this
requirement, the Fund will limit the extent to which it writes call options on
investments held less than 3 months.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval of the holders of a majority of the
outstanding voting shares of the Fund. When used in the Prospectus or this
SAI, a "majority" of shareholders means the vote of the lesser of (1) 67% of
the shares of the Trust (or the Fund) present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
(2) more than 50% of the outstanding shares of the Trust (or the Fund). Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund MAY NOT:
- 5 -
<PAGE>
(1) Issue senior securities, borrow money, or pledge its assets,
except that it may borrow from banks as a temporary measure
(a) for extraordinary or emergency purposes, in amounts not
exceeding 5% of its total assets or (b) in order to meet
redemption requests in amounts not exceeding 15% of its
total assets. The Fund will not make any further
investments if borrowing exceeds 5% of its total assets
until such time as total borrowing represents less than 5%
of Fund assets.
(2) Invest for the purpose of exercising control or management
of another issuer;
(3) Purchase or sell commodities or commodities contracts, real
estate (including limited partnership interests, but
excluding readily marketable securities secured by real
estate or interests therein, readily marketable interests in
real estate investment trusts, or readily marketable
securities issued by companies that invest in real estate or
interests therein) or interests in oil, gas, or other
mineral exploration or development programs or leases
(although it may invest in readily marketable securities of
issuers that invest in or sponsor such programs or leases).
(4) Underwrite securities issued by others except to the extent that the
disposition of portfolio securities,either directly from an issuer or
from an underwriter for an issuer may be deemed to be an underwriter
under the federal securities laws.
(5) Invest in warrants, valued at the lower of cost or market,
exceeding more than 5% of the value of the Fund's net
assets. Included within this amount, but not to exceed 2%
of the value of the Fund's net assets, may be warrants which
are not listed on the New York or American Stock Exchange;
warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
(6) Participate on a joint or joint and several basis in any
trading account in securities;
(7) Purchase foreign securities;
(8) Invest more than 10% of its assets in the securities of
one or more investment companies; or
(9) Make loans of money or securities, except that the Fund may (i)invest
in repurchase agreements and commercial paper; (ii) purchase a portion
of an issue of publicity distributed bonds, debentures or other debt
securities; and (iii) acquire private issues of debt securities
subject to the limitations on investments in illiquid securities.
- 6 -
<PAGE>
The following investment limitations are not fundamental, and may be changed
without shareholder approval. As a matter of non- fundamental policy, the Fund
may not:
(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case
of bonds, guarantors) if more than 5% of its total assets would be
invested in such securities;
(2) Invest more than 10% of its net assets in illiquid
securities. For this purpose, illiquid securities include,
among others (a) securities for which no readily available
market exists or which have legal or contractual
restrictions on resale, (b) fixed time deposits that are
subject to withdrawal penalties and have maturities of more
than seven days, and (c) repurchase agreements not
terminable within seven days;
(3) Invest in the securities of any issuer if those officers or Trustees
of the Trust and those officers and directors of the Advisor who
individually own more than 1/2 of 1% of the outstanding securities of
such issuer together own more than 5% of such issuer's securities;
(4) Write, purchase, or sells puts, calls, straddles, spreads, or
combinations thereof or futures contracts or related options (but the
Fund may write covered call options as described in its Prospectus);
(5) Make short sales of securities or maintain a short position,
except short sales "against the box;" (A short sale is made
by selling a security the Fund does not own. A short sale
is "against the box" to the extent that the Fund
contemporaneously owns or has the right to obtain at no
additional cost securities identical to those sold short)
(while the Fund has reserved the right to make short sales
"against the box," the Advisor has no present intention of
engaging in such transactions at this time or during the
coming year);
(6) Purchase any securities on margin except in connection with
such short-term credits as may be necessary for the
clearance of transactions.
- 7 -
<PAGE>
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of assets, it is intended that if the percentage limitation
is met at the time the investment is made, a later change in percentage
resulting from changing total or net asset values will not be considered a
violation of such policy.
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Trust, their present
position with the Trust or Fund, age, principal occupations during the past 5
years and their aggregate compensation from the Trust for the fiscal year
ended February 29, 1996:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- - ------------------ -------------------- --------------
<C> <C> <C>
John P. Boone (age 64) President None
Trustee* Legacy Advisors, Inc. and
President Legacy Global Advisors, Inc.
Legacy Equity Fund Dallas, Texas
2911 Turtle Creek Boulevard Executive Vice President
Suite 400 Forum Securities, Inc.
Dallas, Texas 75219 Dallas, Texas
Jack E. Brinson (age 64) President, Brinson Investment Co. $6,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886 Trustee, Williamsburg Investment Trust
Cincinnati, Ohio
O. James Peterson III (age 59) Chief Financial Officer $6,000
Trustee Pimlico Race Course
Five Bellona Arsenal Laurel, Maryland; previously
Midlothian, Virginia Senior Vice President, Chief Financial Officer
Dominion Resources, Inc.
Richmond, Virginia
Christopher J. Smith (age 29) President None
Trustee* ObjectTiger Ltd.
867 Thorn Tree Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel
Seligman & Associates
Director, Amelia Earhart
Capital Management, Inc.
Southfield, Michigan
- 8 -
<PAGE>
Ashby M. Foote III (age 44) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
One Jackson Place, Suite 1070
Jackson, Mississippi 39201
Jasen M. Snelling (age 32 ) President
President CityFund Advisory, Inc; previously
Regional Opportunity Fund: Registered Representative
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 Registered Representative
Cincinnati, Ohio 45254 Provident Securities Investment Co.
Cincinnati, Ohio
Robert B. Thompson (age 49) Chief Executive Officer
President Morehead Capital Advisors LLC
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 47) President
President Amelia Earhart Capital Management, Inc.
Amelia Earhart: Eagle Equity Fund Southfield, Michigan
One Towne Square President
Suite 1913 Jill H. Travis, CFP
Southfield, Michigan 48076 Shelby Township, Michigan; previously
Senior Vice President
Huntington Banks, Troy, Michigan
Robert G. Dorsey (age 39) President and Treasurer, MGF Service Corp.;
Vice President Treasurer, Midwest Group Financial Services,
312 Walnut Street, 21st Floor Inc.; Treasurer and Director Leshner Financial,
Cincinnati, Ohio 45202 Inc.
John F. Splain (age 39) Secretary and General Counsel,
Secretary MGF Service Corp., Midwest
312 Walnut Street, 21st Floor Group Financial Services, Inc. and
Cincinnati, Ohio 45202 Leshner Financial, Inc.; Secretary
Midwest Trust, Midwest Group Tax
Free Trust and Midwest Strategic Trust
Mark J. Seger (age 34) Vice President, MGF Service Corp.
Treasurer and Leshner Financial, Inc.; Treasurer,
312 Walnut Street, 21st Floor Midwest Trust, Midwest Group
Cincinnati, Ohio 45202 Tax Free Trust and Midwest Strategic Trust
- - -------------------------------------
- 9 -
<PAGE>
<FN>
* Indicates that Trustee is an "interested person" for purposes of the 1940
Act because of his position with one of the investment advisors to the Trust.
</FN>
</TABLE>
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. Each disinterested Trustee receives an
annual retainer of $2,000 plus $250 from each series of the Trust for each
Board meeting attended in person and $100 from each series of the Trust for
each meeting attended by telephone. All Trustees are reimbursed for any
out-of-pocket expenses incurred in connection with their attendance at Board
meetings.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 7, 1996, the Trustees and
officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 1% of the then outstanding shares of the Fund. On
the same date, Donaldson, Lufkin & Jenrette Securities Corporation, P.O. Box
2052, Jersey City, New Jersey 07303, owned of record 19.8% of the then
outstanding Class A shares of the Fund; BHC Securities, Inc. FAO 22820435,
2005 Market Street, Philadelphia, Pennsylvania 19103, owned of record 11.5% of
the then outstanding Class A shares of the Fund; Ruth R. Wassel, 6900 Hopeful
Road #307, Florence, Kentucky 41042, owned of record 7.1% of the then
outstanding Class A shares of the Fund; and BHC Securities, Inc. FAO 25000635,
2005 Market Street, Philadelphia, Pennslyvania 19103, owned of record 5.3% of
the then outstanding Class A shares of the Fund.
INVESTMENT ADVISOR
CityFund Advisory, Inc. (the "Advisor") supervises the Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement will be renewed for one
year periods only so long as such renewal and continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority
of the Fund's outstanding voting securities, provided the continuance is also
approved by a majority of the Trustees who are not "interested persons" of the
Trust or the Advisor by vote cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement is terminable
without penalty on sixty days notice by the Board of Trustees of the Trust or
by the Advisor. The Advisory Agreement provides that it will terminate
automatically in the event of its assignment.
Compensation of the Advisor is at the annual rate of 1.25% of the Fund's
average daily net assets. The Advisor may be required to reimburse the Fund if
the Fund's annual ordinary operating expenses exceed certain limits. This
expense limitation is calculated and administered in accordance with the
requirements of state securities authorities. For the fiscal year ended
February 29, 1996, the Advisor voluntarily waived its entire
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<PAGE>
advisory fee of $6,850 and reimbursed the Fund $80,044 of expenses in order to
voluntarily reduce the operating expenses of the Fund. For the fiscal period
ended February 28, 1995, the Advisor voluntarily waived its entire advisory
fee of $214 and reimbursed the Fund $10,815 of expenses in order to
voluntarily reduce the operating expenses of the Fund.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities,
investments, cash and cash equivalents of the Fund. The Advisor determines
what securities and other investments will be purchased, retained or sold by
the Fund, and does so in accordance with the investment objective and policies
of the Fund as described herein and in the Prospectus. The Advisor places all
securities orders for the Fund, determining with which broker, dealer, or
issuer to place the orders. The Advisor also provides, at its own expense,
certain Executive Officers to the Trust.
The Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Advisor attempts to
obtain the best execution for all securities brokerage transactions.
Under the Advisory Agreement, the Advisor is not responsible for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of the Agreement, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services or
a loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Advisor in the performance of its duties or from the reckless
disregard of its duties and obligations under the Agreement.
ADMINISTRATOR
MGF Service Corp. (the "Administrator") maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. The Administrator receives for its services as transfer
agent a fee payable monthly at an annual rate of $17 per account, provided,
however, that the minimum fee is $1,000 per month for each class of shares. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage, envelopes, checks, drafts, forms, reports, record storage and
communication lines.
The Administrator also provides accounting and pricing services to the Fund.
The Administrator receives $3,000 per month from the Fund for calculating
daily net asset value per share and
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<PAGE>
maintaining such books and records as are necessary to enable the
Administrator to perform its duties.
In addition, the Administrator has been retained to provide administrative
services to the Fund. In this capacity, the Administrator supplies
non-investment related statistical and research data, internal regulatory
compliance services and executive and administrative services. The
Administrator supervises the preparation of tax returns, reports to
shareholders of the Fund, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for
meetings of the Board of Trustees. For the performance of these administrative
services, the Fund pays the Administrator a fee at the annual rate of .15% of
the average value of its daily net assets up to $50,000,000, .125% of such
assets from $50,000,000 to $100,000,000 and .1% of such assets in excess of
$100,000,000.
Prior to June 1, 1996 the administrator to the Fund was The Nottingham
Company, Rocky Mount, North Carolina. For the fiscal year ended February 29,
1996, The Nottingham Company received from the Fund a fee of $36,000.
DISTRIBUTOR
Midwest Group Financial Services, Inc. (the "Distributor") is the principal
underwriter of the Fund and, as such, the exclusive agent for distribution of
shares of the Fund. The Distributor is obligated to sell the shares on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
The Distributor currently allows concessions to dealers who sell Class A
shares of the Fund. The Distributor retains the entire sales charge on all
direct investments in Class A shares of the Fund and on all investments in
accounts with no designated dealer of record. Prior to June 1, 1996, Capital
Investment Group, Inc. served as the distributor for the Fund. For the fiscal
year ended February 29, 1996 and for the fiscal period ended February 28,
1995, Capital Investment Group, Inc. retained $2,281 and $205, respectively in
underwriting commissions.
The Fund may compensate dealers, including the Distributor and its affiliates,
based on the average balance of all accounts in the Fund for which the dealer
is designated as the party responsible for the account. See "Distribution
Plans Under Rule 12b-1" below.
OTHER SERVICES
AUDITORS. The firm of KPMG Peat Marwick LLP, 201 East Fifth Street,
Cincinnati, Ohio 45202, has been retained by the Board of
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<PAGE>
Trustees to perform an independent audit of the financial statements of the
Fund and to prepare the Fund's federal and state tax returns.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank, 38
Fountain Square Plaza, Cincinnati, Ohio 45263. The Custodian holds all cash
and securities of the Fund (either in its possession or in its favor through
"book entry systems" authorized by the Trustees in accordance with the 1940
Act), collects all income and effects all securities transactions on behalf of
the Fund. For its services as Custodian, the Custodian receives an annual fee
from the Fund based on the average net assets of the Fund held by the
Custodian.
BROKERAGE
It is the Fund's practice to seek to obtain the best overall terms available in
executing Fund transactions and selecting brokers or dealers. Subject to the
general supervision of the Board of Trustees, the Advisor is responsible for,
makes decisions with respect to, and places orders for all purchases and sales
of portfolio securities for the Fund.
In assessing the best overall terms available for any transaction, the Advisor
shall consider factors it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In addition, the Advisor may cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission than that
which might be charged by another broker-dealer for effecting the same
transaction, provided the Advisor determines in good faith that such
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of either
the particular transaction or the overall responsibilities of the Advisor to
the Fund. Such brokerage and research services may consist of reports and
statistics relating to specific companies or industries, general summaries of
groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the economy and the stock, bond and government securities
markets.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review
any commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits received by the Fund. It is possible
- 13 -
<PAGE>
that certain of the supplementary research or other services received will
primarily benefit one or more other accounts for which investment discretion
is exercised by the Advisor. Conversely, the Fund may be the primary
beneficiary of the research or other services received as a result of
securities transactions effected for such other accounts.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution from such firm. The
Fund will not execute portfolio transactions through, acquire securities
issued by, make savings deposits in or enter into repurchase agreements with
the Advisor or an affiliated person of the Advisor (as such term is defined in
the 1940 Act) acting as principal, except to the extent permitted by the
Securities and Exchange Commission ("SEC"). In addition, the Fund will not
purchase securities during the existence of any underwriting or selling group
relating thereto of which the Advisor or an affiliated person of the Advisor,
is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations
in comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.
The Fund purchases money market instruments from dealers, underwriters and
issuers. The Fund does not expect to incur any brokerage commissions on such
purchases because money market instruments are generally traded on a net basis
by a dealer acting as principal for its own account without a stated
commission. The price of the security, however, usually includes a profit to
the dealer. Securities purchased in underwritten offerings include a fixed
amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. When securities are purchased directly
from or sold directly to an issuer, no commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e. without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. The Fund's fixed income portfolio transactions will normally be
principal transactions executed in the over-the-counter market and will be
executed on a net basis, which may include a dealer markup. With respect to
securities traded only in the over-the-counter market, orders will be executed
on a principal basis with primary market makers in such securities except
where better prices or executions may be obtained on an agency basis or by
dealing with other than a primary market maker.
- 14 -
<PAGE>
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole
discretion, believes such practice to be otherwise in the Fund's interest.
Investment decisions for the Fund will be made independently from any other
accounts advised or managed by the Advisor. Such other accounts may also
invest in the same securities as the Fund. To the extent permitted by law, the
Advisor may aggregate the securities to be sold or purchased for the Fund with
those to be sold or purchased for other accounts in executing transactions.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Fund and other accounts, the transaction will be
averaged as to price and available investments allocated as to amount, in the
manner which the Advisor believes to be equitable to the Fund and such other
accounts. In some instances, this investment procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained or
sold by the Fund.
For the fiscal year ended February 29, 1996 and for the fiscal period ended
February 28, 1995, the total amount of brokerage commissions paid by the Fund
were $5,587 and $109, respectively.
DISTRIBUTION PLANS UNDER RULE 12B-1
The Fund has adopted a Plan of Distribution for Class A shares (the "Class A
Plan") and for Class C shares (the "Class C Plan") pursuant to Rule 12b-1
under the 1940 Act (collectively, the "Plans"). The Plans permit the Fund to
pay for expenses incurred in the distribution and promotion of each class of
the Fund's shares.
Under the Class A Plan, the Fund may expend in any fiscal year up to .25% of
the Class A shares' average daily net assets to finance any activity which is
primarily intended to result in the sale of Class A shares and the servicing
of shareholder accounts, provided the Board of Trustees has approved the
category of expenses for which payment is being made. The front-end sales
charge and amounts payable to the Distributor under the Class A Plan are used
by the Distributor to pay commissions and other fees to dealers and other
service organizations who sell Class A shares.
Under the Class B Plan, the Fund may expend in any fiscal year up to 1% of the
Class B shares' average daily net assets to finance any activity which is
primarily intended to result in the sale of Class B shares and the servicing
of shareholder accounts, provided the Board of Trustees has approved the
category of expenses for which payment is being made. Expenditures under the
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<PAGE>
Class B Plan as service fees to any person who sells Class B shares may not
exceed an annual rate of .25% of the average net assets of such shares.
Expenditures under the Class B Plan for distribution activities as an
asset-based sales charge may not exceed an annual rate of .75% of the average
net assets of Class B shares.
Dealers and other service organizations receive commissions from the Advisor
for selling Class B shares, which are paid at the time of sale. These
commissions approximate the commissions payable with respect to sales of Class
A shares. The expenditures payable under the Class B Plan for distribution
activities (at an annual rate of .75% of net assets) are intended to cover the
expense to the Advisor of paying such up-front commissions, and the contingent
deferred sales charge is calculated to charge the investor with any shortfall
that would occur if Class B shares are redeemed prior to the expiration of the
five year CDSC period. To provide funds for the payment of up-front sales
commissions, the Advisor has arranged a line of credit with an unaffiliated
third party lender, which provides funds for the payment of commissions and
other fees payable to dealers and other service organizations which sell Class
B shares. Under the terms of the financing, the Advisor will assign to the
lender the distribution fees that may be payable from time to time to the
Advisor under the Class B Plan and the contingent deferred sales charges
payable to the Advisor with respect to Class B shares.
Potential benefits to the Fund from the Plans include improved shareholder
servicing, savings in transfer agency costs, benefits to the investment
process from growth and stability of assets and maintenance of a financially
healthy management organization. Subject to its practice of seeking to obtain
best execution, the Fund may, from time to time, buy or sell portfolio
securities from or to firms which receive payments under the Plans.
The Plans, the Underwriting Agreement with the Distributor and the form of
Dealer Agreement with broker-dealers have all been approved by the Board of
Trustees of the Trust, including a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in the Plans or any related agreements,
by vote cast in person or at a meeting duly called for the purpose of voting
on the Plans and such Agreements. Continuation of the Plans, the Underwriting
Agreement and the form of Dealer Agreement must be approved annually by the
Board of Trustees in the same manner as specified above.
- 16 -
<PAGE>
Each year the Trustees must determine that continuation of the Plans is in the
best interests of shareholders of the Fund and there is a reasonable
likelihood that the Plans will benefit the Fund. The Board of Trustees has
made such a determination for the current year of operations under the Plans.
The Plans, the Underwriting Agreement and the Dealer Agreements may be
terminated at any time without penalty by a majority of those trustees who are
not "interested persons" or by a majority of the outstanding shares of each
class. Any amendment materially increasing the maximum percentage payable
under the Plans must likewise be approved by a majority of the outstanding
shares of the applicable class as well as a majority of the Trustees who are
not "interested persons" and have no direct or indirect financial interest in
the Plans (the "Independent Trustees"). In order for the Plans to remain
effective, the selection and nomination of those Trustees who are not
interested persons of the Trust must be effected by the Independent Trustees
during such period. All amounts spent by the Fund pursuant to the Plans must
be reported quarterly in a written report to the Trustees for their review.
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder
services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be
made at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to
date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bi-monthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator will automatically charge the checking account for
the amount specified ($50 minimum) which will be automatically invested in
shares at the public offering price on or about the fifteenth and/or the last
business day of the month. The shareholder may change the amount of the
investment or discontinue the plan at any time by writing to the
Administrator.
- 17 -
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $5,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $50 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and
December). Payments in amounts over $5,000 may be made directly to an
investor's account with a commercial bank or other depository institution via
an Automated Clearing House ("ACH") transaction. Instructions for establishing
this service are included in the Application contained in the Prospectus or
are available by calling the Fund. Payment may also be made by check made
payable to the designated recipient and mailed within 7 days of the valuation
date. If the designated recipient is other than the registered shareholder,
the signature of each shareholder must be guaranteed on the application (see
"Signature Guarantees" in the Prospectus). A corporation (or partnership) must
also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to
act on its behalf. The application must be signed by a duly authorized
officer(s) and the corporate seal affixed. No redemption fees are charged to
shareholders under this plan except for potential deferred sales charges with
respect to Class B shares. The Prospectus contains additional information and
limitations relating to the use of a Systematic Withdrawal Plan by a holder of
Class B shares. Costs in conjunction with the administration of the plan are
borne by the Fund. Investors should be aware that such systematic withdrawals
may deplete or use up entirely their initial investment and may result in
realized long-term or short-term capital gains or losses. The Systematic
Withdrawal Plan may be terminated at any time by the Fund upon sixty days'
written notice or by an investor upon written notice to the Fund. Applications
and further details may be obtained by calling the Fund at 1-888-289- 6465, or
by writing to:
Regional Opportunity Fund
Shareholder Services
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment
for the purchase of shares of the Fund. The acceptance of such securities is
at the sole discretion of the Advisor based upon the suitability of the
securities accepted for inclusion as a long term investment of the Fund, the
marketability of such securities, and other factors which the Advisor may deem
appropriate. If accepted, the securities will be valued using the same
criteria and methods as described in "How Shares are Valued" in the
Prospectus. Transactions involving the issuance of shares in the Fund for
securities in
- 18 -
<PAGE>
lieu of cash will be limited to acquisitions of securities (except for
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) which: (a) meet the investment objective and
policies of the Fund; (b) are acquired for investment and not for resale; (c)
are liquid securities which are not restricted as to transfer either by law or
liquidity of market; and (d) have a value which is readily ascertainable (and
not established only by evaluation procedures) as evidenced by a listing on
the American Stock Exchange, the New York Stock Exchange or NASDAQ.
REDEMPTION IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the
Trustees, make it undesirable for the Fund to pay for all redemptions in cash.
In such case, the Board of Trustees may authorize payment to be made in
readily marketable portfolio securities of the Fund. Securities delivered in
payment of redemptions would be valued at the same value assigned to them in
computing the net asset value per share. Shareholders receiving such
securities would incur brokerage costs when the securities are sold. An
irrevocable election has been filed under Rule 18f-1 of the 1940 Act, wherein
the Fund is committed to pay redemptions in cash, rather than in kind, to any
shareholder of record of the Fund who redeems during any ninety day period,
the lesser of (a) $250,000 or (b) one percent (1%) of the Fund's net assets at
the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Fund's Administrator at the address shown herein. Your request
should include the following: (1) the Fund name and existing account
registration; (2) signature(s) of the registered owner(s) exactly as the
signature(s) appear(s) on the account registration; (3) the new account
registration, address, social security or taxpayer identification number and
how dividends and capital gains are to be distributed; (4) signature
guarantees (see the Prospectus under the heading "Signature Guarantees"); and
(5) any additional documents which are required for transfer by corporations,
administrators, executors, trustees, guardians, etc. If you have any questions
about transferring shares, call or write the Administrator.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
PURCHASES. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized dealers or directly by contacting the
Distributor or the Administrator. Selling dealers have the responsibility of
transmitting orders promptly to the Fund's Administrator. The public offering
price of Class A shares of the Fund equals the net asset value plus a
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<PAGE>
sales charge. Class B shares may be subject to a contingent deferred sales
charge upon redemption. The Distributor receives the sales charge on Class A
shares as Distributor and may reallow all or a part of the sales charge in the
form of dealer discounts and brokerage commissions. The Advisor may compensate
dealers up-front from its own funds for distribution-related activities in
connection with the sale of Class B shares, for which the Advisor will receive
the contingent deferred sales charge and a distribution fee under the Class B
Plan as described in "Distribution Plans Under Rule 12b-1." The current
schedule of sales charges and related dealer discounts and brokerage
commissions is set forth in the Prospectus. See "How to Purchase Shares" in
the Prospectus.
REDEMPTIONS. Under the 1940 Act, the Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading
on the New York Stock Exchange is restricted by applicable rules and
regulations of the SEC; (b) the Exchange is closed for other than customary
weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC. The Fund may
also suspend or postpone the recordation of the transfer of shares upon the
occurrence of any of the foregoing conditions.
In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for
any loss sustained by reason of the failure of an investor to make full
payment for shares purchased by the investor or to collect any charge relating
to a transaction effected for the benefit of an investor which is applicable
to Fund shares as provided in the Prospectus from time to time.
HOW SHARE PRICE IS DETERMINED
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund and they have
adopted procedures to do so as follows:
The public offering price (net asset value plus applicable sales charge) of
Class A shares and the net asset value of Class B shares of the Fund is
determined as of 4:00 p.m. Eastern time, Monday through Friday, except on
business holidays when the New York Stock Exchange is closed. The New York
Stock Exchange recognizes the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day
and Christmas Day. Any other holiday recognized by the New York Stock Exchange
will be considered a business holiday on which the Fund's share price will not
be determined.
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<PAGE>
The net asset value per share of each class of the Fund is calculated
separately by adding the value of the securities and other assets belonging to
the Fund and attributable to that class, subtracting the liabilities charged
to the Fund and to that class and dividing the result by the number of
outstanding shares of that class. Assets belonging to the Fund consist of the
consideration received upon the issuance of shares of the Fund together with
all net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular Fund.
Income, realized and unrealized capital gains and losses, and any expenses of
the Fund not allocable to a particular class of shares will be allocated to
each class based on the net assets of that class in relation to the net assets
of the Fund. Assets belonging to the Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net assets of all series in the Trust at the time of allocation or in
accordance with other allocation methods approved by the Board of Trustees.
Certain expenses attributable to a particular class of shares (such as
distribution fees) will be charged to that class. Certain other expenses
attributable to a particular class of shares (such as registration fees,
professional fees and certain printing and postage expenses) may be charged to
that class if such expenses are actually incurred in a different amount by
that class or if the class receives services of a different kind or to a
different degree than another class and the Board of Trustees approves such
allocation. Subject to the provisions of the Declaration of Trust,
determinations by the Board of Trustees as to the direct and allocable
liabilities and the allocable portion of any general assets, with respect to
the Fund and its classes are conclusive.
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is
based on tax laws and regulations that are in effect on the date hereof; such
laws and regulations may be changed by legislative, judicial or administrative
action. Investors are advised to consult their tax advisors with specific
reference to their own tax situations.
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Each series of the Trust, including the Fund, will be treated as a separate
entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect
to be a regulated investment company or have made such an election for a
previous year and must satisfy, in addition to the distribution requirement
described in the Prospectus, certain requirements with respect to the source
of its income for a taxable year. At least 90% of the gross income of the Fund
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities or
foreign currencies, and other income derived with respect to the Fund's
business of investing in such stock, securities or currencies. Any income
derived by the Fund from a partnership or trust is derived with respect to the
Fund's business of investing in such stock, securities or currencies only to
the extent that such income is attributable to items of income that would have
been qualifying income if realized by the Fund in the same manner as by the
partnership or trust.
Another requirement for qualification as a regulated investment company under
the Code is that less than 30% of the Fund's gross income for a taxable year
must be derived from gains realized on the sale or other disposition of the
following investments held for less than three months: (1) stock and
securities (as defined in Section 2(a)(36) of the 1940 Act); (2) options,
futures and forward contracts other than those on foreign currencies; or (3)
foreign currencies (or options, futures or forward contracts on foreign
currencies) that are not directly related to the Fund's principal business of
investing in stocks or securities (or options and futures with respect to
stocks or securities). Interest (including original issue discount and, with
respect to certain debt securities, accrued market discount) received by the
Fund upon maturity or disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of such security within the meaning of this requirement. However,
any other income which is attributable to realized market appreciation will be
treated as gross income from the sale or other disposition of securities for
this purpose.
An investment company may not qualify as a regulated investment company for
any taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more that 5% of the total assets of the
investment company nor more than 10% of the outstanding voting securities of
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such issuer. In addition, not more than 25% of the value of the investment
company's total assets may be invested in the securities (other than
government securities or the securities of other regulated investment
companies) of any one issuer. The Fund intends to satisfy all requirements on
an ongoing basis for continued qualification as a regulated investment
company.
The Fund will designate any distribution of long term capital gains as a
capital gain dividend in a written notice mailed to shareholders within 60
days after the close of the Fund's taxable year. Shareholders should note
that, upon the sale or exchange of shares, if the shareholder has not held
such shares for at least six months, any loss on the sale or exchange of those
shares will be treated as a long term capital loss to the extent of the
capital gain dividends with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies
that fail to currently distribute an amount equal to specified percentages of
their ordinary taxable income and capital gain net income (excess of capital
gains over capital losses). The Fund intends to make sufficient distributions
or deemed distributions of its ordinary taxable income and any capital gain
net income prior to the end of each calendar year to avoid liability for this
excise tax.
If for any taxable year the Fund does not qualify for the special federal
income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate
rates (without any deduction for distributions to its shareholders). In such
event, dividend distributions (whether or not derived from interest on
tax-exempt securities) would be taxable as ordinary income to shareholders to
the extent of the Fund's current and accumulated earnings and profits, and
would be eligible for the dividends received deduction for corporations.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the
Internal Revenue Service for failure to properly include on their tax return
payments of taxable interest or dividends, or who have failed to certify to
the Fund that they are not subject to backup withholding when required to do
so or that they are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent
contractors are located or in which it is otherwise deemed to be conducting
business, the Fund may be
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subject to the tax laws of such states or localities. In addition, in those
states and localities that have income tax laws, the treatment of the Fund and
its shareholders under such laws may differ from their treatment under federal
income tax laws.
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Massachusetts
law on August 12, 1992. The Trust's Declaration of Trust authorizes the Board
of Trustees to divide shares into series, each series relating to a separate
portfolio of investments. The Declaration of Trust currently provides for the
shares of five series: the Amelia Earhart: Eagle Equity Fund managed by Amelia
Earhart Capital Management, Inc. of Southfield Michigan; The CarolinasFund
managed by Morehead Capital Advisors LLC of Charlotte, North Carolina; the
Legacy Equity Fund managed by Legacy Advisors, Inc. of Dallas, Texas; the
Mississippi Opportunity Fund managed by Vector Money Management, Inc. of
Jackson, Mississippi; and the Fund. The Board of Trustees has authorized
separate classes of shares for the Fund, the Amelia Earhart: Eagle Equity
Fund, The CarolinasFund and the Mississippi Opportunity Fund.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be
entitled to receive the assets available for distribution belonging to such
series. Shareholders of a series are entitled to participate equally in the
net distributable assets of the particular series involved on liquidation,
based on the number of shares of the series that are held by each shareholder.
If any assets, income, earnings, proceeds, funds or payments are not readily
identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more series as they, in their sole discretion,
deem fair and equitable.
Shares of the Fund, when issued, are fully paid and non-assessable.
Shareholders are entitled to one vote for each full share held and a
fractional vote for each fractional share held. Shareholders of all series in
the Trust, including the Fund, will vote together and not separately, except
as otherwise required by law or when the Board of Trustees determines that the
matter to be voted upon affects only the interests of the shareholders of a
particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority
of the outstanding shares of each series affected by the matter. A series is
affected by a matter unless it is clear that the
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<PAGE>
interests of each series in the matter are substantially identical or that the
matter does not affect any interest of the series. Under Rule 18f-2 of the
1940 Act, the approval of an investment advisory agreement, a material change
to a Rule 12b-1 Plan or any change in a fundamental investment policy would be
effectively acted upon with respect to a series only if approved by a majority
of the outstanding shares of such series. However, the Rule also provides that
the ratification of the appointment of independent accountants, the approval
of principal underwriting contracts and the election of Trustees may be
effectively acted upon by shareholders of the Trust voting together, without
regard to a particular series.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as
such liability may arise from his or her own bad faith, willful misfeasance,
gross negligence or reckless disregard of duties. It also provides that all
third parties shall look solely to the Trust property for satisfaction of
claims arising in connection with the affairs of the Trust. With the
exceptions stated, the Declaration of Trust provides that a Trustee or officer
is entitled to be indemnified against all liability in connection with the
affairs of the Trust.
Prior to June 1, 1996 the Trust was named The Nottingham Investment Trust.
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. Total return and yield are
computed separately for Class A and Class B shares of the Fund. The yield of
Class A shares is expected to be higher than the yield of Class B shares due
to the higher distribution fees imposed on Class B shares.
The average annual total return of the Fund for a period is computed by
subtracting the net asset value per share at the beginning of the period from
the net asset value per share at the end of the period (after adjusting for
the reinvestment of any income dividends and capital gain distributions), and
dividing the result by the net asset value per share at the beginning of the
period. In particular, the average annual total return of the Fund ("T") is
computed by using the redeemable value at the end of a specified period of
time ("ERV") of a hypothetical initial investment of $1,000 ("P") over a
period of time ("n") according to the formula P(l+T)n=ERV. The calculation of
average annual total return assumes the reinvestment of all dividends and
distributions and the deduction of the current maximum sales load from the
initial $1,000 payment. The Fund may also compute its aggregate total return,
which is calculated in a similar manner, except that the results are not
annualized.
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<PAGE>
The average annual total returns for Class A shares for the one year period
ended February 29, 1996 and for the period since inception (January 3, 1995)
to February 29, 1996 are 14.22% and 12.23%, respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate
of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return.
Nonstandardized Return may consist of a cumulative percentage of return,
actual year-by-year rates or any combination thereof.
The cumulative total return for Class A shares for the period since inception
(January 3, 1995) to February 29, 1996 is 14.27%. The average annual
Nonstandardized Returns of Class A shares (computed without the applicable
sales load) for the one year period ended February 29, 1996 and for the period
since inception (January 3, 1995) to February 29, 1996 are 18.41% and 15.74%,
respectively. A nonstandardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
From time to time, the Fund may advertise its yield. A yield quotation is
based on a 30-day (or one month) period and is computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity
of each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day
prior to the start of the 30-day (or one month) period for which yield is
being calculated, or, with respect to obligations purchased during the month,
the purchase price (plus actual accrued interest).
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<PAGE>
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other
mutual funds having similar objectives or to standardized indices or other
measures of investment performance. In particular, the Fund may compare its
performance to the S&P 500 Index, which is generally considered to be
representative of the performance of unmanaged common stocks that are publicly
traded in the United States securities markets. Comparative performance may
also be expressed by reference to a ranking prepared by a mutual fund
monitoring service, such as Lipper Analytical Services, Inc. or Morningstar,
Inc. or by one or more newspapers, newsletters or financial periodicals. The
Fund may also occasionally cite statistics to reflect its volatility and risk.
The Fund may also compare its performance to published reports of the
performance of unmanaged companies located in the Cincinnati tri-state area.
The performance of such unmanaged portfolios generally does not reflect the
effects of dividends or dividend reinvestment. Of course, there can be no
assurance that the Fund will experience the same results. Performance
comparisons may be useful to investors who wish to compare the Fund's past
performance to that of other mutual funds and investment products. Of course,
past performance is not a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net
earnings and net asset value per share fluctuate daily. Both net earnings and
net asset value per share are factors in the computation of total return as
described above.
As indicated, from time to time, the Fund may advertise its
performance compared to similar funds or portfolios using certain
indices, reporting services, and financial publications. These
may include the following:
O LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain
a more complete view of the Fund's performance before investing. Of course,
when comparing the
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Fund's performance to any index, factors such as composition of the index and
prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting
services, or total return, investors should take into consideration any
relevant differences in funds such as permitted portfolio compositions and
methods used to value portfolio securities and compute offering price.
Advertisements and other sales literature for the Fund may quote total returns
that are calculated on nonstandardized base periods. The total returns
represent the historic change in the value of an investment in the Fund based
on monthly reinvestment of dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation
and the effects of inflation on the dollar, including the purchasing power of
the dollar at various rates of inflation. The Fund may also disclose from time
to time information about its portfolio allocation and holdings at a
particular date (including ratings of securities assigned by independent
rating services such as S&P and Moody's). The Fund may also depict the
historical performance of the securities in which the Fund may invest over
periods reflecting a variety of market or economic conditions either alone or
in comparison with alternative investments, performance indices of those
investments, or economic indicators. The Fund may also include in
advertisements and in materials furnished to present and prospective
shareholders statements or illustrations relating to the appropriateness of
types of securities and/or mutual funds that may be employed to meet specific
financial goals, such as saving for retirement, children's education, or other
future needs.
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APPENDIX A
DESCRIPTION OF RATINGS
Under normal market conditions, at least 90% of the Fund's net assets will be
invested in equities. As a temporary defensive position, however, the Fund may
invest up to 100% of its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements or money market instruments
("Investment-Grade Debt Securities"). When the Fund invests in
Investment-Grade Debt Securities as a temporary defensive measure, it is not
pursuing its investment objective. Under normal circumstances, however, the
Fund may invest in money market or repurchase agreement instruments as
described in the Prospectus.
The various ratings used by the NRSROs are described below. A rating by an
NRSRO represents the organization's opinion as to the credit quality of the
security being rated. However, the ratings are general and are not absolute
standards of quality or guarantees as to the creditworthiness of an issuer.
Consequently, the Advisor believes that the quality of fixed-income securities
in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved
in credit analysis. A rating is not a recommendation to purchase, sell or hold
a security because it does not take into account market value or suitability
for a particular investor. When a security has received a rating from more
than one NRSRO, each rating is evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the NRSROs from
other sources that they consider reliable. Ratings may be changed, suspended
or withdrawn as a result of changes in or unavailability of such information,
or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS:
The following summarizes the four highest ratings used by Moody's Investors
Service, Inc. ("Moody's") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than
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the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are
to be considered upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
that suggest a susceptibility to impairment sometime in the future.
BAA: Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated
Aa, A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
Investment-Grade Debt Securities by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because
the protection of interest and principal payments often may be very moderate
and not well safeguarded. Bonds which are rated B generally lack
characteristics of a desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the security over any long period
of time may be small. Bonds which are rated Caa are of poor standing. Such
securities may be in default or there may be present elements of danger with
respect to principal or interest. Bonds which are rated Ca represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. Bonds which are rated C are the
lowest rated class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have superior capacity for repayment of short-term promissory obligations.
Issuers
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rated Prime-2 (or related supporting institutions) are considered to have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics of issuers rated Prime-1
but to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriated may be more affected by external conditions. Ample alternate
liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term
notes and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S RATINGS:
The following summarizes the four highest ratings used by Standard & Poor's
Ratings Group ("S&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay
principal and interest.
AA: Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within these major rating categories.
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<PAGE>
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
Investment-Grade Debt Securities and are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay
interest and principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds may have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are give a
plus (+) designation.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S RATINGS:
The following summarizes the four highest ratings used by Fitch Investors
Service, Inc. ("Fitch") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA: Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated
in the AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-1+.
A: Bonds are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances,
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however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings of these bonds will
fall below investment grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show
relative standing within a rating category.
Bonds rated BB, B and CCC by Fitch are not considered Investment- Grade
Debt Securities and are regarded, on balance, as predominately speculative
with respect to the issuer's ability to pay interest and make principal
payments in accordance with the terms of the obligations. BB indicates the
lowest degree of speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for
short-term notes, municipal notes, variable rate demand instruments and
commercial paper.
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S RATINGS:
The following summarizes the four highest ratings used by Duff & Phelps Credit
Rating Co. ("D&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating credit quality. The risk factors are
considered to be negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality.
Protection factors are strong. Risk is modest but may vary slightly from time
to time because of economic conditions.
A: Bonds rated A have average but adequate protection factors. However
risk factors are more variable and greater in periods of economic stress.
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BBB: Bonds rated BBB have below average protection factors, but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment- Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree
of speculation and CCC the highest degree of speculation.
The rating Duff 1 is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff 1+, Duff 1
and Duff 1- within the highest rating category. Duff 1+ indicates highest
certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is judged to
be outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1 indicates very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are considered to be minor. Duff 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
FINANCIAL STATEMENTS AND REPORTS
The Financial Statements of the Fund will be audited at least once each
year by independent public accountants. Shareholders will receive annual
audited and semiannual (unaudited) reports when published, and will receive
written confirmation of all confirmable transactions in their account. A copy
of the Annual Report will accompany the Statement of Additional Information
whenever the Statement of Additional Information is requested by a shareholder
or prospective investor. The Financial Statements of the Fund as of February
29, 1996, together with the report of the independent accountants thereon, are
included on the following pages.
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The Nottingham Investment Trust
P.O. Drawer 8315
Rocky Mount, North Carolina 27804-1315
April 29, 1996 Telephone 919-972-9922
U.S. WATS 800-525-FUND
Facsimile 919-442-4226
Dear Shareholder:
The Greater Cincinnati Fund ended its fiscal year with a total return of 18.41
% as of Feb. 29,1996. The market had a banner year in 1996 pulling back in
certain sectors in December and January. The overall outlook for 1996 we
remain bullish. Strong sector growth trends in the Bio-technology,
Communications and Healthcare will remain firmly in place. Expect volatility,
particularly in tech stocks, and the usual stock rotations.
Our strategy remains the same this year as last using a top down approach to
stock selection, first identifying trends that will effect the market, then
focusing on industries that will benefit from these trends. Finally, stocks
are selected of companies within those industries that meet the investment
criteria of unit sales, earnings and revenue.
Despite so much to be positive about, there are those who liken the market's
movement to that of an ocean tide. As stock prices increase, so does their
nervousness, albeit often untied to any tangible fundamental outlook virtually
impossible to alter overnight. Nevertheless, many focus on predicting its
short term direction, rather than on understanding the fundamentals of the
particular companies in which they are invested. This focus implies that the
fundamental success of all others, or that the fundamental success of any
company is in the final analysis unrelated to that company's current and
future stock price. Common sense tells us that the first implication is wholly
untrue and that the second is at best only partially true, in that
macroeconomics events can place short term price compression on stocks despite
strong underlying company fundamentals.
Although at times the general market can be volatile, over the long term it is
nothing like an ocean tide. The average level of a tidal water body is not
only consistent over any twenty-four hour period, but also over any
twenty-four year period. This same statement cannot be made for the market,
whose twenty-four year performance can be much more easily likened to a tidal
flow, gradually increasing. This flow is not only rational, but also directly
related to the fundamental growth of the underlying albeit largely unrelated
companies that it represents.
As far as investing is concerned, little has changed since the beginning of
time. It is still about doing your homework with an eye toward the future,
attempting to understand through direct contact with companies, their
customers, competitors, and suppliers how things like new products and
services will affect their businesses, and in turn about creating one
investment opinion, your own. With today's technology and information access
and the hundreds of contacts that we make on companies in which we have
interest, we are equipped better to anticipate the future capabilities of
these companies, but also causes us to understand just how are large our
current opportunity really is.
Thank you all for making 1995 a success, and we look forward to serving you in
the future.
Sincerely,
Jasen M. Snelling, President
CityFund Advisory, Inc.
<PAGE>
GREATER CINCINNATI FUND
CLASS A SHARES
Performance Update - $10,000 Investment
For the period from January 3, 1995 (commencement of
operations) to February 29, 1996
[GRAPH APPEARS HERE]
GREATER CINCINNATI FUND -
Class A FUND S&P 500
03-Jan-95 9650 9650
28-Feb-95 9650 10244
31-May-95 10048 11212
31-Aug-95 10675 11810
30-Nov-95 11441 12724
29-Feb-96 11427 13461
THIS GRAPH DEPICTS THE PERFORMANCE OF THE CLASS A SHARES OF THE GREATER
CINCINNATI FUND VERSUS THE S&P 500 INDEX. IT IS IMPORTANT TO NOTE THAT THE
GREATER CINCINNATI FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE
INDEX IS NOT AVAILABLE FOR INVESTMENT AND IS UNMANAGED. THE COMPARISON IS
SHOWN FOR ILLUSTRATIVE PURPOSES ONLY.
ANNUALIZED TOTAL RETURN
Commencement One Year ended
of operations 2/29/96
through 2/29/96
Maximum 3.5% Sales Load 12.23% 14.22%
No Sales Load 15.74% 18.41%
(bullet) The graph assumes an initial $10,000 investment at January 3, 1995
($9,650 after maximum sales load of 3.5%). All dividends and
distributions are reinvested.
(bullet) At February 29, 1996, the Class A Shares of the Fund would have
grown to $11,427 - total investment return of 14.27% since
January 3, 1995. Without the deduction of the 3.5% maximum
sales load, the Class A Shares of the Fund would have grown to
$11,841 - total investment return of 18.41% since January 3, 1995.
The sales load may be reduced or eliminated for larger purchases.
(bullet) At February 29, 1996, a similar investment in the S&P 500 Index (after
maximum sales load of 3.5%) would have grown to $13,461 - total
investment return of 34.61% since January 3, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions,
and the principal value of shares, when redeemed, may be worth more or
less than the original cost. Average annual returns are historical in
nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestments of dividends.
<PAGE>
GREATER CINCINNATI FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - 76.08%
Broadcast-Radio & Television - 1.51%
(a) Emmis Broadcasting Corporation 300 $11,475
Building Materials - 2.22%
LSI Industries, Inc. 1,000 16,875
Pharmaceuticals - 14.08%
Cardinal Health, Inc 300 18,075
(a) Chronimed, Inc. 700 14,613
Eli Lilly & Company 300 18,150
Johnson & Johnson 200 18,700
Jones Medical Industries, Inc. 400 17,625
Pfizer, Inc. 300 19,762
106,925
Electronics - 6.71%
(a) Cincinnati Microwave Inc. 1,000 3,625
(a) Cyberoptics Corporation 500 17,125
General Electric Company 400 30,200
50,950
Financial- Banks, Commercial - 10.40%
Banc One Corporation 500 17,813
PNC Bank Corporation 1,000 30,625
Star Banc Corporation 485 30,555
78,993
Household Products & Housewares - 2.48%
Procter & Gamble Company 230 18,860
Commercial Services - 2.60%
(a) Primark Corporation 500 19,750
Computer Software & Services - 2.01%
(a) Structural Dynamics Research Corporation 500 15,250
Lodging - 1.86%
(a) Studio Plus Hotels, Inc. 500 14,125
Hand & Machine Tools - 1.89%
Cincinnati Milacron, Inc. 500 14,375
Medical Supplies - 4.59%
Hillenbrand Industries, Inc. 625 20,391
Omnicare, Inc. 300 14,475
34,866
</TABLE>
(Continued)
<PAGE>
GREATER CINCINNATI FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
<S> <C> <C>
COMMON STOCKS - Continued
Medical- Hospital Mgmt & Service - 2.30%
(a) Genesis Health Ventures, Inc. 400 $17,450
Medical- Biotechnology - 4.28%
Guidant Corporation 400 18,950
(a) Neoprobe Corporation 700 13,562
32,512
Restaurants & Food Service - 1.66%
Cooker Restaurant Corporation 1,000 12,625
Textiles - 1.79%
Cintas Corporation 280 13,580
Telecommunications Equipment - 2.48%
(a) Aspect Telecommunications Corporation 400 18,850
Transportation- Air - 4.41%
Comair Holdings, Inc 825 25,678
Delta Air Lines, Inc 100 7,800
33,478
Utilities- Electric - 8.81%
CINergy Corporation 960 28,680
DPL, Inc. 1,100 26,262
IPALCO Enterprises, Inc. 300 11,962
66,904
Total Common Stocks (Cost $544,550) $577,843
</TABLE>
Principal Interest Maturity Value
Amount Rate Date (note 1)
CORPORATE BONDS - 4.04%
Industrial Bonds - 4.04%
Kroger Corporation $30,000 8.50% 6-15-03 30,711
(Cost $30,168)
REPURCHASE AGREEMENT (b) - 12.79%
Wachovia Bank 97,112 5.32% 3-01-96 97,112
(Cost $97,112)
(Continued)
<PAGE>
GREATER CINCINNATI FUND
PORTFOLIO OF INVESTMENTS
February 29, 1996
Value
(note 1)
Total Value of Investments (Cost $671,830 (c)) 92.91% $705,666
Other Assets Less Liabilities 7.09% 53,818
Net Assets 100.00% $759,484
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into February 29, 1996, with a
maturity value of $68,302,116 collateralized by $71,660,000 U.S.
Treasury Bills, due September 19, 1996. The aggregate market value
of the collateral at February 29, 1996 was $69,697,130. The Fund's
pro rata interest in the market value of the collateral at February
29, 1996 was $99,109. The Fund's pro rata interest in the joint
repurchase agreement collateral is taken into possession by the
Fund's custodian upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is
at least 102 percent of the sales price of the repurchase agreement.
(c) Aggregate cost for federal income tax purposes is the same as for
financial reporting purposes. Unrealized appreciation (depreciation)
of investments for financial reporting and federal income tax
purposes is as follows:
Unrealized appreciation $52,063
Unrealized depreciation (18,227)
Net unrealized appreciation $33,836
See accompanying notes to financial statements
<PAGE>
GREATER CINCINNATI FUND
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments at value (cost $574,718) $608,554
Repurchase agreement (cost $97,112) 97,112
Interest receivable 1,378
Dividends receivable 785
Due from advisor (note 2) 28,335
Deferred organization expenses, net (note 4) 37,095
Other assets 251
Total assets 773,510
LIABILITIES
Accrued professional fees 6,500
Accrued expenses 7,526
Total liabilities 14,026
NET ASSETS $759,484
NET ASSETS CONSIST OF
Paid-in capital $709,835
Undistributed net investment income 1,414
Undistributed net realized gain on investments 14,399
Net unrealized appreciation on investments 33,836
$759,484
CLASS A
Net asset value ($759,365.57 (division sign) 68,342.267 shares outstanding) $11.11
Maximum offering price per share (100 (division sign) 96.5 of $11.11) $11.51
CLASS B
Net asset value and offering price per share ($118.54 (division sign) 10.604 shares outstanding) $11.18
</TABLE>
See accompanying notes to financial statements
<PAGE>
GREATER CINCINNATI FUND
STATEMENT OF OPERATIONS
Year ended February 29, 1996
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income
Interest $10,494
Dividends 6,907
Total income 17,401
Expenses
Fund accounting fees (note 2) 29,250
Professional fees 17,585
Investment advisory fees (note 2) 6,850
Custody fees 4,916
Fund administration fees (note 2) 3,279
Registration and filing administration fees 2,827
Distribution and service fees - Class A (note 3) 2,739
Securities pricing fees 2,584
Shareholder recordkeeping fees 644
Amortization of deferred organization expenses (note 4) 9,692
Trustee fees and meeting expenses 6,909
Shareholder servicing expenses 4,538
Registration and filing expenses 3,479
Printing expenses 394
Other operating expenses 4,117
Total expenses 99,803
Less:
Expense reimbursements (note 2) (80,044)
Investment advisory fees waived (note 2) (6,850)
Distribution and service fees waived (note 3) (741)
Net expenses 12,168
Net investment income 5,233
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 51,230
Decrease in unrealized depreciation on investments 34,016
Net realized and unrealized gain on investments 85,246
Net increase in net assets resulting from operations $90,479
</TABLE>
See accompanying notes to financial statements
<PAGE>
GREATER CINCINNATI FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
January 3, 1995
Year (commencement
ended of operations) to
February 29, February 28,
1996 1995
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income $ 5,233 $ 250
Net realized gain from investment transactions 51,230 0
(Decrease) increase in unrealized depreciation on investments 34,016 (180)
Net increase in net assets resulting from operations 90,479 70
Distributions to shareholders from
Net investment income - Class A (4,068) 0
Net investment income - Class B (1) 0
Net realized gain from investment transactions - Class A (36,825) 0
Net realized gain from investment transactions - Class B (6) 0
Decrease in net assets resulting from distributions (40,900) 0
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 476,907 232,928
Total increase in net assets 526,486 232,998
NET ASSETS
Beginning of period 232,998 0
End of period (including undistributed net investment income $ 759,484 $ 232,998
of $1,414 in 1996)
</TABLE>
(a) A summary of capital share activity follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
For the period from For the period from
Year ended January 3, 1995 to April 10, 1995 to
February 29, 1996 February 28, 1995 February 29, 1996
Shares Value Shares Value Shares Value
<S> <C> <C> <C> <C> <C> <C>
Shares sold 45,877 $491,234 23,303 $232,928 10 $100
Shares issued for reinvestment
of distributions 2,514 27,909 0 0 1 8
48,391 519,143 23,303 232,928 11 108
Shares redeemed (3,351) (42,344) 0 0 0 0
Net increase 45,040 $476,799 23,303 $232,928 11 $108
</TABLE>
See accompanying notes to financial statements
<PAGE>
GREATER CINCINNATI FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
CLASS A CLASS B
For the For the
period from period from
January 3, 1995 April 10, 1995
Year (commencement (commencement
ended of operations) to of operations) to
February 29, February 28, February 29,
1996 1995 1996
<S> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.08
Income (loss) from investment operations
Net investment income 0.10 0.01 0.19
Net realized and unrealized gain (loss)
from investment transactions 1.74 (0.01) 1.68
Total from investment operations 1.84 0.00 1.87
Distributions to shareholders from
Net investment income (0.09) 0.00 (0.13)
Net realized gain from investment transactions (0.64) 0.00 (0.64)
Total distributions (0.73) 0.00 (0.77)
Net asset value, end of period $11.11 $10.00 $11.18
Total return 18.41%(a) 0.00% 18.55%(b)
Ratios/supplemental data
Net assets, end of period $759,366 $232,998 $118
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 18.26% 80.88% (c) 18.27%(c)
After expense reimbursements and waived fees 2.23% 2.%5 (c) 1.75%(c)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (15.08)% (77.35)%(c) (14.54)%(c)
After expense reimbursements and waived fees 0.96% 1.54% (c) 1.92% (c)
Portfolio turnover rate 108.06% 0.00% 108.06%
<FN>
(a) Total return does not reflect payment of a sales charge.
(b) Annualized total return is 21.06%.
(c) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
GREATER CINCINNATI FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Greater Cincinnati Fund (the "Fund") is a non-diversified series of shares
of beneficial interest of The Nottingham Investment Trust (the "Trust"). The
Trust, an open-end investment company, was organized on August 12, 1992 as a
Massachusetts Business Trust and is registered under the Investment Company
Act of 1940. The Fund began operations on January 3, 1995. The Fund is
currently authorized to issue two classes of shares - Class A shares (formerly
Investor shares) and Class B shares (formerly Institutional shares). The Class
A shares are sold subject to a maximum sales charge of 3.50% and are subject
to distribution and service fees ("12b-1 fees") under a distribution plan
pursuant to Rule 12b-1 of the Investment Company Act of 1940. Class B shares
are subject to a maximum 5.0% contingent deferred sales charge, which will be
reduced or eliminated depending on the length of time the shares are held.
Class B shares are also subject to 12b-1 fees.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge structures
and ongoing distribution and service fees. Income, expenses (other than
distribution and service fees, which are attributable to each class based upon
a set percentage of its net assets), and realized and unrealized gains or
losses on investments are allocated to each class of shares based upon its
relative net assets. Both classes have equal voting privileges, except where
otherwise required by law or when the Board of Trustees determines that the
matter to be voted on affects only the interests of the shareholders of a
particular class. The following is a summary of significant accounting
policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time. Other securities traded in the
over-the-counter market and listed securities for which no
sale was reported on that date are valued at the most recent
bid price. Securities for which market quotations are not
readily available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend
date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September and December, on
a date selected by the Trust's Trustees. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. The Fund may
make a supplemental distribution subsequent to the end of its
fiscal year ended February 29, 1996.
E. Use of Estimates - Management makes a number of estimates in
the preparation of the Fund's financial statements. Actual
results could differ significantly from those estimates.
(Continued)
<PAGE>
GREATER CINCINNATI FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, CityFund Advisory, Inc. (the
"Advisor") provides the Fund with a continuous program of supervision of the
Fund's assets, including the composition of its investment portfolio, and
furnishes advice and recommendations with respect to investments, investment
policies, and the purchase and sale of securities. As compensation for its
services, the Advisor receives a fee at the annual rate of 1.25% of the Fund's
average daily net assets.
The Advisor has voluntarily agreed to reimburse expenses of the Fund if the
Fund's total expenses, exclusive of interest, taxes, brokerage commissions,
sales charges and extraordinary expenses, exceed 2.25% of the average daily
value of Class A shares outstanding for any fiscal year, or exceed 1.75% of
the average daily value of Class B shares outstanding for any fiscal year, or
exceed the limits set by applicable state securities laws or other applicable
laws if such limits are lower.
Currently, the Fund does not offer its shares for sale in states which require
limitations to be placed on its expenses. The Advisor has voluntarily waived
its fee amounting to $6,850 ($0.14 per share) and has agreed to reimburse a
portion of the Fund's operating expenses for the fiscal year ended February
29, 1996. The total fees waived and expenses reimbursed by the Advisor
amounted to $86,894.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for the
overall management and day-to-day operations of the Fund pursuant to an
accounting and administrative agreement with the Trust. As compensation for
its services, the Administrator receives a fee at the annual rate of 0.20% of
the Fund's first $50 million of average daily net assets, 0.175% on the next
$50 million of average daily net assets, and 0.15% on average daily net assets
over $100 million. The Administrator also receives a monthly fee of $2,750 for
accounting and recordkeeping services. Additionally, the administrator charges
the Fund for servicing of shareholder accounts and registration of the Fund's
shares. The contract with the Administrator provides that the aggregate fees
for the aforementioned administration, accounting and recordkeeping services
shall not be less than $3,000 per month. The Administrator also charges the
Fund for certain expenses involved with the daily valuation of portfolio
securities.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any sales
charges imposed on purchases of Class A shares and re-allocates a portion of
such charges to dealers through whom the sale was made, if any. For the year
ended February 29, 1996, the Distributor retained sales charges in the amount
of $2,281.
Certain Trustees and officers of the Trust are also officers or directors of
the Advisor or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE COSTS
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company Act of
1940 (the "Act"), adopted a distribution plan with respect to both Class A and
Class B shares pursuant to Rule 12b-1 of the Act (the "Plan"). Rule 12b-1
regulates the manner in which a regulated investment company may assume costs
of distributing and promoting the sales of its shares.
(Continued)
<PAGE>
GREATER CINCINNATI FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
The Plan provides that the Fund may incur certain costs, which may not exceed
0.50% per annum of the Fund's average daily net asset value of Class A shares
and 0.75% per annum of the average net asset value of Class B shares, for
payment to the Distributor for items such as advertising expenses, selling
expenses, commissions, travel, or other expenses reasonably intended to result
in sales of shares. In addition, the Fund may incur certain costs, which may
not exceed 0.25% per annum of the average net asset value of Class B shares,
to support servicing of Class B shareholder accounts. The Distributor has
voluntarily waived distribution fees in the amount of $741 for the year ended
February 29, 1996.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization and the
registration of its shares have been assumed by the Fund. The organization
expenses are being amortized over a period of sixty months. Investors
purchasing shares of the Fund bear such expenses only as they are amortized
against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during the
amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
of the Fund outstanding at the time of the redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases of investments other than short-term investments aggregated $786,617
during the fiscal year ended February 29, 1996. Other than short-term
investments, investments sold aggregated $385,615 during the fiscal year ended
February 29, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
All distributions from net realized gain from investment transactions for the
year ended February 29, 1996 represent short-term capital gain distributions,
and are taxable as ordinary income to shareholders for federal income tax
purposes. Shareholders should consult a tax advisor on how to report
distributions for state and local income tax purposes.
<PAGE>
(KPMG Peat Marwick LLP Logo)
Independent Auditors' Report
To the Board of Trustees and Shareholders
The Nottingham Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Greater Cincinnati Fund (the
"Fund"), a series of The Nottingham Investment Trust, as of February 29, 1996,
the related statement of operations for the year then ended, and the
statements of changes in net assets and financial highlights for the year
ended February 29, 1996 and the period from January 3, 1995 (commencement of
operations) to February 28, 1995. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Greater Cincinnati Fund as of February 29, 1996, the results of its operations
for the year then ended, and the changes in its net assets and financial
highlights for the year ended February 29, 1996 and the period from January 3,
1995 (commencement of operations) to February 28, 1995 in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
April 5, 1996
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
----------------------------------
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
Statements of Assets and Liabilities - February 29, 1996,
Statements of Operations,Statements of Changes in Net Assets,
Financial Highlights, Notes to Financial Statements - February
29, 1996, Portfolios of Investments - February 29, 1996,
Independent Auditors' Reports
(b) Exhibits:
1.(i) Amended and Restated Declaration of Trust*
(ii) Amendments No. 4 and 5 to Amended and Restated
Declaration of Trust**
2. Amended and Restated Bylaws*
3. Not Applicable
4. Not Applicable
5. Investment Advisory Agreements and Sub-Advisory
Agreement*
6.(i) Form of Underwriting Agreement**
(ii) Form of Dealer Agreement**
7. Not Applicable
8.(i) Custody Agreement with Trustmark National Bank*
(ii) Custody Agreement with The Fifth Third
Bank**
9.(i) Administration Agreement**
(ii) Accounting Services Agreement**
(iii) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement**
10. Opinion and Consent of Counsel*
11. Consent of Accountants**
12. Not Applicable
- 1 -
<PAGE>
13. Purchase Agreement*
14. Not Applicable
15.(i) Distribution Plans for the Legacy Equity
Fund, The CarolinasFund and the
Mississippi Opportunity Fund*
(ii) Form of Amended and Restated Plan of Distribution
for the Regional Opportunity Fund**
(iii) Amended and Restated Plan of Distribution for
the Amelia Earhart: Eagle Equity Fund**
16. Not Applicable
17. Financial Data Schedules**
18. Amended and Restated Rule 18f-3 Multi-Class
Plan*
19. Powers of Attorney**
* Previously filed as Exhibit to Registration Statement on
Form N-1A
** Filed herewith
Item 25. Persons Controlled by or under Common Control with
--------------------------------------------------
Registrant
----------
No person is directly or indirectly controlled by or under
common control with the Registrant.
Item 26. Number of Holders of Securities
-------------------------------
Set forth is the number of record holders of shares of
beneficial interest of the Trust as of June 3, 1996:
Number of Record
Title of Class Holders
-------------- ----------------
Amelia Earhart: Eagle Equity Fund
Class A Shares 84
Class B Shares 0
The CarolinasFund
Investor Shares 189
Institutional Shares 4
Legacy Equity Fund 11
- 2 -
<PAGE>
Mississippi Opportunity Fund
Class A Shares 114
Class C Shares 31
Regional Opportunity Fund
Class A Shares 77
Class B Shares 0
Item 27. Indemnification.
----------------
Article V of the Registrant's Amended and Restated Declaration
of Trust provides for indemnification of officers and Trustees
as follows:
"SECTION 5.2 LIMITATION OF PERSONAL
LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES OR
AGENTS OF THE TRUST. Provided they have acted
under the belief that their actions are in
the best interest of the Trust, the Trustees
and officers shall not be responsible for or
liable in any event for neglect or wrongdoing
by them or any officer, agent, employee,
investment advisor or principal underwriter
of the Trust or of any entity providing
administrative services for the Trust, but
nothing herein contained shall protect any
Trustee or officer against any liability to
which he would otherwise be subject by reason
of willful malfeasance, bad faith, gross
negligence, or reckless disregard of the
duties involved in the conduct of his office.
SECTION 5.4 MANDATORY INDEMNIFICATION. (a)
Subject only to the provisions hereof, every
person who is or has been a Trustee, officer,
employee or agent of the Trust and every
person who serves at the Trustees request as
director, officer, employee or agent of
another corporation, partnership, joint
venture, trust or other enterprise shall be
indemnified by the Trust to the fullest
extent permitted by law against all
liabilities and against all expenses
reasonably incurred or paid by him in
connection with any debt, claim, action,
demand, suit, proceeding, judgment, decree,
liability or obligation of any kind in which
he becomes involved as a party or otherwise
or is threatened by virtue of his being or
having been a Trustee, officer, employee or
agent of the Trust or of another corporation,
partnership, joint venture, trust or other
enterprise at the request of the Trust and
- 3 -
<PAGE>
against amounts paid or incurred by him in
the compromise or settlement thereof.
(b) The words "claim," "action," "suit," or
"proceeding" shall apply to all claims,
actions, suits or proceedings (civil,
criminal, administrative, legislative,
investigative or other, including appeals),
actual or threatened, and the words
"liabilities" and "expenses" shall include,
without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(c) No indemnification shall be provided
hereunder to a Trustee or officer:
(i) against any liability to the Trust
or the Shareholders by reason of willful
misfeasance, bad faith, gross negligence
or reckless disregard of the duties
involved in the conduct of his office
("disabling conduct");
(ii) with respect to any matter as to
which he shall, by the court or other
body by or before which the proceeding
was brought or engaged, have been
finally adjudicated to be liable by
reason of disabling conduct;
(iii) in the absence of a final
adjudication on the merits that such
Trustee or officer did not engage in
disabling conduct, unless a reasonable
determination, based upon a review of
the facts that the person to be
indemnified is not liable by reason of
such conduct, is made:
(A) by vote of a majority of a quorum of
the Trustees who are neither Interested
Persons nor parties to the proceedings; or
(B) by independent legal counsel, in a
written opinion.
- 4 -
<PAGE>
(d) The rights of indemnification herein
provided may be insured against by policies
maintained by the Trust, shall be severable,
shall not affect any other rights to which
any Trustee, officer, employee or agent may
now or hereafter be entitled, shall continue
as to a person who has ceased to be such
Trustee, officer, employee, or agent and
shall inure to the benefit of the heirs,
executors and administrators of such a
person; provided, however, that no person may
satisfy any right of indemnity or
reimbursement granted herein except out of
the property of the Trust, and no other
person shall be personally liable to provide
indemnity or reimbursement hereunder (except
an insurer or surety or person otherwise
bound by contract).
(e) Expenses in connection with the
preparation and presentation of a defense to
any claim, action, suit or proceeding of the
character described in paragraph (a) of this
Section 5.4 may be paid by the Trust prior to
final disposition thereof upon receipt of a
written undertaking by or on behalf of the
Trustee, officer, employee or agent to
reimburse the Trust if it is ultimately
determined under this Section 5.4 that he is
not entitled to indemnification. Such
undertaking shall be secured by a surety bond
or other suitable insurance or such security
as the Trustees shall require unless a
majority of a quorum of the Trustees who are
neither Interested Persons nor parties to the
proceeding, or independent legal counsel in a
written opinion, shall have determined, based
on readily available facts, that there is
reason to believe that the indemnitee
ultimately will be found to be entitled to
indemnification.
SECTION 5.7 RELIANCE ON EXPERTS, ETC. Each
Trustee and officer or employee of the Trust
shall, in the performance of his duties, be
fully and completely justified and protected
with regard to any act or any failure to act
resulting from reliance in good faith upon
the books of account or other records of the
Trust, upon an opinion of counsel, or upon
reports made to the Trust by any of its
officers or employees or by any advisor,
administrator, manager, distributor, selected
dealer, accountant, appraiser or other expert
- 5 -
<PAGE>
or consultant selected with reasonable care
by the Trustee, officers or employees of the
Trust, regardless of whether such counsel or
expert may also be a Trustee.
The Registrant maintains a standard mutual fund and investment
advisory professional and directors and officers liability
policy. The policy provides coverage to the Registrant, its
Trustees and officers. Coverage under the policy will include
losses by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.
The Advisory Agreement for each of The CarolinasFund, the
Legacy Equity Fund, the Mississippi Opportunity Fund and the
Regional Opportunity Fund and the Subadvisory Agreement for
the Legacy Equity Fund provides for indemnification of the
Advisors (or Subadvisor) as follows:
Subject to the limitations set forth in this
Section 8(b), the Fund shall indemnify,
defend and hold harmless (from the assets of
the Trust or Trusts to which the conduct in
question relates) the Advisor against all
loss, damage and liability, including but not
limited to amounts paid in satisfaction of
judgments, in compromise or as fines and
penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by
the Advisor in connection with the defense or
disposition of any action, suit or other
proceeding, whether civil or criminal, before
any court or administrative or legislative
body, related to or resulting from this
Agreement or the performance of services
hereunder, except with respect to any matter
as to which it has been determined that the
loss, damage or liability is a direct result
of (i) a breach of fiduciary duty with
respect to the receipt of compensation for
services; or (ii) willful misfeasance, bad
faith or gross negligence on the part of the
Advisor in the performance of its duties or
from reckless disregard by it of its duties
under this Agreement (either and both of the
conduct described in clauses (i) and (ii)
above being referred to hereinafter as
"Disabling Conduct"). A determination that
the Advisor is entitled to indemnification
may be made by (i) a final decision on the
merits by a court or other body before whom
the proceeding was brought that the Advisor
was not liable by reason of Disabling
- 6 -
<PAGE>
Conduct, (ii) dismissal of a court action or
an administrative proceeding against the
Advisor for insufficiency of evidence of
Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the
facts, that the Advisor was not liable by
reason of Disabling Conduct by (a) vote of a
majority of a quorum of Trustees who are
neither "interested persons" of the Fund as
the quoted phrase is defined in Section
2(a)(19) of the 1940 Act nor parties to the
action, suit or other proceeding on the same
or similar grounds that is then or has been
pending or threatened (such quorum of such
Trustees being referred to hereinafter as the
"Independent Trustees"), or (b) an
independent legal counsel in a written
opinion. Expenses, including accountants' and
counsel fees so incurred by the Advisor (but
excluding amounts paid in satisfaction of
judgments, in compromise or as fines or
penalties), may be paid from time to time by
the Fund or Trust to which the conduct in
question related in advance of the final
disposition of any such action, suit or
proceeding; provided, that the Advisor shall
have undertaken to repay the amounts so paid
if it is ultimately determined that
indemnification of such expenses is not
authorized under this Section 8(b) and if (i)
the Advisor shall have provided security for
such undertaking, (ii) the Fund shall be
insured against losses arising by reason of
any lawful advances, or (iii) a majority of
the Independent Trustees, or an independent
legal counsel in a written opinion, shall
have determined, based on a review of readily
available facts (as opposed to a full trial-
type inquiry), that there is reason to
believe that the Advisor ultimately will be
entitled to indemnification hereunder.
- 7 -
<PAGE>
As to any matter disposed of by a compromise
payment by the Advisor referred to in this
Section 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for
said payment or for any other expenses shall
be provided unless such indemnification shall
be approved (i) by a majority of the
Independent Trustees or (ii) by an
independent legal counsel in a written
opinion. Approval by the Independent Trustees
pursuant to clause (i) shall not prevent the
recovery from the Advisor of any amount paid
to the Advisor in accordance with either of
such clauses as indemnification if the
Advisor is subsequently adjudicated by a
court of competent jurisdiction not to have
acted in good faith in the reasonable belief
that the Advisor's action was in or not
opposed to the best interests of the Fund or
to have been liable to the Fund or its
Shareholders by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in
its conduct under the Agreement.
The right of indemnification provided by this
Section 8(b) shall not be exclusive of or
affect any of the rights to which the Advisor
may be entitled. Nothing contained in this
Section 8(b) shall affect any rights to
indemnification to which Trustees, officers
or other personnel of the Fund, and other
persons may be entitled by contract or
otherwise under law, nor the power of the
Fund to purchase and maintain liability
insurance on behalf of any such person.
The Board of Trustees of the Trust shall take
all such action as may be necessary and
appropriate to authorize the Fund hereunder
to pay the indemnification required by the
Section 8(b) including, without limitation,
to the extent needed, to determine whether
the Advisor is entitled to indemnification
hereunder and the reasonable amount of any
indemnity due it hereunder, or employ
independent legal counsel for that purpose."
The Advisory Agreement for the Amelia Earhart: Eagle
Equity Fund provides for indemnification of the Advisor
as follows:
Absent willful misfeasance, bad faith, gross
negligence, or reckless disregard of
- 8 -
<PAGE>
obligations or duties ("disabling conduct")
hereunder on the part of the Advisor, the
Advisor shall not be subject to liability to
the Fund or to any shareholder of a Series
for any act or omission in the course of, or
connected with, rendering services hereunder,
including without limitation, any error of
judgment or mistake of law or for any losses
that may be sustained in connection with the
matters to which this Agreement relates,
except to the extent specified in Section
36(b) of the 1940 Act concerning loss
resulting from breach of fiduciary duty with
respect to the receipt of compensation for
services. Except for such disabling conduct,
the Fund shall indemnify the Advisor from any
liability arising from the Advisor's conduct
under this Agreement to the extent permitted
by the Declaration of Trust and applicable
law. As used in this Section 7, the term
"Advisor" shall include Amelia Earhart
Capital Management, Inc. and/or any of its
affiliates and the directors, officers and
employees of Amelia Earhart Capital
Management, Inc. and/or of its affiliates.
The Underwriting Agreement provides that the Underwriter, its
directors, officers, employees, shareholders and control
persons shall not be liable for any error of judgment or
mistake of law or for any loss suffered by Registrant in
connection with the matters to which the Agreement relates,
except a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of any of such persons in the
performance of Underwriter's duties or from the reckless
disregard by any of such persons of Underwriter's obligations
and duties under the Agreement. Registrant will advance
attorneys' fees or other expenses incurred by any such person
in defending a proceeding, upon the undertaking by or on
behalf of such person to repay the advance if it is ultimately
determined that such person is not entitled to
indemnification.
- 9 -
<PAGE>
Item 28. Business and Other Connections of Investment Advisors
------------------------------------------------------
1. Amelia Earhart Capital Management, Inc.
("Amelia"), a registered investment advisor,
provides investment advisory services to the
Amelia Earhart: Eagle Equity Fund series of
Registrant. The following list sets forth
the business and other connections of the
directors and officers of Amelia.
(1) Jill H. Travis, President and Director of Amelia
(a) President of Jill H. Travis CFP, Shelby
Township, Michigan, a financial consulting
firm.
(2) Tammy Wong, Secretary and Treasurer of Amelia.
(a) Treasurer of Seligman & Associates,
Southfield, Michigan, a real estate and
financial services firm.
(3) Sandra J. Seligman, a Director of Amelia.
(a) Proprietor of Touch of Lace, Birmingham,
Michigan, a bath and linen shop.
(b) Proprietor of Sandra Miller Design,
Birmingham, Michigan, an interior design
firm.
(4) Scott J. Seligman, Chairman and a Director of
Amelia.
(a) A Director of Sterling Bank & Trust, FSB,
Southfield, Michigan.
(b) President and a Director of Seligman &
Associates, Inc.
2. Morehead Capital Advisors, LLC ("Morehead"), a
registered investment advisor, provides investment
advisory services to The CarolinasFund series of
Registrant. The following list sets forth the
business and other connections of the partners of
Morehead.
- 10 -
<PAGE>
(1) Robert B. Thompson - Chief Executive Officer,
President and a partner of Morehead.
(a) President of Morehead Investment Advisors,
Charlotte, North Carolina, an investment
advisor and broker-dealer, until June 1995.
(2) William G. Staton - Senior Investment Officer and
a partner of Morehead.
(a) Founder of Financial Training Group,
Charlotte, North Carolina, an investment
adviser.
(3) Benjamin Richter - a Director and partner of
Morehead.
(a) President of Richter and Company, Inc.
Charlotte, North Carolina, a
produce brokerage firm.
(4) Lloyd Richter - a Director and partner of
Morehead.
(a) Vice President, Secretary and Treasurer of
Richter and Company, Inc.
(5) Ronald H. Wrenn - a Director and partner of
Morehead.
(a) President of Starboard, Charlotte, North
Carolina, a seafood broker.
3. Legacy Advisors, Inc. ("Legacy"), a registered
investment advisor, provides investment advisory
services and Forum Securities, Inc. ("Forum"), a
registered investment advisor and broker-dealer,
provides sub-advisory services to the Legacy
Equity Fund series of Registrant. Legacy and
Forum also provide investment advisory services
to individual and institutional accounts. The
following list sets forth the business and other
connections of the directors and officers of
Legacy and Forum.
(1) John P. Boone - President, Secretary and Director
of Legacy; Executive Vice President of Forum
(a) President and Secretary of Legacy Global
Advisors, Inc., Dallas, Texas, an investment
adviser.
- 11 -
<PAGE>
(2) Timothy C. Wheeler - Senior Vice President and
Assistant Secretary of Legacy; Vice President of
Forum
(a) Vice President and Assistant Secretary of
Legacy Global Advisors, Inc.
(3) Gloria A. Eulich - Vice President of Legacy; a
registered representative of Forum.
(4) John S. Stevenson II - Vice President of Legacy; a
registered representative of Forum.
(a) Salesman for Northern Trust Bank of Texas,
Dallas, Texas until January 1996.
(5) Carolyn Wilcott - Vice President of Legacy; a
registered representative of Forum.
(a) Vice President of Legacy Global Advisors,
Inc.
(6) Kelly B. Flaherty - Treasurer of Legacy.
(a) Treasurer of Legacy Global Advisors, Inc.
(7) Charles M. Best - President and Director of Forum.
(8) William R. Johnson - Vice President of Forum.
(9) Harold W. Lehrmann - Director of Forum.
(a) President of Belmont Group.
(10) Keith W. Kennedy - Director of Forum.
(a) Vice President and General Counsel of Belmont
Group.
(11) David C. Peck - Director of Forum.
(a) President of Weston Properties.
4. CityFund Advisory, Inc. ("CityFund"), a registered
investment advisor, provides investment advisory
services to the Regional Opportunity Fund series
of Registrant. The following sets forth the
business and other connections of the directors
and officers of CityFund.
(1) Jasen M. Snelling - President and a Director of
CityFund.
- 12 -
<PAGE>
(2) Jerry A. Smith - A Director of CityFund.
5. Vector Money Management, Inc. ("Vector"), a
registered investment advisor, provides investment
advisory services to the Mississippi Opportunity
Fund series of Registrant. Vector also provides
investment advisory services to individual and
institutional accounts. The following list sets
forth the business and other connections of the
officer of Vector.
(1) Ashby M. Foote III - Chief Executive Officer and
President of Vector.
Item 29. Principal Underwriters
- - ------- ----------------------
(a) Midwest Group Financial Services, Inc. also acts as
underwriter for Midwest Strategic Trust, Midwest Group
Tax Free Trust, Midwest Trust and Brundage, Story and
Rose Investment Trust.
Position With Position With
(b) Name Underwriter Registrant
---- ------------- -------------
Robert H. Leshner Chairman of the None
Board and Director
Michael F. Andrews President None
James A. Markley, Director None
Jr.
John J. Goetz Chief Investment None
Officer
Maryellen Peretzky Vice President, None
Assistant Secretary
and Director
Sharon L. Karp Vice President None
John F. Splain Secretary and Secretary
General Counsel
Robert G. Dorsey Treasurer Vice
President
Susan F. Flischel Vice President- None
Investments
- 13 -
<PAGE>
Scott Weston Assistant Vice None
President-
Investments
Michele M. Hawkins Assistant Vice None
President
Elizabeth A. Santen Assistant Secretary Assistant
Secretary
The address of all of the above-named persons is 312 Walnut
Street, Cincinnati, Ohio 45202.
(c) None
Item 30. Location of Accounts and Records
- - ------- --------------------------------
The Registrant maintains the records required by Section 31(a)
of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3
inclusive thereunder at the principal executive office of its
investment advisors. Certain records, including records relating
to the Registrant's shareholders and the physical possession of
its securities, may be maintained pursuant to Rule 31a-3 at the
office of the Registrant's transfer, accounting and dividend
disbursing agent and its custodians.
Item 31. Management Services
- - ------- -------------------
None
Item 32. Undertakings
- - ------- ------------
(a) Not Applicable
(b) Not Applicable
(c) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon
request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed below on its behalf by the undersigned,
thereunto duly authorized, in the City of Cincinnati and the State of Ohio on
the 20th day of June, 1996.
MAPLEWOOD INVESTMENT TRUST
By: /s/ John F. Splain
-------------------
John F. Splain,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
Chairman
O. James Peterson III* and Trustee
/s/ Mark J. Seger Treasurer June 20, 1996
- - ----------------------
Mark J. Seger
John P. Boone* Trustee
Jack E. Brinson* Trustee
Christopher J. Smith* Trustee
*By:/s/ John F. Splain
------------------
John F. Splain
Attorney-in-Fact
June 20, 1996
<PAGE>
EXHIBIT INDEX
(1) Amendments No. 4 and 5 to Amended and Restated
Declaration of Trust
(2) Form of Underwriting Agreement with Midwest Group
Financial Services, Inc.
(3) Form of Dealer's Agreement
(4) Custody Agreement with The Fifth Third Bank
(5) Administration Agreement with MGF Service Corp.
(6) Accounting Services Agreement with MGF Service
Corp.
(7) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement with MGF Service
Corp.
(8) Consent of Accountants
(9) Form of Amended and Restated Plan of Distribution for
the Regional Opportunity Fund
(10) Amended and Restated Plan of Distribution for the
Amelia Earhart: Eagle Equity Fund
(11) Financial Data Schedule for the Amelia Earhart: Eagle
Equity Fund Class A Shares
(12) Financial Data Schedule for The CarolinasFund Investor
Shares
(13) Financial Data Schedule for The CarolinasFund
Institutional Shares
(14) Financial Data Schedule for the Legacy Equity Fund
(15) Financial Data Schedule for the Mississippi Opportunity
Fund Class A Shares
(16) Financial Data Schedule for the Mississippi Opportunity
Fund Class C Shares
(17) Financial Data Schedule for the Regional Opportunity
Fund Class A Shares
(18) Financial Data Schedule for the Regional Opportunity
Fund Class B Shares
(19) Power of Attorney for O. James Peterson III, John P.
Boone, Jack E. Brinson and Christopher J. Smith
<PAGE>
THE NOTTINGHAM INVESTMENT TRUST
AMENDMENT NO. 4 TO AMENDED AND RESTATED DECLARATION OF TRUST
Pursuant to Section 11.4 of the Amended and Restated Declaration of Trust of
The Nottingham Investment Trust and effective on June 12, 1996, the
undersigned being a two-thirds majority of the Trustees of The Nottingham
Investment Trust, hereby adopt the following resolutions:
"RESOLVED, that the name of The Nottingham Investment Trust be changed to
Maplewood Investment Trust; and
FURTHER RESOLVED, that the address of the principal place of business of the
Trust be changed to 312 Walnut Street, Cincinnati, Ohio 45202; and
FURTHER RESOLVED, that the Trust's Amended and Restated Declaration of Trust
and other Trust documents and records, as necessary or appropriate, be amended
to reflect the change in the name and address of the Trust; and
FURTHER RESOLVED, that the officers of the Trust are hereby authorized to take
such further actions as necessary to effect the purpose of these resolutions."
IN WITNESS WHEREOF, the undersigned Trustees have executed one or more
counterparts of this instrument on June 12, 1996.
/s/ John P. Boone
----------------------------
John P. Boone
/s/ Jack E. Brinson
----------------------------
Jack E. Brinson
/s/ O. James Peterson III
----------------------------
O. James Peterson III
/s/ Christopher J. Smith
----------------------------
Christopher J. Smith
<PAGE>
MAPLEWOOD INVESTMENT TRUST
AMENDMENT NO. 5 TO AMENDED AND RESTATED DECLARATION OF TRUST
The undersigned hereby certifies that he is the duly elected Secretary
of Maplewood Investment Trust and that pursuant to Section 11.4 of the Amended
and Restated Declaration of Trust, the Trustees, at a meeting in which a quorum
was present on May 23, 1996, adopted the following resolutions:
"RESOLVED, that the name of the Greater Cincinnati Fund, a series of
Maplewood Investment Trust, be changed to the Regional Opportunity
Fund: Ohio Indiana Kentucky; and
FURTHER RESOLVED, that the Trust's Amended and Restated Declaration of
Trust and other Trust documents and records, as necessary or
appropriate, be amended to reflect the change in name of this series;
and
FURTHER RESOLVED, that the officers of the Trust are hereby authorized
to take such further actions as necessary to effect the purpose of
these resolutions."
The undersigned certifies that the actions to effect the foregoing
Amendment were duly taken in the manner provided by the Amended and Restated
Declaration of Trust, that said Amendment is to be effective June 20, 1996 and
that he is causing this Certificate to be signed and filed as provided in
Section 11.4 of the Declaration of Trust.
Witness my hand this 20th day of June, 1996.
/s/ John F. Splain
-------------------------
John F. Splain, Secretary
<PAGE>
UNDERWRITING AGREEMENT
This Agreement made as of June 1, 1996 by and between Walnut Investment
Trust, a Massachusetts business trust (the "Trust"), and Midwest Group
Financial Services, Inc., an Ohio corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act");
and
WHEREAS, Underwriter is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of
beneficial interest (the "Shares") of each series of shares of the Trust (the
"Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Trust hereby appoints Underwriter as its exclusive agent for the
distribution of the Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any
<PAGE>
Shares except on the terms set forth in this Agreement. Notwithstanding any
other provision hereof, the Trust may terminate, suspend or withdraw the
offering of Shares whenever, in its sole discretion, it deems such action to
be desirable.
2. Sale and Repurchase of Shares.
(a) Underwriter will have the right, as agent for the Trust,
to enter into dealer agreements with responsible investment dealers, and to
sell Shares to such investment dealers against orders therefor at the public
offering price (as defined in subparagraph 2(e) hereof) less a discount
determined by Underwriter, which discount shall not exceed the amount of the
sales charge stated in the Trust's effective Registration Statement on Form
N-1A under the Securities Act of 1933, as amended, including the then current
prospectus and statement of additional information (the "Registration
Statement"). Upon receipt of an order to purchase Shares from a dealer with
whom Underwriter has a dealer agreement, Underwriter will promptly cause such
order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the
Trust, to sell such Shares to the public against orders therefor at the public
offering price.
(c) Underwriter will also have the right, as agent for the
Trust, to sell Shares at their net asset value to such persons as may be
approved by the Trustees of the Trust, all such sales to comply with the
provisions of the Act and the rules and
- 2 -
<PAGE>
regulations of the Securities and Exchange Commission promulgated
thereunder.
(d) Underwriter will also have the right to take, as agent
for the Trust, all actions which, in Underwriter's judgment, are necessary to
carry into effect the distribution of the Shares.
(e) The public offering price for the Shares of each Series
shall be the respective net asset value of the Shares of that Series then in
effect, plus any applicable sales charge determined in the manner set forth in
the Registration Statement or as permitted by the Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
In no event shall any applicable sales charge exceed the maximum sales charge
permitted by the Rules of Fair Practice of the NASD.
(f) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy
of the net asset value per Share as calculated.
(g) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the third
business day following the date on
- 3 -
<PAGE>
which Underwriter shall have received an order for the purchase of the Shares.
Underwriter shall have the right to retain the sales charge less any applicable
dealer discount.
(h) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
(i) Nothing in this Agreement shall prevent Underwriter or
any affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation
(including other investment companies) or in any way limit or restrict
Underwriter or any such affiliated person from buying, selling or trading any
securities for its or their own account or for the accounts of others for whom
it or they may be acting; provided, however, that Underwriter expressly
represents that it will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations to the Trust under this
Agreement.
(j) Underwriter, as agent of and for the account of the
Trust, may repurchase the Shares at such prices and upon such terms and
conditions as shall be specified in the Registration Statement.
3. Sale of Shares by the Trust.
The Trust reserves the right to issue any Shares at any time
directly to the holders of Shares ("Shareholders"), to sell Shares to its
Shareholders or to other persons approved by
- 4 -
<PAGE>
Underwriter at not less than net asset value and to issue Shares in exchange
for substantially all the assets of any corporation or trust or for the shares
of any corporation or trust.
4. Basis of Sale of Shares.
Underwriter does not agree to sell any specific number of
Shares. Underwriter, as agent for the Trust, undertakes to sell Shares on a
best efforts basis only against orders therefor.
5. Rules of NASD, etc.
(a) Underwriter will conform to the Rules of Fair Practice of
the NASD and the securities laws of any jurisdiction in which it sells,
directly or indirectly, any Shares.
(b) Underwriter will require each dealer with whom
Underwriter has a dealer agreement to conform to the applicable provisions
hereof and the Registration Statement with respect to the public offering
price of the Shares, and neither Underwriter nor any such dealers shall
withhold the placing of purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer
or broker, or otherwise, under all applicable State or
- 5 -
<PAGE>
federal laws required in order that Shares may be sold in such States as may be
mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a
sale of the Shares, any representations concerning the Shares except those
contained in the then current prospectus and statement of additional
information covering the Shares and in printed information approved by the
Trust as information supplemental to such prospectus and statement of
additional information. Copies of the then effective prospectus and statement
of additional information and any such printed supplemental information will
be supplied by the Trust to Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Trust.
The Trust shall furnish to Underwriter copies of all
information, financial statements and other papers which Underwriter may
reasonably request for use in connection with the distribution of the Shares,
and this shall include, but shall not be limited to, one certified copy, upon
request by Underwriter, of all financial statements prepared for the Trust by
independent public accountants.
7. Expenses.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or
dealer under state and federal laws and
- 6 -
<PAGE>
in establishing and maintaining its relationships with the dealers selling the
Shares. All other costs in connection with the offering of the Shares will be
paid by the Trust or the Trust's investment advisers (the "Advisers") in
accordance with agreements between them as permitted by applicable law,
including the Act and rules and regulations promulgated thereunder.
8. Indemnification of Trust.
Underwriter, to the extent of the net commission received by
it from the sale of Shares but to no greater amount, agrees to indemnify and
hold harmless the Trust, the Advisers and each person who has been, is, or may
hereafter be a trustee, director, officer, employee, partner, shareholder or
control person of the Trust or the Advisers, against any loss, damage or
expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with any claim or in connection with any action,
suit or proceeding to which any of them may be a party, which arises out of or
is alleged to arise out of or is based upon any untrue statement or alleged
untrue statement of a material fact, or the omission or alleged omission to
state a material fact necessary to make the statements not misleading, on the
part of Underwriter or any agent or employee of Underwriter or any other
person for whose acts Underwriter is responsible, unless such statement or
omission was made in reliance upon written information furnished by the Trust
or the Advisers. Underwriter likewise, to the
- 7 -
<PAGE>
extent of the net commission received by it from the sale of Shares but to no
greater amount, agrees to indemnify and hold harmless the Trust, the Advisers
and each such person in connection with any claim or in connection with any
action, suit or proceeding which arises out of or is alleged to arise out of
Underwriter's failure to exercise reasonable care and diligence with respect
to its services, if any, rendered in connection with investment, reinvestment,
automatic withdrawal and other plans for Shares. The term "expenses" for
purposes of this and the next paragraph includes amounts paid in satisfaction
of judgments or in settlements which are made with Underwriter's consent. The
foregoing rights of indemnification shall be in addition to any other rights
to which the Trust, the Advisers or each such person may be entitled as a
matter of law.
9. Indemnification of Underwriter.
Underwriter, its directors, officers, employees,
shareholders and control persons shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of any of such persons
in the performance of Underwriter's duties or from the reckless disregard by
any of such persons of Underwriter's obligations and duties under this
Agreement. The Trust will advance attorneys' fees or other expenses incurred
by any such person in defending a
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<PAGE>
proceeding, upon the undertaking by or on behalf of such person to repay the
advance if it is ultimately determined that such person is not entitled to
indemnification. Any person employed by Underwriter who may also be or become
an officer or employee of the Trust shall be deemed, when acting within the
scope of his employment by the Trust, to be acting in such employment solely
for the Trust and not as an employee or agent of Underwriter.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This Agreement may
be amended only if such amendment is approved (i) by Underwriter, (ii) either
by action of the Board of Trustees of the Trust or at a meeting of the
Shareholders of the Trust by the affirmative vote of a majority of the
outstanding Shares, and (iii) by a majority of the Trustees of the Trust who
are not interested persons of the Trust or of Underwriter by vote cast in
person at a meeting called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate
this Agreement on sixty (60) days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and
shall remain in full force and effect for a period of two (2)
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<PAGE>
years from the date of its execution (unless terminated automatically as set
forth in Section 10), and from year to year thereafter, subject to annual
approval (i) by Underwriter, (ii) by the Board of Trustees of the Trust or a
vote of a majority of the outstanding Shares, and (iii) by a majority of the
Trustees of the Trust who are not interested persons of the Trust or of
Underwriter by vote cast in person at a meeting called for the purpose of
voting on such approval.
12. Limitation of Liability.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, Shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind
only the trust property of the Trust, as provided in the Agreement and
Declaration of Trust of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees and Shareholders of the Trust
and signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees and Shareholders nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Agreement and
Declaration of Trust.
- 10 -
<PAGE>
13. New Series.
The terms and provisions of this Agreement shall become
automatically applicable to any additional series of the Trust established
during the initial or renewal term of this Agreement.
14. Successor Investment Company.
Unless this Agreement has been terminated in accordance with
Paragraph 10, the terms and provisions of this Agreement shall become
automatically applicable to any investment company which is a successor to the
Trust as a result of reorganization, recapitalization or change of domicile.
15. Severability.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
16. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of
the State of Ohio.
(b) Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or provision
of the Act and to interpretation thereof, if any, by the United States courts
or in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange
- 11 -
<PAGE>
Commission issued pursuant to said Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is
revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
17. Notices.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Trust for this purpose shall be The Maryland Jockey Club, P.O. Box 130,
Laurel, Maryland 20725 and that the address of Underwriter for this purpose
shall be 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202.
IN WITNESS WHEREOF, the Trust and Underwriter have each
caused this Agreement to be signed in duplicate on their behalf, all as of the
day and year first above written.
ATTEST: WALNUT INVESTMENT TRUST
- - ----------------------- By: ---------------------
Its: Chairman
ATTEST: MIDWEST GROUP FINANCIAL
SERVICES, INC.
- - ------------------------ By: ----------------------
Its: President
- 12 -
<PAGE>
DEALER'S AGREEMENT
------------------
Midwest Group Financial Services, Inc. ("Underwriter") invites
you, as a selected dealer, to participate as principal in the
distribution of shares (the "Shares") of the mutual funds set forth
on Schedule A to this Agreement (the "Funds"), of which it is the
exclusive underwriter. Underwriter agrees to sell to you, subject
to any limitations imposed by the Funds, Shares issued by the Funds
and to promptly confirm each sale to you. All sales will be made
according to the following terms:
1. All offerings of any of the Shares by you must be made at
the public offering prices, and shall be subject to the conditions
of offering, set forth in the then current Prospectus of the Funds
and to the terms and conditions herein set forth, and you agree to
comply with all requirements applicable to you of all applicable
laws, including federal and state securities laws, the rules and
regulations of the Securities and Exchange Commission, and the
Rules of Fair Practice of the National Association of Securities
Dealers, inc. (the "NASD"), including Section 24 of the Rules of
Fair Practice of the NASD. You will not offer the Shares for sale
in any state or other jurisdiction where they are not qualified for
sale under the Blue Sky Laws and regulations of such state or
jurisdiction, or where you are not qualified to act as a dealer.
Upon application to Underwriter, Underwriter will inform you as to
the states or other jurisdictions in which Underwriter believes the
Shares may legally be sold.
2. (a) You will receive a discount from the public offering
price ("concession") on all Shares purchased by you from
Underwriter as indicated on Schedule A, as it may be amended by
Underwriter from time to time.
(b) In all transactions in open accounts in which you
are designated as Dealer of Record, you will receive the
concessions as set forth on Schedule A. You hereby authorize
Underwriter to act as your agent in connection with all
transactions in open accounts in which you are designated as Dealer
of Record. All designations as Dealer of Record, and all
authorizations of Underwriter to act as your Agent pursuant
thereto, shall cease upon the termination of this Agreement or upon
the investor's instructions to transfer his open account to another
Dealer of Record. No dealer concessions will be allowed on
purchases generating less than $1.00 in dealer concessions.
(c) As the exclusive underwriter of the Shares,
Underwriter reserves the privilege of revising the discounts
specified on Schedule A at any time by written notice.
3. Concessions will be paid to you at the address of your
principal office, as indicated below in your acceptance of this
Agreement.
4. Underwriter reserves the right to cancel this Agreement
at any time without notice if any Shares shall be offered for sale
by you at less than the then current public offering prices
determined by, or for, the Funds.
5. All orders are subject to acceptance or rejection by
Underwriter in its sole discretion. We reserve the right, in our
discretion, without notice, to suspend sales or withdraw the
offering of Shares entirely.
6. Payment shall be made to the Funds and shall be received
by its Transfer Agent within five (5) business days after the
acceptance of your order or such shorter time as may be required by
law. With respect to all Shares ordered by you for which payment
has not been received, you hereby assign and pledge to Underwriter
all of your right, title and interest in such Shares to secure
payment therefor. You appoint Underwriter as your agent to execute
and deliver all documents necessary to effectuate any of the
transactions described in this paragraph. If such payment is not
received within the required time period, Underwriter reserves the
right, without notice, and at its option, forthwith (a) to cancel
the sale, (b) to sell the Shares ordered by you back to the Funds,
or (c) to assign your payment obligation, accompanied by all
pledged Shares, to any person. You agree that Underwriter may hold
you responsible for any loss, including loss of profit, suffered by
the Funds, its Transfer Agent or Underwriter, resulting from your
failure to make payment within the required time period.
7. No person is authorized to make any representations
concerning Shares of the Funds except those contained in the
current applicable Prospectus and Statement of Additional
Information and in sales literature issued and furnished by
Underwriter supplemental to such Prospectus. Underwriter will
furnish additional copies of the current Prospectus and Statement
of Additional Information and such sales literature and other
releases and information issued by Underwriter in reasonable
quantities upon request.
8. Under this Agreement, you act as principal and are not
employed by Underwriter as broker, agent or employee. You are not
authorized to act for Underwriter nor to make any representation on
its behalf; and in purchasing or selling Shares hereunder, you rely
only upon the current Prospectus and Statement of Additional
Information furnished to you by Underwriter from time to time and
upon such written representations as may hereafter be made by
Underwriter to you over its signature.
9. You appoint the transfer agent for the Funds as your
agent to execute the purchase transactions of Shares in accordance
with the terms and provisions of any account, program, plan or
service established or used by your customers and to confirm each
purchase to your customers on your behalf, and you guarantee the
legal capacity of your customers so purchasing such Shares and any
co-owners of such Shares.
10. You will (a) maintain all records required by law
relating to transactions in the Shares, and upon the request of
Underwriter, or the request of the Funds, promptly make such of
these records available to Underwriter or to the Funds as are
requested, and (b) promptly notify Underwriter if you experience
any difficulty in maintaining the records required in the foregoing
clause in an accurate and complete manner. In addition, you will
establish appropriate procedures and reporting forms and schedule,
approved by Underwriter and by the Funds, to enable the parties
hereto and the Funds to identify all accounts opened and maintained
by your customers.
11. Underwriter has adopted compliance standards, attached
hereto as Schedule B, as to when Class A and Class C Shares of the
Dual Pricing Funds may appropriately be sold to particular
investors. You agree that all persons associated with you will
conform to such standards when selling Shares.
12. Each party hereto represents that it is presently, and at
all times during the term of this Agreement will be, a member in
good standing of the NASD and agrees to abide by all its Rules of
Fair Practice including, but not limited to, the following
provisions:
(a) You shall not withhold placing customers' orders for
any Shares so as to profit yourself as a result of such
withholding. You shall not purchase any Shares from
Underwriter other than for investment, except for the purpose
of covering purchase orders already received.
(b) All conditional orders received by Underwriter must
be at a specified definite price.
(c) If any Shares purchased by you are repurchased by
the Funds (or by Underwriter for the account of the Funds) or
are tendered for redemption within seven business days after
confirmation of the original sale of such Shares (1) you agree
to forthwith refund to Underwriter the full concession allowed
to you on the original sale, such refund to be paid by
Underwriter to the Funds, and (2) Underwriter shall forthwith
pay to the Funds that part of the discount retained by
Underwriter on the original sale. Notice will be given to you
of any such repurchase or redemption within ten days of the
date on which the repurchase or redemption request is made.
(d) Neither Underwriter, as exclusive underwriter for
the Funds, nor you as principal, shall purchase any Shares
from a record holder at a price lower than the net asset value
then quoted by, or for, the Funds. Nothing in this sub-
paragraph shall prevent you from selling Shares for the
account of a record holder to Underwriter or the Funds at the
net asset value currently quoted by, or for, the Funds and
charging the investor a fair commission for handling the
transaction.
(e) You warrant on behalf of yourself and your
registered representatives and employees that any purchase of
Shares at net asset value by the same pursuant to the terms of
the Prospectus of the applicable Fund is for investment
purposes only and not for purposes of resale. Shares so
purchased may be resold only to the Fund which issued them.
13. You agree that you will indemnify Underwriter, the Funds,
the Funds' transfer agent, the Funds' investment adviser, and the
Funds' custodians and hold such persons harmless from any claims or
assertions relating to the lawfulness of your company's
participation in this Agreement and the transactions contemplated
hereby or relating to any activities of any persons or entities
affiliated with your company which are performed in connection with
the discharge of your responsibilities under this Agreement. If
any such claims are asserted, the indemnified parties shall have
the right to engage in their own defense, including the selection
and engagement of legal counsel of their choosing, and all costs of
such defense shall be borne by you.
14. This Agreement will automatically terminate in the event
of its assignment. Either party hereto may cancel this Agreement
without penalty upon ten days' written notice. This Agreement may
also be terminated as to any Fund at any time without penalty by
the vote of a majority of the members of the Board of Trustees of
the terminating Fund who are not "interested persons" (as such term
is defined in the Investment Company Act of 1940) and who have no
direct or indirect financial interest in the applicable Fund's
Distribution Expense Plan or any agreement relating to such Plan,
including this Agreement, or by a vote of a majority of the
outstanding voting securities of the terminating Fund on ten days'
written notice.
15. All communications to Underwriter should be sent to
Midwest Group Financial Services, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202, or at such other address as Underwriter may
designate in writing. Any notice to you shall be duly given if
mailed or telegraphed to you at the address of your principal
office, as indicated below in your acceptance of this Agreement.
<PAGE>
16. This Agreement supersedes any other agreement with you
relating to the offer and sale of the Shares, and relating to any
other matter discussed herein.
17. This Agreement shall be binding (i) upon placing your
first order with Underwriter for the purchase of Shares, or (ii)
upon receipt by Underwriter in Cincinnati, Ohio of a counterpart of
this Agreement duly accepted and signed by you, whichever shall
occur first. This Agreement shall be construed in accordance with
the laws of the State of Ohio.
18. The undersigned, executing this Agreement on behalf of
Dealer, hereby warrants and represents that he is duly authorized
to so execute this Agreement on behalf of Dealer.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us one copy of this
Agreement.
MIDWEST GROUP FINANCIAL
SERVICES, INC.
By: --------------------------
ACCEPTED BY DEALER:
------------------------------
Firm Name
By:---------------------------
Authorized Signature,
Position
------------------------------
Type or Print Name
ADDRESS (Principal Office):
------------------------------
------------------------------
Date:-------------------------
SCHEDULE A
MIDWEST GROUP FINANCIAL SERVICES, INC.
Maplewood Investment Trust Commission Schedule
Amelia Earhart: Eagle Equity Fund - Class A - CUSIP# 565543105
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 4.50% 4.00%
$100,000 but less than $250,000 3.50% 3.00%
$250,000 but less than $500,000 2.50% 2.00%
$500,000 or more None None
25 basis points annual trailing commission, effective immediately, paid
quarterly.
Regional Opportunity Fund - Class A - CUSIP# 565543303
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 4.00% 3.60%
$100,000 but less than $250,000 3.50% 3.30%
$250,000 but less than $500,000 2.50% 2.30%
$500,000 but less than $1,000,000 2.00% 1.80%
$1,000,000 or more None None
25 basis points annual trailing commission, effective immediately, paid
quarterly.
Amelia Earhart: Eagle Equity Fund -Class B - Currently unavailable for purchase
Regional Opportunity Fund -Class B - CUSIP# 565543808
The Funds will be offered to clients at net asset value. A commission of 41/2%
of the purchase amount of Class B shares will be paid to participating brokers
at the time of purchase. Purchases of Class B shares are subject to a
contingent deferred sales load, according to the following schedule:
Year Since Purchase Contingent Deferred
Payment Was Made Sales Load
First 5.00%
Second 4.00%
Third 3.00%
Fourth 2.00%
Fifth 1.00%
Sixth and Thereafter None
25 basis points annual trailing commission will be paid quarterly beginning in
the thirteenth month.
The CarolinasFund - Investor Shares - CUSIP# 565543204
The Mississippi Opportunity Fund - Class A - CUSIP# 565543501
Total
Dollar Amount of Purchase Sales Dealer
(At Offering Price) Charge* Concession
Less than $100,000 3.50% 3.00%
$100,000 but less than $250,000 3.00% 2.50%
$200 but less than $500,000 2.50% 2.00%
$500,000 or more None None
50 basis points annual trailing commission, effective immediately, paid
quarterly.
The CarolinasFund - Institutional Shares - CUSIP# 565543709
No front-end load, no trailing commission
The Mississippi Opportunity Fund - Class C - CUSIP# 565543600
No front-end load, 100 basis points annual trailing commission, effective
immediately, paid quarterly.
Legacy Equity Fund - CUSIP# 565543402
Total Sales Charge* Dealer Concession
3.00% 2.90%
50 basis points annual trailing commission effective immediately, paid
quarterly.
Brokers may invest for their own account at NAV.
*As a percentage of offering price.
SCHEDULE B
Policies and Procedures
With Respect to Sales
Of Dual Pricing Fund
------------------------
As certain Funds within Maplewood Investment Trust (the "Dual Pricing
Funds") offer two classes of Shares subject to different levels of
front-end sales charges, it is important for an investor not only
to choose the Fund that best suits his investment objectives, but
also to choose the sales financing method which best suits his
particular situation. To assist investors in these decisions, we
are instituting the following policy:
1. Any purchase order for $1 million or more must be for
Class A Shares.
2. Any purchase order for $100,000 but less than $1 million
is subject to approval by a registered principal of the
Underwriter, who must approve the purchase order for
either Class A Shares or Class B Shares in light of the
relevant facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold the
Shares; and
(c) any other relevant circumstances, such as the
availability of purchases under a Letter of Intent.
3. Any order to exchange Class A Shares of a Dual Pricing
Fund (or Shares of another Fund having a maximum sales
load equal to or greater than Class A Shares of the Dual
Pricing Funds) for Shares of another Dual Pricing Fund
will be for Class A Shares only. Class B Shares of a
Dual Pricing Fund may be exchanged for either Class A or
Class B Shares of another Dual Pricing Fund, provided
that an exchange of Class B Shares for Class A Shares is
subject to approval by a registered principal of
Underwriter, who must approve the exchange in light of
the relevant facts and circumstances.
There are instances when one financing method may be more
appropriate than the other. For example, investors who would
qualify for a significant discount from the maximum sales charge on
Class A Shares may determine that payment of such a reduced front-
end sales charge is superior to payment of the higher ongoing
distribution fee applicable to Class B Shares. On the other hand,
an investor whose order would not qualify for such a discount may
wish to pay a lower sales charge and have more of his funds
invested in Class B Shares. If such an investor anticipates that
he will redeem his Shares within a short period of time, the
investor may, depending on the amount of his purchase, choose to
bear higher distribution expenses than if he had purchased Class A
Shares.
In addition, investors who intend to hold their Shares for a
significantly long time may wish to purchase Class A Shares in
order to avoid the higher ongoing distribution expenses of Class B
Shares.
The appropriate supervisor must ensure that all employees
receiving investor inquiries about the purchase of Shares of Dual
Pricing Funds advise the investor of the available financing
methods offered by mutual funds, and the impact of choosing one
method over another. It may be appropriate for the supervisor to
discuss the purchase with the investor.
This policy is effective immediately with respect to any order
for the purchase of Shares of all Dual Pricing Funds. Questions
relating to this policy should be directed to Sharon Karp, Vice
President of the Underwriter, at 513/629-2000.
CUSTODY AGREEMENT
This AGREEMENT, dated as of June 3, 1996, by and between WALNUT
INVESTMENT TRUST (the "Trust"), a business trust organized under the laws of
The Commonwealth of Massachusetts, acting with respect to the AMELIA EARHART:
EAGLE EQUITY FUND, THE CAROLINASFUND, the LEGACY EQUITY FUND and the REGIONAL
OPPORTUNITY FUND (individually, a "Fund" and, collectively, the "Funds"), each
of them a series of the Trust and each of them operated and administered by
the Trust, and THE FIFTH THIRD BANK, a banking company organized under the
laws of the State of Ohio (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Trust desires that the Funds' Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Funds and named in Exhibit A hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day
by The New York Stock Exchange, Inc. and any other day for which the Trust
computes the net asset value of Shares of any Fund.
1.5 "NASD" shall mean The National Association of Securities
Dealers, Inc.
- 2 -
<PAGE>
1.6 "Officer" shall mean the President, any Vice President,
the Secretary, any Assistant Secretary, the Treasurer, or any
Assistant Treasurer of the Trust.
1.7 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary
course of business and (iii) orally confirmed by the Custodian. The Trust
shall cause all Oral Instructions to be confirmed by Written Instructions. If
such Written Instructions confirming Oral Instructions are not received by the
Custodian prior to a transaction, it shall in no way affect the validity of
the transaction or the authorization thereof by the Trust. If Oral
Instructions vary from the Written Instructions which purport to confirm them,
the Custodian shall notify the Trust of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.8 "Fund Custody Account" shall mean any of the accounts in the name
of the Trust, which are provided for in Section 3.2 below.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions
when deemed appropriate by both parties.
- 3 -
<PAGE>
1.10 "Securities Depository" shall mean The Participants Trust Company
or The Depository Trust Company and (provided that Custodian shall have
received a copy of a resolution of the Board of Trustees, certified by an
Officer, specifically approving the use of such clearing agency as a
depository for the Funds) any other clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities and
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the central
handling of Securities where all Securities of any particular class or series
of an issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of the
Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes,
bank certificates of deposit, bankers' acceptances, mortgage-backed
securities, other money market instruments or other obligations, and any
certificates, receipts, warrants or other instruments or documents
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear and
to service.
1.12 "Shares" shall mean, with respect to a Fund, the units of
beneficial interest issued by the Trust on account of such Fund.
- 4 -
<PAGE>
1.13 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by one or more Authorized
Persons, or (ii) communications by telex or any other such system from a
person or persons reasonably believed by the Custodian to be Authorized
Persons, or (iii) communications transmitted electronically through the
Institutional Delivery System (IDS), or any other similar electronic
instruction system acceptable to Custodian and approved by resolutions of the
Board of Trustees, a copy of which, certified by an Officer, shall have been
delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the
possession of the Trust at any time during the period of this Agreement,
provided that such Securities and cash at all times shall be and remain the
property of the Trust.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth.
- 5 -
<PAGE>
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of a Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically
segregated from other Securities and non-cash property in the possession of
the Custodian (including the Securities and non-cash property of the other
Funds) and shall be identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open
and maintain in its trust department a custody account in the name of the
Trust coupled with the name of such Fund, subject only to draft or order of
the Custodian, in which the Custodian shall enter and carry all Securities,
cash and other assets of such Fund which are delivered to it.
3.3 Appointment of Agents. (a) In its discretion, the Custodian may
appoint, and at any time remove, any domestic bank or trust company,
which has been approved by the Board of Trustees and is qualified to act as a
custodian under the 1940 Act, as sub-custodian to hold Securities and cash of
the Funds and to carry out such other provisions of this Agreement as it may
determine, and may also open and maintain one or more banking accounts with
such a bank or trust company (any such accounts to be in the name of the
Custodian and subject only to its draft or order), provided, however, that the
appointment of any such agent
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shall not relieve the Custodian of any of its obligations or liabilities under
this Agreement.
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or cause
to be delivered, to the Custodian all of the Funds' Securities, cash and
other assets, including (a) all payments of income, payments or principal and
capital distributions received by the Funds with respect to such Securities,
cash or other assets owned by the Funds at any time during the period of this
Agreement, and (b) all cash received by the Funds for the issuance, at any
time during such period, of Shares. The Custodian shall not be responsible for
such Securities, cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian
may deposit and/or maintain Securities of the Funds in a Securities Depository
or in a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any
Securities Depository or Book-Entry System, the Trust
shall deliver to the Custodian a resolution of the
Board of Trustees, certified by an Officer, authorizing
and instructing the Custodian on an on-going basis to
deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry
System to the extent possible and practical in
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connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and
returns of collateral consisting of Securities. So long as
such Securities Depository or Book-Entry System shall continue
to be employed for the deposit of Securities of the Funds, the
Trust shall annually re-adopt such resolution and deliver a
copy thereof, certified by an Officer, to the Custodian.
(b) Securities of the Funds kept in a Book-Entry System or
Securities Depository shall be kept in an account ("Depository
Account") of the Custodian in such Book- Entry System or
Securities Depository which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for
customers.
(c) The records of the Custodian and the Custodian's account on
the books of the Book-Entry System and Securities Depository
as the case may be, with respect to Securities of a Fund
maintained in a Book-Entry System or Securities Depository
shall, by book-entry or otherwise, identify such Securities as
belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a
Book-Entry System or Securities Depository, the
Custodian shall pay for such Securities upon (i)
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receipt of advice from the Book-Entry System or Securities
Depository that such Securities have been transferred to the
Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer
for the account of such Fund. If Securities sold by a Fund are
held in a Book-Entry System or Securities Depository, the
Custodian shall transfer such Securities upon (i) receipt of
advice from the Book-Entry System or Securities Depository
that payment for such Securities has been transferred to the
Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment
for the account of such Fund.
(e) Upon request, the Custodian shall provide the Trust with
copies of any report (obtained by the Custodian from a
Book-Entry System or Securities Depository in which Securities
of the Funds are kept) on the internal accounting controls and
procedures for safeguarding Securities deposited in such
Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Trust for any loss or
damage to a Fund resulting (i) from the use of a Book-Entry
System or Securities
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Depository by reason of any negligence or willful misconduct
on the part of Custodian or any sub-custodian appointed
pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such
sub-custodian to enforce effectively such rights as it may
have against a Book- Entry System or Securities Depository. At
its election, the Trust shall be subrogated to the rights of
the Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person from any
loss or damage to the Funds arising from the use of such
Book-Entry System or Securities Depository, if and to the
extent that the Funds have not been made whole for any such
loss or damage.
3.6 Disbursement of Moneys from Fund Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall disburse moneys from a
Fund Custody account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only (i) in
the case of Securities (other than options on Securities,
futures contracts and options on futures contracts), against
the delivery to the Custodian (or any sub-custodian appointed
pursuant to Section 3.3 above) of such Securities registered
as provided in
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Section 3.9 below or in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry
System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the case of
options on Securities, against delivery to the Custodian (or
such sub-custodian) of such receipts as are required by the
customs prevailing among dealers in such options; (iii) in the
case of futures contracts and options on futures contracts,
against delivery to the Custodian (or such sub-custodian) of
evidence of title thereto in favor of the Fund or any nominee
referred to in Section 3.9 below; and (iv) in the case of
repurchase or reverse repurchase agreements entered into
between the Trust and a bank which is a member of the Federal
Reserve System or between the Trust and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or
Securities Depository with such Securities;
(b) In connection with the conversion, exchange or
surrender, as set forth in Section 3.7(f) below, of
Securities owned by the Fund;
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(c) For the payment of any dividends or capital gain
distributions declared by the Fund;
(d) In payment of the redemption price of Shares as
provided in Section 5.1 below;
(e) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: interest; taxes;
administration, investment management, investment
advisory, accounting, auditing, transfer agent,
custodian, trustee and legal fees; and other operating
expenses of the Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or
treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of
the NASD, relating to compliance with rules of The
Options Clearing Corporation and of any registered
national securities exchange (or of any similar
organization or organizations) regarding escrow or
other arrangements in connection with transactions by
the Fund;
(g) For transfer in accordance with the provision of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
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Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations)
regarding account deposits in connection
with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
(i) For any other proper purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
amount and purposes of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
3.7 Delivery of Securities from Fund Custody Accounts.
Upon receipt of Proper Instructions, the Custodian shall release
and deliver Securities from a Fund Custody Account but only in
the following cases:
(a) Upon the sale of Securities for the account of the Fund
but only against receipt of payment therefor in cash,
by certified or cashiers check or bank credit;
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(b) In the case of a sale effected through a Book-Entry
System or Securities Depository, in accordance with the
provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer
into the name of the Fund, the Custodian or any sub-
custodian appointed pursuant to Section 3.3 above, or
of any nominee or nominees of any of the foregoing, or
(ii) for exchange for a different number of
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new Securities are to be
delivered to the Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the issuer of such Securities, or pursuant to
provisions for conversion contained in such Securities, or
pursuant to any deposit agreement, including surrender or
receipt of underlying Securities
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in connection with the issuance or cancellation of depository
receipts; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any
repurchase or reverse repurchase agreement entered into
by the Fund;
(h) In the case of warrants, rights or similar Securities, upon
the exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-
dealer registered under the 1934 Act and a member of
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the NASD, relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with
transactions by the Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or
organizations) regarding account deposits in connection
with transactions by the Fund; or
(n) For any other proper corporate purposes, but only upon
receipt, in addition to Proper Instructions, of a copy
of a resolution of the Board of Trustees, certified by
an Officer, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless
otherwise instructed by the Trust, the Custodian shall with respect to all
Securities held for a Fund:
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(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect
on a timely basis the amount payable upon all Securities which
may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary
form for Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax
laws or the laws or regulations of any other taxing
authority now or hereafter in effect, and prepare and
submit reports to the Internal Revenue Service ("IRS")
and to the Trust at such time, in such manner and
containing such information as is prescribed by the
IRS;
(f) Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
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(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of a Fund if eligible therefor. All other
Securities held for a Fund may be registered in the name of such Fund, the
Custodian, or any sub-custodian appointed pursuant to Section 3.3 above, or in
the name of any nominee of any of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof; provided, however,
that such Securities are held specifically for the account of the Fund. The
Trust shall furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in
the name of any of the nominees hereinabove referred to or in the name of a
Book-Entry System or Securities Depository, any Securities registered in the
name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held
for the Funds, including (i) journals or other records of original entry
containing an itemized daily
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record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting (A)
Securities in transfer, (B) Securities in physical possession, (C) monies and
Securities borrowed and monies and Securities loaned (together with a record
of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Funds as the Trust
shall reasonably request, or as may be required by the 1940 Act, including,
but not limited to, Section 31 of the 1940 Act and Rule 31a-1 and 31a-2
promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Trust and in compliance with rules
and regulations of the Securities and Exchange Commission, (ii) be the
property of the Trust and at all times during the regular business hours of
the Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Trust and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
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3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement by Fund and a summary of all transfers to or
from each Fund Custody Account on the day following such transfers. At least
monthly and from time to time, the Custodian shall furnish the Trust with a
detailed statement, by Fund, of the Securities and moneys held for the Funds
under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on
the internal accounting controls and procedures for safeguarding Securities,
which are employed by the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all
proxies, if any, relating to Securities which are not registered in the name
of a Fund, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are to be
voted, and shall include all other proxy materials, if any, and shall promptly
deliver to the Trust such proxies, all proxy soliciting materials, which
should include all other proxy materials, if any, and all notices relating to
such Securities.
3.14 Information on Corporate Actions. The Custodian will promptly
notify the Trust of corporate actions, limited to those Securities registered
in nominee name and to those Securities
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held at a Securities Depository or sub-custodian acting as agent for the
Custodian. Custodian will be responsible only if the notice of such corporate
actions is published by the Financial Daily Card Service, J. J. Kenny Called
Bond Service or Depository Trust Company, or received by first class mail from
the agent. For market announcements not yet received and distributed by
Custodian's services, Trust will inform its custody representative with
appropriate instructions. Custodian will, upon receipt of Trust's response
within the required deadline, affect such action for receipt or payment for
the Trust. For those responses received after the deadline, Custodian will
affect such action for receipt or payment, subject to the limitations of the
agent(s) affecting such actions. Custodian will promptly notify Trust for put
options only if the notice is received by first class mail from the agent. The
Trust will provide or cause to be provided to the Custodian all relevant
information contained in the prospectus for any Security which has unique
put/option provisions and provide Custodian with specific tender instructions
at least ten Business Days prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
4.1 Purchase of Securities. Promptly upon each purchase of
Securities for a Fund, Written Instructions shall be delivered to
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the Custodian, specifying (a) the Fund for which the purchase was made, (b)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (c) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (d) the date of purchase and
settlement, (e) the purchase price per unit, (f) the total amount payable upon
such purchase, and (g) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by a Fund pay
out of the moneys held for the account of such Fund the total amount specified
in such Written Instructions to the person named therein. The Custodian shall
not be under any obligation to pay out moneys to cover the cost of a purchase
of Securities for a Fund, if in the relevant Fund Custody Account there is
insufficient cash available to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for a Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Written or Oral Instructions to so
pay in advance, the Custodian shall be liable to the Fund for such Securities
to the same extent as if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to
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the Custodian, specifying (a) the Fund for which the sale was made, (b) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (c) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (d) the date of sale and settlement,
(e) the sale price per unit, (f) the total amount payable upon such sale, and
(g) the person to whom such Securities are to be delivered. Upon receipt of
the total amount payable to the Fund as specified in such Written
Instructions, the Custodian shall deliver such Securities to the person
specified in such Written Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund for which such Securities
were delivered shall bear the risk that final payment for such Securities may
not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and the
Custodian shall have no liability for any for the foregoing.
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4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the relevant Fund Custody Account,
prior to actual receipt of final payment thereof, with (i) proceeds from the
sale of Securities which it has been instructed to deliver against payment,
(ii) proceeds from the redemption of Securities or other assets of the Fund,
and (iii) income from cash, Securities or other assets of the Fund. Any such
credit shall be conditional upon actual receipt by Custodian of final payment
and may be reversed if final payment is not actually received in full. The
Custodian may, in its sole discretion and from time to time, permit a Fund to
use funds so credited to its Fund Custody Account in anticipation of actual
receipt of final payment. Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the actual receipt of all
final payments in anticipation of which funds were credited to the Fund
Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to
facilitate the settlement of a Fund's transactions in its Fund Custody
Account. Any such advance shall be repayable immediately upon demand made by
Custodian.
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ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of a
Fund, the Custodian shall wire each amount specified in such Proper
Instructions to or through such bank as the Trust may designate with respect
to such amount in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under
any obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount paid by
the Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD
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(or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules
of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or in
connection with financial futures contracts (or options
thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities
made by the Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and
firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees, certified by an Officer,
setting forth the
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purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or any Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any sub-custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Trust of any action taken or omitted by
the Custodian pursuant to advice of counsel. The Custodian shall not be under
any obligation at any time to ascertain whether the Trust or a Fund is in
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compliance with the 1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or by-laws, or its investment objectives and policies
as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for,
or considered to be the custodian of, any cash belonging to a Fund or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or collect
on such instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent
that it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or evidence
of title thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for a Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
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7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate with and supply
necessary information, by Fund, to the entity or entities appointed by the
Trust to keep the books of account of the Funds and/or compute the value of
the assets of the Funds. The Custodian shall take all such reasonable actions
as the Trust may from time to time request to enable the Trust to obtain, from
year to year, favorable opinions from the Trust's independent accountants with
respect to the Custodian's activities hereunder in connection with (a) the
preparation of the Trust's reports on Form N-1A and Form N-SAR and any other
reports required by the Securities and Exchange Commission, and (b) the
fulfillment by the Trust of any other requirements of the Securities and
Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such sub-custodian, from and against any
loss, damage, cost, expense
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(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or
claim arising directly or indirectly (a) from the fact that Securities are
registered in the name of any such nominee, or (b) from any action or inaction
by the Custodian or such sub-custodian (i) at the request or direction of or
in reliance on the advice of the Trust, or (ii) upon Proper Instructions, or
(c) generally, from the performance of its obligations under this Agreement or
any sub-custody agreement with a sub-custodian appointed pursuant to Section
3.3 above, provided that neither the Custodian nor any such sub-custodian
shall be indemnified and held harmless from and against any such loss, damage,
cost, expense, liability or claim arising from the Custodian's or such
sub-custodian's negligence, bad faith or willful misconduct.
8.2 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
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ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Funds in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
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<PAGE>
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of the
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
the giving of such notice. If a successor custodian shall have been appointed
by the Board of Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of termination
(a) deliver directly to the successor custodian all Securities (other than
Securities held in a Book-Entry System or Securities Depository) and cash then
owned by the Funds and held by the Custodian as custodian, and (b) transfer
any Securities held in a Book-Entry System or Securities Depository to an
account of or for the benefit of the Funds at the successor custodian,
provided that the Trust shall have paid to the Custodian all fees, expenses
and other amounts to the payment or reimbursement of which it shall then be
entitled. Upon such delivery and transfer, the Custodian shall be relieved of
all obligations under this Agreement. The Trust may at any time immediately
terminate this Agreement in the event of the
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<PAGE>
appointment of a conservator or receiver for the Custodian by regulatory
authorities in the State of Ohio or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian
is not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to
an account of or for the Funds at such bank or trust company all Securities of
the Funds held in a Book-Entry System or Securities Depository. Upon such
delivery and transfer, such bank or trust company shall be the successor
custodian under this Agreement and the Custodian shall be relieved of all
obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed
upon from time to time by the Trust and the Custodian. The fees
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<PAGE>
and other charges in effect on the date hereof and applicable to the Funds are
set forth in Exhibit B attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust as provided in the Trust's Agreement and
Declaration of Trust, as from time to time amended. The execution and delivery
of this Agreement have been authorized by the Trustees, and this Agreement has
been signed and delivered by an authorized officer of the Trust, acting as
such, and neither such authorization by the Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in the above-mentioned
Agreement and Declaration of Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given hereunder
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<PAGE>
shall be in writing and shall be sent or delivered to the recipient at the
address set forth after its name hereinbelow:
To the Trust:
Walnut Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone: (513) 629-2000
Facsimile: (513) 629-2041
To Custodian:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Area Manager-Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in the
prospectus or statement of additional information for a Fund and such other
printed
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<PAGE>
matter as merely identifies Custodian as custodian for one or more Funds. The
Trust shall submit printed matter requiring approval to Custodian in draft
form, allowing sufficient time for review by Custodian and its counsel prior
to any deadline for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right hereunder
shall not preclude the exercise of any other right, and the remedies provided
herein are cumulative and not exclusive of any remedies provided at law or in
equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an
instrument in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of
which shall be deemed an original but all of which together shall constitute
but one and the same instrument.
14.6 Severability. If any provision of this Agreement
shall be invalid, illegal or unenforceable in any respect under
any applicable law, the validity, legality and enforceability of
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the remaining provisions shall not be affected or impaired
thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not be
assignable by either party hereto without the written consent of the other
party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: WALNUT INVESTMENT TRUST
/s/ John F. Splain By:/s/ Robert G. Dorsey
- - ----------------- -----------------------
Its: Vice President
ATTEST: THE FIFTH THIRD BANK
/s/Elizabeth G. Bernotas By:/s/ Tracie D. Hoffman
- - ------------------------ ------------------------
Tracie Hoffman
Vice President
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<PAGE>
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
WALNUT INVESTMENT TRUST AND THE FIFTH THIRD BANK
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer each Fund Custody Account.
THE CAROLINASFUND
Name Signature
Robert B. Thompson /s/ Robert B. Thompson
Sarah A. Morris /s/ Sarah A. Morris
REGIONAL OPPORTUNITY FUND
Name Signature
Jasen M. Snelling /s/ Jasen M. Snelling
Kevin Elliott /s/ Kevin Elliott
AMELIA EARHART: EAGLE EQUITY FUND
Name Signature
Jill H. Travis /s/ Jill H. Travis
Tammy Wong /s/ Tammy Wong
Phillip Franks /s/ Phillip Franks
LEGACY EQUITY FUND
Name Signature
John P. Boone /s/ John P. Boone
Timothy C. Wheeler /s/ Timothy C. Wheeler
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<PAGE>
EXHIBIT B
FIFTH THIRD BANK
FEE SCHEDULE
WALNUT INVESTMENT TRUST
PER UNIT FEE
I Annual asset based Fees per fund
Under $25 Million 1 bp
$25 - $100 Million .75 bp
$100 - $200 Million .5 bp
Over $200 Million .25 bp
Minimum per fund $2,400.00
II Security Transaction Fees
DTC/Fed Eligible $ 9.00
Physical 25.00
Amortized Securities 25.00
Options 25.00
Mutual Funds 15.00
Foreign - Euroclear & Cedel 50.00
Foreign - Other TBD
III Systems
Automated Securities Workstation $150.00
$200.00 Initial Setup
Mainframe-To-Mainframe 150.00
$200.00 Initial Setup
IV. Miscellaneous Fees
Principal & Interest Collection $ 5.00
(on amortized securities)
Per additional issue for repo 5.00
collateral
Voluntary Corporate Actions 25.00
Wire Transfers (In/Out) 7.00
Check Requests 6.00
Automated Asset Reconciliation 25.00
Escrow Receipt 5.00
Special Services - per hr. fee 75.00
Overnight Packages 8.00
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<PAGE>
ADMINISTRATION AGREEMENT
AGREEMENT dated as of June 1, 1996 between Walnut Investment Trust
(the "Trust"), a Massachusetts business trust, and MGF Service Corp. ("MGF"),
an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of MGF to
serve as its administrative agent; and
WHEREAS, MGF wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and MGF agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs MGF as agent to perform
those services described in this Agreement for the Trust. MGF shall act under
such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities
and Exchange Commission (the "SEC") and amendments
thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
MGF;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
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<PAGE>
F. Such other certificates, documents or opinions which
MGF may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in
effect;
H. Copies of all Investment Advisory Agreements in effect;
and
I. Copies of all documents relating to special investment
or withdrawal plans which are offered or may be offered
in the future by the Trust and for which MGF is to act
as plan agent.
3. TRUST ADMINISTRATION.
Subject to the direction and control of the Trustees of the
Trust, MGF shall supervise the Trust's business affairs not otherwise
supervised by other agents of the Trust. To the extent not otherwise the
primary responsibility of, or provided by, other agents of the Trust, MGF
shall supply (i) office facilities, (ii) internal auditing and regulatory
services, and (iii) executive and administrative services. MGF shall
coordinate the preparation of (i) tax returns, (ii) reports to shareholders of
the Trust, (iii) reports to and filings with the SEC and state securities
authorities including preliminary and definitive proxy materials,
post-effective amendments to the Trust's registration statement, and the
Trust's Form N-SAR, and (iv) necessary materials for Board of Trustees'
meetings unless prepared by other parties under agreement with the Trust. MGF
shall provide personnel to serve as officers of the Trust if so elected by the
Board of Trustees; provided, however, that the Trust shall reimburse MGF for
the reasonable out-of-pocket expenses incurred by such personnel in attending
Board of Trustees' meetings and shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
MGF shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the
same may be amended from time to time, pertaining to the various functions
performed by it and not otherwise created and maintained by another party
pursuant to contract with the Trust. All such records shall be the property of
the Trust at all times and shall be available for inspection and use by the
Trust. Where applicable, such records shall be maintained by MGF for the
periods and in the places required by Rule 31a-2 under the 1940 Act. The
retention of such records shall be at the expense of the Trust. MGF shall make
available during regular business hours all records and other data created and
maintained pursuant to this Agreement for reasonable audit and inspection by
the Trust, any person retained by the Trust, or any regulatory agency having
authority over the Trust.
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<PAGE>
5. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
For the performance of MGF's obligations under this
Agreement, each series of the Trust shall pay MGF, on the first business day
following the end of each month, a monthly fee at the annual rate of .15% of
such series' average daily net assets up to $50 million; .125% of such assets
from $50 to $100 million; and .1% of such assets in excess of $100 million;
provided, however, that the minimum fee shall be $1,000 per month for each
series. MGF shall not be required to reimburse the Trust or the Trust's
investment advisers for (or have deducted from its fees) any expenses in
excess of expense limitations imposed by certain state securities commissions
having jurisdiction over the Trust.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any services for
the Trust which services could cause MGF to be deemed an "investment adviser"
of the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to
supersede or contravene the Trust's prospectus or statement of additional
information or any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the accuracy of
information furnished to it by MGF, the Trust assumes full responsibility for
complying with all applicable requirements of the 1940 Act, the Securities Act
of 1933, as amended, and any other laws, rules and regulations of governmental
authorities having jurisdiction.
8. REFERENCES TO MGF.
The Trust shall not circulate any printed matter which
contains any reference to MGF without the prior written approval of MGF,
excepting solely such printed matter as merely identifies MGF as Administrative
Services Agent, Transfer, Shareholder Servicing and Dividend Disbursing Agent
and Accounting Services Agent. The Trust will submit printed matter requiring
approval to MGF in draft form, allowing sufficient time for review by MGF and
its counsel prior to any deadline for printing.
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<PAGE>
9. INDEMNIFICATION OF MGF.
A. MGF may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither MGF nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be
subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act
or omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
MGF under this Agreement or by reason of reckless disregard by any of such
persons of the obligations and duties of MGF under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of MGF, or any of its affiliates, who may be or become an
officer, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of MGF or any of its affiliates,
even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless MGF, its directors, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which MGF may sustain or incur or
which may be asserted against MGF by any person by reason of, or as a result
of: (i) any action taken or omitted to be taken by MGF in good faith in
reliance upon any certificate, instrument, order or share certificate
reasonably believed by it to be genuine and to be signed, countersigned or
executed by any duly authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the opinion of legal
counsel for the Trust or its own counsel; or (ii) any action taken or omitted
to be taken by MGF in connection with its appointment in good faith in
reliance upon any law, act, regulation or interpretation of the same even
though the same may thereafter have been altered, changed, amended or
repealed. However, indemnification under this subparagraph shall not apply to
actions or omissions of MGF or its directors, officers, employees,
shareholders or agents in cases of its or their own gross negligence, willful
misconduct, bad faith, or reckless disregard of its or their own duties
hereunder.
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<PAGE>
10. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for three years from that
date and shall continue in force from year to year thereafter, but only so
long as such continuance is approved (1) by MGF, (2) by vote, cast in person
at a meeting called for the purpose, of a majority of the Trust's trustees who
are not parties to this Agreement or interested persons (as defined in the
1940 Act) of any such party, and (3) by vote of a majority of the Trust's
Board of Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefore. Upon termination of this
Agreement, the Trust shall pay to MGF such compensation as may be due as of
the date of such termination, and shall likewise reimburse MGF for any
out-of-pocket expenses and disbursements reasonably incurred by MGF to such
date.
C. In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or responsibilities under
this Agreement is designated by the Trust by written notice to MGF, MGF shall,
promptly upon such termination and at the expense of the Trust, transfer all
records maintained by MGF under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including provision for
assistance from MGF's cognizant personnel in the establishment of books,
records and other data by such successor.
11. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any affiliated
person (as defined in the 1940 Act) of MGF from providing services for any
other person, firm or corporation (including other investment companies);
provided, however, that MGF expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind
only the trust property of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
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<PAGE>
deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
13. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
14. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the SEC, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
15. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Walnut Investment Trust
c/o The Maryland Jockey Club
P.O. Box 130
Laurel, Maryland 20725
Attention: O. James Peterson III
To MGF: MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with
the terms of this Section 15. Each such notice shall be deemed delivered (a)
on the date delivered if by personal delivery; (b) on the date
telecommunicated if by
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<PAGE>
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
16. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
17. BINDING EFFECT.
Each of the undersigned expressly warrants and represents
that he has the full power and authority to sign this Agreement on behalf of
the party indicated, and that his signature will operate to bind the party
indicated to the foregoing terms.
18. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
19. FORCE MAJEURE.
If MGF shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national
emergencies, explosion, flood, accident, earthquake or other catastrophe,
fire, strike or other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable parts,
materials, labor or transportation, such delay or non-performance shall be
excused and a reasonable time for performance in connection with this
Agreement shall be extended to include the period of such delay or
non-performance.
20. MISCELLANEOUS.
The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof
or otherwise affect their construction or effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
WALNUT INVESTMENT TRUST
By:_____________________________
Its: Chairman
MGF SERVICE CORP.
By:_____________________________
Its: President
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<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of June 1, 1996 between Walnut Investment Trust (the
"Trust"), a Massachusetts business trust, and MGF Service Corp. ("MGF"), an
Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of MGF to provide
the Trust with certain accounting and pricing services; and
WHEREAS, MGF wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and MGF agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs MGF as agent to
perform those services described in this Agreement for the Trust. MGF shall
act under such appointment and perform the obligations thereof upon the terms
and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
MGF will calculate the net asset value of each series of the
Trust and the per share net asset value of each series of the Trust, in
accordance with the Trust's current prospectus and statement of additional
information, once daily as of the time selected by the Trust's Board of
Trustees. MGF will prepare and maintain a daily valuation of all securities
and other assets of the Trust in accordance with instructions from a
designated officer of the Trust or its investment adviser and in the manner
set forth in the Trust's current prospectus and statement of additional
information. In valuing securities of the Trust, MGF may contract with, and
rely upon market quotations provided by, outside services.
3. BOOKS AND RECORDS.
MGF will maintain and keep current the general ledger for
each series of the Trust, recording all income and expenses, capital share
activity and security transactions of the Trust. MGF will maintain such
further books and records as are necessary
<PAGE>
to enable it to perform its duties under this Agreement, and will periodically
provide reports to the Trust and its authorized agents regarding share
purchases and redemptions and trial balances of each series of the Trust. MGF
will prepare and maintain complete, accurate and current all records with
respect to the Trust required to be maintained by the Trust under the Internal
Revenue Code of 1986, as amended, and under the rules and regulations of the
1940 Act, and will preserve said records in the manner and for the periods
prescribed in the Code and the 1940 Act. The retention of such records shall
be at the expense of the Trust.
All of the records prepared and maintained by MGF pursuant to this
Section 3 which are required to be maintained by the Trust under the Code and
the 1940 Act will be the property of the Trust. In the event this Agreement is
terminated, all such records shall be delivered to the Trust at the Trust's
expense, and MGF shall be relieved of responsibility for the preparation and
maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
MGF shall process each request received from the Trust or
its authorized agents for payment of the Trust's expenses. Upon receipt of
written instructions signed by an officer or other authorized agent of the
Trust, MGF shall prepare checks in the appropriate amounts which shall be
signed by an authorized officer of MGF and mailed to the appropriate party.
5. FORM N-SAR.
MGF shall maintain such records within its control and shall
be requested by the Trust to assist the Trust in fulfilling the requirements
of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
MGF shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
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<PAGE>
8. FEES.
For the performance of the services under this Agreement,
each series of the Trust shall pay MGF a monthly fee in accordance with the
schedule attached hereto as Schedule A. The fees with respect to any month
shall be paid to MGF on the last business day of such month. The Trust shall
also promptly reimburse MGF for the cost of external pricing services utilized
by MGF. MGF shall not be required to reimburse the Trust or the Trust's
investment advisers for (or have deducted from its fees) any expenses in
excess of expense limitations imposed by certain state securities commissions
having jurisdiction over the Trust.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any services for
the Trust which services could cause MGF to be deemed an "investment adviser"
of the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to
supersede or contravene the Trust's prospectus or statement of additional
information or any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the accuracy of
information furnished to it by MGF, the Trust assumes full responsibility for
complying with all applicable requirements of the 1940 Act, the Securities Act
of 1933, as amended, and any other laws, rules and regulations of governmental
authorities having jurisdiction.
10. REFERENCES TO MGF.
The Trust shall not circulate any printed matter which
contains any reference to MGF without the prior written approval of MGF,
excepting solely such printed matter as merely identifies MGF as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Trust will submit printed
matter requiring approval to MGF in draft form, allowing sufficient time for
review by MGF and its counsel prior to any deadline for printing.
11. EQUIPMENT FAILURES.
MGF shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. MGF shall
have no liability with respect to equipment failures beyond its control.
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<PAGE>
12. INDEMNIFICATION OF MGF.
A. MGF may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither MGF nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be
subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act
or omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
MGF under this Agreement or by reason of reckless disregard by any of such
persons of the obligations and duties of MGF under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of MGF, or any of its affiliates, who may be or become
an officer, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of MGF or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless MGF, its directors, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which MGF may sustain or incur or
which may be asserted against MGF by any person by reason of, or as a result
of: (i) any action taken or omitted to be taken by MGF in good faith in
reliance upon any certificate, instrument, order or share certificate
reasonably believed by it to be genuine and to be signed, countersigned or
executed by any duly authorized person, upon the oral instructions or written
instructions of an authorized person of the Trust or upon the opinion of legal
counsel for the Trust or its own counsel; or (ii) any action taken or omitted
to be taken by MGF in connection with its appointment in good faith in
reliance upon any law, act, regulation or interpretation of the same even
though the same may thereafter have been altered, changed, amended or
repealed. However, indemnification under this subparagraph shall not apply to
actions or omissions of MGF or its directors, officers, employees,
shareholders or agents in cases of its or their own gross negligence, willful
misconduct, bad faith, or reckless disregard of its or their own duties
hereunder.
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13. TERMINATION.
A. The provisions of this Agreement shall be effective on
the date first above written, shall continue in effect for three years from
that date and shall continue in force from year to year thereafter, but only
so long as such continuance is approved (1) by MGF, (2) by vote, cast in
person at a meeting called for the purpose, of a majority of the Trust's
trustees who are not parties to this Agreement or interested persons (as
defined in the 1940 Act) of any such party, and (3) by vote of a majority of
the Trust's Board of Trustees or a majority of the Trust's outstanding voting
securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefore. Upon termination of this
Agreement, the Trust shall pay to MGF such compensation as may be due as of
the date of such termination, and shall likewise reimburse MGF for any
out-of-pocket expenses and disbursements reasonably incurred by MGF to such
date.
C. In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or responsibilities under
this Agreement is designated by the Trust by written notice to MGF, MGF shall,
promptly upon such termination and at the expense of the Trust, transfer all
records maintained by MGF under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including provision for
assistance from MGF's cognizant personnel in the establishment of books,
records and other data by such successor.
14. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any
affiliated person (as defined in the 1940 Act) of MGF from providing services
for any other person, firm or corporation (including other investment
companies); provided, however, that MGF expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
15. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind
only the trust property of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the trust property of the Trust.
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16. SEVERABILITY.
In the event any provision of this Agreement is determined
to be void or unenforceable, such determination shall not affect the remainder
of this Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of
a requirement of the 1940 Act, reflected in any provision of this Agreement,
is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
18. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including
telex and telegraphic communication) and shall be (as elected by the person
giving such notice) hand delivered by messenger or courier service,
telecommunicated, or mailed (airmail if international) by registered or
certified mail (postage prepaid), return receipt requested, addressed to:
To the Trust: Walnut Investment Trust
c/o The Maryland Jockey Club
P.O. Box 130
Laurel, Maryland 20725
Attention: O. James Peterson III
To MGF: MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with
the terms of this Section 18. Each such notice shall be deemed delivered (a)
on the date delivered if by personal delivery; (b) on the date
telecommunicated if by telegraph; (c) on the date of transmission with
confirmed answer back if by telex, telefax or other telegraphic method; and
(d) on the date upon which the return receipt is signed or delivery is refused
or the notice is designated by the postal authorities as not deliverable, as
the case may be, if mailed.
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19. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
20. BINDING EFFECT.
Each of the undersigned expressly warrants and represents
that he has the full power and authority to sign this Agreement on behalf of
the party indicated, and that his signature will operate to bind the party
indicated to the foregoing terms.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FORCE MAJEURE.
If MGF shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national
emergencies, explosion, flood, accident, earthquake or other catastrophe,
fire, strike or other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable parts,
materials, labor or transportation, such delay or non-performance shall be
excused and a reasonable time for performance in connection with this
Agreement shall be extended to include the period of such delay or
non-performance.
23. MISCELLANEOUS.
The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof
or otherwise affect their construction or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
WALNUT INVESTMENT TRUST
By: /s/ O. James Peterson III
--------------------------
Its: Chairman
MGF SERVICE CORP.
By: /s/ Robert G. Dorsey
---------------------
Its: President
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Schedule A
COMPENSATION
Each series of the Trust will pay MGF a monthly fee, according to the
average net assets of such series during such month, as follows:
Monthly Fee Average Net Assets During Month
Single Class Dual Class -------------------------------
- - ------------ ----------
$2,000 $3,000 $0 - $ 50,000,000
$2,500 $3,500 $50,000,000 - $100,000,000
$3,000 $4,000 $100,000,000 - $200,000,000
$3,500 $4,500 $200,000,000 - $300,000,000
$4,500 $5,500 Over $300,000,000
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TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of June 1, 1996 between Walnut Investment Trust
(the "Trust"), a Massachusetts business trust, and MGF Service Corp.
("MGF"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of MGF to serve as
its transfer, dividend disbursing, shareholder service and plan agent; and
WHEREAS, MGF wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and MGF agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs MGF as agent to perform
those services described in this Agreement for the Trust. MGF shall act under
such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities
and Exchange Commission (the "SEC") and amendments
thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
MGF;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving
such forms;
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<PAGE>
F. Such other certificates, documents or opinions which
MGF may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in
effect;
H. Copies of all Investment Advisory Agreements in effect;
and
I. Copies of all documents relating to special investment
or withdrawal plans which are offered or may be offered
in the future by the Trust and for which MGF is to act
as plan agent.
3. MGF TO RECORD SHARES.
MGF shall record the issuance of shares of the Trust and
maintain pursuant to applicable rules of the SEC a record of the total number of
shares of the Trust which are authorized, issued and outstanding, based upon
data provided to it by the Trust. MGF shall also provide the Trust on a
regular basis or upon reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation when
recording the issuance of the Trust's shares, except as otherwise set forth
herein, to monitor the issuance of such shares or to take cognizance of any
laws relating to the issue or sale of such shares, which functions shall be
the sole responsibility of the Trust.
4. MGF TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to MGF of certificates, if any, in proper form for transfer, MGF
shall approve such transfer and shall take all necessary steps to effectuate
the transfer as indicated in the transfer request. Upon approval of the
transfer, MGF shall notify the Trust in writing of each such transaction and
shall make appropriate entries on the shareholder records maintained by MGF.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates
and an investor requests a share certificate, MGF will countersign and mail,
by insured first class mail, a share certificate to the investor at his
address as set forth on the transfer books of the Trust, subject to any other
instructions for delivery of certificates representing newly purchased shares
and subject to the limitation that no certificates representing newly
purchased shares shall be mailed to the investor until the cash purchase price
of such shares has been collected and
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<PAGE>
credited to the account of the Trust maintained by the Custodian. The Trust
shall supply MGF with a sufficient supply of blank share certificates and from
time to time shall renew such supply upon request of MGF. Such blank share
certificates shall be properly signed, manually or, if authorized by the
Trust, by facsimile; and notwithstanding the death, resignation or removal of
any officers of the Trust authorized to sign share certificates, MGF may
continue to countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Trust. In case of
the alleged loss or destruction of any share certificate, no new certificates
shall be issued in lieu thereof, unless there shall first be furnished an
appropriate bond satisfactory to MGF and the Trust, and issued by a surety
company satisfactory to MGF and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the account of, the
Trust or Midwest Group Financial Services, Inc., as underwriter of the Trust
(the Underwriter"), MGF shall stamp the check or instrument with the date of
receipt, determine the amount thereof due the Trust and shall forthwith
process the same for collection. Upon receipt of notification of receipt of
funds eligible for share purchases in accordance with the Trust's then current
prospectus and statement of additional information, MGF shall notify the
Trust, at the close of each business day, in writing of the amount of said
funds credited to the Trust and deposited in its account with the Custodian,
and shall similarly notify the Underwriter of the amount of said funds
credited to the Underwriter and deposited in its account with its designated
bank.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of the
Trust, accompanied by sufficient information to enable MGF to establish a
shareholder account, MGF shall, as of the next determination of net asset
value after receipt of such order in accordance with the Trust's then current
prospectus and statement of additional information, compute the number of
shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Trust.
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<PAGE>
8. RETURNED CHECKS.
In the event that MGF is notified by the Trust's Custodian
that any check or other order for the payment of money is returned unpaid for
any reason, MGF will:
A. Give prompt notification to the Trust and the
Underwriter of the non-payment of said check;
B. In the absence of other instructions from the Trust or the
Underwriter, take such steps as may be necessary to redeem any shares purchased
on the basis of such returned check and cause the proceeds of such redemption
plus any dividends declared with respect to such shares to be credited to the
account of the Trust and to request the Trust's Custodian to forward such
returned check to the person who originally submitted the check; and
C. Notify the Trust of such actions and correct the Trust's
records maintained by MGF pursuant to this Agreement.
9. SALES CHARGE.
In computing the number of shares to credit to the account of
a shareholder, MGF will calculate the total of the applicable sales charges
with respect to each purchase as set forth in the Trust's current prospectus
and statement of additional information and in accordance with any
notification filed with respect to combined and accumulated purchases. MGF
will also determine the portion of each sales charge payable by the
Underwriter to the dealer of record participating in the sale in accordance
with such schedules as are from time to time delivered by the Underwriter to
MGF; provided, however, MGF shall have no liability hereunder arising from the
incorrect selection by MGF of the gross rate of sales charges except that this
exculpation shall not apply in the event the rate is specified by the
Underwriter or the Trust and MGF fails to select the rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish MGF with appropriate evidence of
trustee action authorizing the declaration of dividends and other
distributions. MGF shall establish procedures in accordance with the Trust's
then current prospectus and statement of additional information and with other
authorized actions of the Trust's Board of Trustees under which it will have
available from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, MGF shall, as agent for each shareholder who
so requests, invest the dividends and other distributions in full and
fractional shares in accordance with the Trust's then current prospectus and
statement
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<PAGE>
of additional information. If a shareholder has elected to receive dividends or
other distributions in cash, then MGF shall disburse dividends to shareholders
of record in accordance with the Trust's then current prospectus and statement
of additional information. MGF shall, on or before the mailing date of such
checks, notify the Trust and the Custodian of the estimated amount of cash
required to pay such dividend or distribution, and the Trust shall instruct
the Custodian to make available sufficient funds therefor in the appropriate
account of the Trust. MGF shall mail to the shareholders periodic statements,
as requested by the Trust, showing the number of full and fractional shares
and the net asset value per share of shares so credited. When requested by the
Trust, MGF shall prepare and file with the Internal Revenue Service, and when
required, shall address and mail to shareholders, such returns and information
relating to dividends and distributions paid by the Trust as are required to
be so prepared, filed and mailed by applicable laws, rules and regulations.
11. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
MGF shall, at least annually, furnish in writing to the Trust
the names and addresses, as shown in the shareholder accounts maintained by MGF,
of all shareholders for which there are, as of the end of the calendar year,
dividends, distributions or redemption proceeds for which checks or share
certificates mailed in payment of distributions have been returned. MGF shall
use its best efforts to contact the shareholders affected and to follow any
other written instructions received from the Trust concerning the disposition
of any such unclaimed dividends, distributions or redemption proceeds.
12. REDEMPTIONS AND EXCHANGES.
A. MGF shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by MGF. Upon its approval of such redemption
transactions, MGF, if requested by the Trust, shall mail to the shareholder
and/or dealer of record a confirmation showing trade date, number of full and
fractional shares redeemed, the price per share and the total redemption
proceeds. For each such redemption, MGF shall either: (a) prepare checks in
the appropriate amounts for approval and verification by the Trust and
signature by an authorized officer of MGF and mail the checks to the
appropriate person, or (b) in the event redemption proceeds are to be wired
through the Federal Reserve Wire System or by bank wire, cause such proceeds
to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of
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<PAGE>
payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by MGF. If MGF or the Trust determines that
a request for redemption does not comply with the requirements for redemptions,
MGF shall promptly notify the shareholder indicating the reason therefor.
B. If shares of the Trust are eligible for exchange with
shares of any other investment company, MGF, in accordance with the then
current prospectus and statement of additional information and exchange rules
of the Trust and such other investment company, or such other investment
company's transfer agent, shall review and approve all exchange requests and
shall, on behalf of the Trust's shareholders, process such approved exchange
requests.
C. MGF shall notify the Trust, the Custodian and the
Underwriter on each business day of the amount of cash required to meet
payments made pursuant to the provisions of this Paragraph 12, and, on the
basis of such notice, the Trust shall instruct the Custodian to make available
from time to time sufficient funds therefor in the appropriate account of the
Trust. Procedures for effecting redemption orders accepted from shareholders
or dealers of record by telephone or other methods shall be established by
mutual agreement between MGF and the Trust consistent with the Trust's then
current prospectus and statement of additional information.
D. The authority of MGF to perform its responsibilities under
Paragraph 7, Paragraph 10, and this Paragraph 12 shall be suspended with
respect to any series of the Trust upon receipt of notification by it of the
suspension of the determination of such series' net asset value.
13. AUTOMATIC WITHDRAWAL PLANS.
MGF will process automatic withdrawal orders pursuant to the
provisions of the withdrawal plans duly executed by shareholders and the
current prospectus and statement of additional information of the Trust.
Payments upon such withdrawal order shall be made by MGF from the appropriate
account maintained by the Trust with the Custodian on approximately the last
business day of each month in which a payment has been requested, and MGF will
withdraw from a shareholder's account and present for repurchase or redemption
as many shares as shall be sufficient to make such withdrawal payment pursuant
to the provisions of the shareholder's withdrawal plan and the current
prospectus and statement of additional information of the Trust. From time to
time on new automatic withdrawal plans a check for payment date already past
may be issued upon request by the shareholder.
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<PAGE>
14. LETTERS OF INTENT.
MGF will process such letters of intent for investing in
shares of the Trust as are provided for in the Trust's current prospectus and
statement of additional information. MGF will make appropriate deposits to the
account of the Underwriter for the adjustment of sales charges as therein
provided and will currently report the same to the Underwriter.
15. WIRE-ORDER PURCHASES.
MGF will send written confirmations to the dealers of record
containing all details of the wire-order purchases placed by each such dealer
by the close of business on the business day following receipt of such orders
by MGF or the Underwriter, with copies to the Underwriter. Upon receipt of any
check drawn or endorsed to the Trust (or MGF, as agent) or otherwise
identified as being payment of an outstanding wire-order, MGF will stamp said
check with the date of its receipt and deposit the amount represented by such
check to MGF's deposit accounts maintained with the Custodian. MGF will
compute the respective portions of such deposit which represent the sales
charge and the net asset value of the shares so purchased, will cause the
Custodian to transfer federal funds in an amount equal to the net asset value
of the shares so purchased to the Trust's account with the Custodian, and will
notify the Trust and the Underwriter before noon of each business day of the
total amount deposited in the Trust's deposit accounts, and in the event that
payment for a purchase order is not received by MGF or the Custodian on the
tenth business day following receipt of the order, prepare an NASD "notice of
failure of dealer to make payment" and forward such notification to the
Underwriter.
16. OTHER PLANS.
MGF will process such accumulation plans, group programs and
other plans or programs for investing in shares of the Trust as are now
provided for in the Trust's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms
of such plans and programs duly executed by such shareholders.
17. RECORDKEEPING AND OTHER INFORMATION.
MGF shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the
same may be amended from time to time, pertaining to the various functions
performed by it and not otherwise created and maintained by another party
pursuant to contract with the Trust. All such records shall be the property of
the Trust at all times and shall be available for inspection
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<PAGE>
and use by the Trust. Where applicable, such records shall be maintained by MGF
for the periods and in the places required by Rule 31a-2 under the 1940 Act.
The retention of such records shall be at the expense of the Trust. MGF shall
make available during regular business hours all records and other data
created and maintained pursuant to this Agreement for reasonable audit and
inspection by the Trust, any person retained by the Trust, or any regulatory
agency having
authority over the Trust.
18. SHAREHOLDER RECORDS.
MGF shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each
shareholder, including dividends and distributions in
cash or invested in shares;
E. Information with respect to the source of all dividends
and distributions allocated among income, realized
short-term gains and realized long-term gains;
F. Any instructions from a shareholder including all forms
furnished by the Trust and executed by a shareholder
with respect to (i) dividend or distribution elections
and (ii) elections with respect to payment options in
connection with the redemption of shares;
G. Any correspondence relating to the current maintenance
of a shareholder's account;
H. Certificate numbers and denominations for any
shareholder holding certificates;
I. Any stop or restraining order placed against a
shareholder's account;
J. Information with respect to withholding in the case of
a foreign account or any other account for which
withholding is required by the Internal Revenue Code of
1986, as amended; and
K. Any information required in order for MGF to perform
the calculations contemplated under this Agreement.
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<PAGE>
19. TAX RETURNS AND REPORTS.
MGF will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if required, mail
to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
20. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and approval of
the Custodian and the Trust as shall be required by any agreement or applicable
law, MGF will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
21. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, MGF shall arrange for the Trust's investment
advisers to have direct access to shareholder information contained in MGF's
computer system, including account balances, performance information and such
other information which is available to MGF with respect to shareholder
accounts.
22. COOPERATION WITH ACCOUNTANTS.
MGF shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
23. SHAREHOLDER SERVICE AND CORRESPONDENCE.
MGF will provide and maintain adequate personnel, records and
equipment to receive and answer all shareholder and dealer inquiries relating
to account status, share purchases, redemptions and exchanges and other
investment plans available to Trust shareholders. MGF will answer written
correspondence from shareholders relating to their share accounts and such
other written or oral inquiries as may from time to time be mutually agreed
upon, and MGF will notify the Trust of any correspondence or inquiries which
may require an answer from the Trust.
24. PROXIES.
MGF shall assist the Trust in the mailing of proxy cards and
other material in connection with shareholder meetings of the Trust, shall
receive, examine and tabulate returned
- 9 -
<PAGE>
proxies and shall, if requested by the Trust, provide at least one inspector of
election to attend and participate as required by law in shareholder meetings
of the Trust.
25. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
26. COMPENSATION.
For the performance of MGF's obligations under this
Agreement, each series of the Trust shall pay MGF, on the first business day
following the end of each month, a monthly fee in accordance with the schedule
attached hereto as Schedule A. MGF shall not be required to reimburse the
Trust or the Trust's investment advisers for (or have deducted from its fees)
any expenses in excess of expense limitations imposed by certain state
securities commissions having jurisdiction over the Trust. The Trust shall
promptly reimburse MGF for any out-of-pocket expenses and advances which are
to be paid by the Trust in accordance with Paragraph 27.
27. EXPENSES.
MGF shall furnish, at its expense and without cost to the
Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) use of
data processing equipment. All costs and expenses not expressly assumed by MGF
under this Paragraph 27 shall be paid by the Trust, including, but not limited
to, costs and expenses of officers and employees of MGF in attending meetings
of the Board of Trustees and shareholders of the Trust, as well as costs and
expenses for postage, envelopes, checks, drafts, continuous forms, reports,
communications, statements and other materials, telephone, telegraph and
remote transmission lines, use of outside pricing services, use of outside
mailing firms, necessary outside record storage, media for storage of records
(e.g., microfilm, microfiche, computer tapes), printing, confirmations and any
other shareholder correspondence and any and all assessments, taxes or levies
assessed on MGF for services provided under this Agreement. Postage for
mailings of dividends, proxies, reports and other mailings to all shareholders
shall be advanced to MGF three business days prior to the mailing date of such
materials.
28. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require MGF to perform any services for
the Trust which services could cause MGF to be
- 10 -
<PAGE>
deemed an "investment adviser" of the Trust within the meaning of Section
2(a)(20) of the 1940 Act or to supersede or contravene the Trust's prospectus
or statement of additional information or any provisions of the 1940 Act and
the rules thereunder. Except as otherwise provided in this Agreement and
except for the accuracy of information furnished to it by MGF, the Trust
assumes full responsibility for complying with all applicable requirements of
the 1940 Act, the Securities Act of 1933, as amended, and any other laws,
rules and regulations of governmental authorities having jurisdiction.
29. REFERENCES TO MGF.
The Trust shall not circulate any printed matter which
contains any reference to MGF without the prior written approval of MGF,
excepting solely such printed matter as merely identifies MGF as Administrative
Services Agent, Transfer, Shareholder Servicing and Dividend Disbursing Agent
and Accounting Services Agent. The Trust will submit printed matter requiring
approval to MGF in draft form, allowing sufficient time for review by MGF and
its counsel prior to any deadline for printing.
30. EQUIPMENT FAILURES.
MGF shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. MGF shall
have no liability with respect to equipment failures beyond its control.
31. INDEMNIFICATION OF MGF.
A. MGF may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither MGF nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be
subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act
or omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
MGF under this Agreement or by reason of reckless disregard by any of such
persons of the obligations and duties of MGF under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of MGF, or any of its affiliates, who may be or become an
officer, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee,
- 11 -
<PAGE>
shareholder or agent of or one under the control or direction of MGF or any of
its affiliates, even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless MGF, its directors,
officers, employees, shareholders, agents, control persons and affiliates from
and against any and all claims, demands, expenses and liabilities (whether
with or without basis in fact or law) of any and every nature which MGF may
sustain or incur or which may be asserted against MGF by any person by reason
of, or as a result of: (i) any action taken or omitted to be taken by MGF in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii)
any action taken or omitted to be taken by MGF in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of MGF or its directors,
officers, employees, shareholders or agents in cases of its or their own gross
negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
32. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for three years from that
date and shall continue in force from year to year thereafter, but only so
long as such continuance is approved (1) by MGF, (2) by vote, cast in person
at a meeting called for the purpose, of a majority of the Trust's trustees who
are not parties to this Agreement or interested persons (as defined in the
1940 Act) of any such party, and (3) by vote of a majority of the Trust's
Board of Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefore. Upon termination of this
Agreement, the Trust shall pay to MGF such compensation as may be due as of
the date of such termination, and shall likewise reimburse MGF for any
out-of-pocket expenses and disbursements reasonably incurred by MGF to such
date.
C. In the event that in connection with the termination of
this Agreement a successor to any of MGF's duties or responsibilities under
this Agreement is designated by the
- 12 -
<PAGE>
Trust by written notice to MGF, MGF shall, promptly upon such termination and
at the expense of the Trust, transfer all records maintained by MGF under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from MGF's cognizant
personnel in the establishment of books, records and other data by such
successor.
33. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent MGF or any affiliated
person (as defined in the 1940 Act) of MGF from providing services for any
other person, firm or corporation (including other investment companies);
provided, however, that MGF expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
34. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, personally, but bind
only the trust property of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the trust property of the Trust.
35. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
36. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the SEC, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
- 13 -
<PAGE>
37. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Walnut Investment Trust
c/o The Maryland Jockey Club
P.O. Box 130
Laurel, Maryland 20725
Attention: O. James Peterson III
To MGF: MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with
the terms of this Section 37. Each such notice shall be deemed delivered (a)
on the date delivered if by personal delivery; (b) on the date
telecommunicated if by telegraph; (c) on the date of transmission with
confirmed answer back if by telex, telefax or other telegraphic method; and
(d) on the date upon which the return receipt is signed or delivery is refused
or the notice is designated by the postal authorities as not deliverable, as
the case may be, if mailed.
38. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
39. BINDING EFFECT.
Each of the undersigned expressly warrants and represents
that he has the full power and authority to sign this Agreement on behalf of
the party indicated, and that his signature will operate to bind the party
indicated to the foregoing terms.
40. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
- 14 -
<PAGE>
41. FORCE MAJEURE.
If MGF shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national
emergencies, explosion, flood, accident, earthquake or other catastrophe,
fire, strike or other labor problems, legal action, present or future law,
governmental order, rule or regulation, or shortages of suitable parts,
materials, labor or transportation, such delay or non-performance shall be
excused and a reasonable time for performance in connection with this
Agreement shall be extended to include the period of such delay or
non-performance.
42. MISCELLANEOUS.
The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
WALNUT INVESTMENT TRUST
By: /s/ O. James Peterson III
-------------------------
Its: Chairman
MGF SERVICE CORP.
By: /s/Robert G. Dorsey
---------------------------
Its: President
- 15 -
<PAGE>
Schedule A
COMPENSATION
SERVICES FEE
As Transfer Agent and Shareholder (Per Account)
Servicing Agent:
Regional Opportunity Fund Payable monthly at
rate of $17.00/year
The CarolinasFund Payable monthly at
rate of $17.00/year
Mississippi Opportunity Fund Payable monthly at
rate of $17.00/year
Amelia Earhart: Eagle Equity Fund Payable monthly at
rate of $17.00/year
Legacy Equity Fund Payable monthly at
rate of $17.00/year
Each class of shares of each Fund will be subject to a minimum charge of $1,000
per month.
- 16 -
<PAGE>
<PAGE>
Independent Auditors' Consent
-------------------------------
The Board of Trustees and Shareholders
Maplewood Investment Trust:
We consent to the use of our reports dated April 5, 1996 included in the
registration statement on Form N-1A of Amelia Earhart: Eagle Equity Fund, The
CarolinasFund, Legacy Equity Fund, Mississippi Opportunity Fund and Greater
Cincinnati Fund (renamed the Regional Opportunity Fund: Ohio Indiana
Kentucky), each a series of the Maplewood Investment Trust (formerly the
Nottingham Investment Trust) and to the reference to our firm under the
heading "Financial Highlights" in the prospectuses.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
June 20, 1996
<PAGE>
AMENDED AND RESTATED
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
WHEREAS, Maplewood Investment Trust, an unincorporated business trust
organized and existing under the laws of the Commonwealth of Massachusetts
(the "Trust"), engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests
in the Regional Opportunity Fund: Ohio Indiana Kentucky (the "Fund") of the
Trust, which Shares are classified into Class A Shares and Class B Shares of
the Fund;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined,
in the exercise of reasonable business judgment and in light of their
fiduciary duties under state law and under Section 36(a) and (b) of the 1940
Act, that there is a reasonable likelihood that this Plan will benefit the
Trust and its shareholders, have approved this Plan by votes cast at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
and
NOW, THEREFORE, the Trust hereby amends and restates this Plan in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. DISTRIBUTION AND SERVICING ACTIVITIES. Subject to the supervision
of the Trustees of the Trust, the Trust may, directly or indirectly, engage in
any activities primarily intended to result in the sale of Class A Shares of
the Fund or the servicing of Class A shareholder accounts, which activities
may include, but are not limited to, the following: (a) payments to the
Trust's Distributor and to securities dealers and others in respect of the
sale of Class A shares of the Fund or the servicing of Class A shareholder
accounts; (b) payment of compensation to and expenses of personnel (including
personnel of organizations with which the Trust has entered into agreements
related to this Plan) who engage in or support distribution of Class A Shares
of the Fund or who render shareholder support services not otherwise provided
by the Trust's transfer agent, administrator, or custodian, including but not
limited to, answering inquiries regarding the Trust, processing shareholder
transactions, providing personal services and/or the
<PAGE>
maintenance of shareholder accounts, providing other shareholder liaison
services, responding to shareholder inquiries, providing information on
shareholder investments in the Fund, and providing such other shareholder
services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution
of sales literature; (e) preparation, printing and distribution of
prospectuses and statements of additional information and reports of the Trust
for recipients other than existing shareholders of the Trust; and (f)
obtaining such information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem advisable.
The Trust is authorized to engage in the activities listed above, and in any
other activities primarily intended to result in the sale of Class A Shares of
the Fund or the servicing of Class A shareholder accounts, either directly or
through other persons with which the Trust has entered into agreements related
to this Plan.
2. MAXIMUM EXPENDITURES. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures
will be made shall be determined by the Trustees of the Trust, but in no event
may such expenditures exceed an amount calculated at the rate of 0.25% per
annum of the average daily net asset value of the Class A Shares of the Fund
for each year or portion thereof included in the period for which the
computation is being made, elapsed since the inception of this Plan to the
date of such expenditures. Such payments for distribution and shareholder
servicing activities may be made directly by the Trust or to other persons
with which the Trust has entered into agreements related to this Plan.
3. TERM AND TERMINATION. (a) This Plan shall be amended and restated,
originally effective as of the 2nd day of January, 1995, amended and restated
to reflect the reclassification of the Shares of the Fund, effective as of the
1st day of September, 1995 and further amended and restated to reflect a
decrease in the maximum expenditures permitted by Section 2 hereof, effective
as of June 20, 1996. Unless terminated as herein provided, this Plan shall
continue in effect for one year from September 1, 1995 and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i)
the Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a
meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to the Fund
by a vote of a majority of the Non-Interested Trustees or by a vote of a
majority of the outstanding voting securities of the Class A Shares of the
Fund as defined in the 1940 Act.
- 2 -
<PAGE>
4. AMENDMENTS. This Plan may not be amended to increase materially
the maximum expenditures permitted by Section 2 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
the Class A Shares of the Fund as defined in the 1940 Act with respect to
which a material increase in the amount of expenditures is proposed, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 3(a) hereof.
5. SELECTION AND NOMINATION OF TRUSTEES. While
this Plan is in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. QUARTERLY REPORTS. The Treasurer of the Trust
shall provide to the Trustees of the Trust and the Trustees shall review
quarterly a written report of the amounts expended pursuant to this Plan and
any related agreement and the purposes for which such expenditures were made.
7. RECORDKEEPING. The Trust shall preserve copies of this Plan and
any related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. LIMITATION OF LIABILITY. Any obligations of the Trust hereunder
shall not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the Trust.
The term "Walnut Investment Trust" means and refers to the Trustees from time
to time serving under the Declaration of Trust of the Trust, a copy of which
is on file with the Secretary of The Commonwealth of Massachusetts. The
execution of this Plan has been authorized by the Trustees, and this Plan has
been signed on behalf of the Trust by an authorized officer of the Trust,
acting as such and not individually, and neither such authorization by such
Trustees nor such execution by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Trust as
provided in the Agreement and Declaration of Trust.
*
*
*
*
- 3 -
<PAGE>
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of June 20, 1996.
Attest: MAPLEWOOD INVESTMENT TRUST
By:
------------------------
Attest: REGIONAL OPPORTUNITY FUND:
OHIO INDIANA KENTUCKY
By:
------------------------
- 4 -
<PAGE>
AMENDED AND RESTATED
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, The Nottingham Investment Trust, an unincorporated business trust
organized and existing under the laws of the Commonwealth of Massachusetts
(the "Trust"), engages in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in
the Amelia Earhart: Eagle Equity Fund (the "Fund") of the Trust, which Shares
are classified into Class A Shares and Class B Shares of the Fund;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined,
in the exercise of reasonable business judgment and in light of their
fiduciary duties under state law and under Section 36(a) and (b) of the 1940
Act, that there is a reasonable likelihood that this Plan will benefit the
Trust and its shareholders, have approved this Plan by votes cast at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
and
NOW, THEREFORE, the Trust hereby amends and restates this Plan in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision
of the Trustees of the Trust, the Trust may, directly or indirectly, engage in
any activities primarily intended to result in the sale of Class A Shares of
the Fund or the servicing of Class A shareholder accounts, which activities
may include, but are not limited to, the following: (a) payments to the
Trust's Distributor and to securities dealers and others in respect of the
sale of Class A shares of the Fund or the servicing of Class A shareholder
accounts; (b) payment of compensation to and expenses of personnel (including
personnel of organizations with which the Trust has entered into agreements
related to this Plan) who engage in or support distribution of Class A Shares
of the Fund or who render shareholder support services not otherwise provided
by the Trust's transfer agent, administrator, or custodian, including but not
limited to, answering inquiries regarding the Trust, processing shareholder
transactions, providing personal services and/or the
<PAGE>
maintenance of shareholder accounts, providing other shareholder liaison
services, responding to shareholder inquiries, providing information on
shareholder investments in the Fund, and providing such other shareholder
services as the Trust may reasonably request; (c) formulation and
implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparation, printing and distribution
of sales literature; (e) preparation, printing and distribution of
prospectuses and statements of additional information and reports of the Trust
for recipients other than existing shareholders of the Trust; and (f)
obtaining such information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem advisable.
The Trust is authorized to engage in the activities listed above, and in any
other activities primarily intended to result in the sale of Class A Shares of
the Fund or the servicing of Class A shareholder accounts, either directly or
through other persons with which the Trust has entered into agreements related
to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures
will be made shall be determined by the Trustees of the Trust, but in no event
may such expenditures exceed an amount calculated at the rate of 0.25% per
annum of the average daily net asset value of the Class A Shares of the Fund
for each year or portion thereof included in the period for which the
computation is being made, elapsed since the inception of this Plan to the
date of such expenditures. Notwithstanding the foregoing, in no event may such
expenditures paid by the Trust as service fees exceed an amount calculated at
the rate of 0.25% of the average annual net assets of the Class A Shares of
the Fund, nor may such expenditures paid as service fees to any person who
sells Class A Shares of the Fund exceed an amount calculated at the rate of
0.25% of the average annual net asset value of such shares. Such payments for
distribution and shareholder servicing activities may be made directly by the
Trust or to other persons with which the Trust has entered into agreements
related to this Plan.
3. Term and Termination. (a) This Plan shall be amended and restated,
originally effective as of the 17th day of December, 1992, amended and
restated effective as of the 24th day of October, 1994, and further amended
and restated to reflect the classification of the Shares of the Fund,
effective as of the 1st day of September, 1995. Unless terminated as herein
provided, this Plan shall continue in effect for one year from September 1,
1995 and shall continue in effect for successive periods of one year
thereafter, but only so long as each such continuance is specifically approved
by votes of a majority of both (i) the Trustees of the Trust and (ii) the
Non-Interested Trustees, cast at a meeting called for the purpose of voting on
such approval.
- 2 -
<PAGE>
(b) This Plan may be terminated at any time with respect to the Fund
by a vote of a majority of the Non-Interested Trustees or by a vote of a
majority of the outstanding voting securities of the Class A Shares of the
Fund as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially
the maximum expenditures permitted by Section 2 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
the Class A Shares of the Fund as defined in the 1940 Act with respect to
which a material increase in the amount of expenditures is proposed, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of the Non-Interested
Trustees of the Trust shall be committed to the discretion of such
Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and
the purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and
any related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder
shall not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the Trust.
The term "The Nottingham Investment Trust" means and refers to the Trustees
from time to time serving under the Declaration of Trust of the Trust, a copy
of which is on file with the Secretary of The Commonwealth of Massachusetts.
The execution of this Plan has been authorized by the Trustees, and this Plan
has been signed on behalf of the Trust by an authorized officer of the Trust,
acting as such and not individually, and neither such authorization by such
Trustees nor such execution by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Trust as
provided in the Agreement and Declaration of Trust.
*
*
*
*
- 3 -
<PAGE>
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed as
of the date first written above.
THE NOTTINGHAM INVESTMENT TRUST
Attest:
/s/ Dodie M. Duffy By: /s/ Frank P. Meadows III
-------------------------
Attest: AMELIA EARHART: EAGLE EQUITY FUND
/s/ Phillip Franks
By: /s/ Christopher Smith
-------------------------
- 4 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> AMELIA EARHART: EAGLE EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 1,163,337
<INVESTMENTS-AT-VALUE> 1,514,324
<RECEIVABLES> 359,316
<ASSETS-OTHER> 16,981
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,890,621
<PAYABLE-FOR-SECURITIES> 92,002
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,885
<TOTAL-LIABILITIES> 108,887
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,396,996
<SHARES-COMMON-STOCK> 104,238
<SHARES-COMMON-PRIOR> 61,042
<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 4,211
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<NET-CHANGE-IN-ASSETS> 961,595
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 121,885
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<PER-SHARE-NAV-BEGIN> 13.44
<PER-SHARE-NII> (.12)
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .43
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<PER-SHARE-NAV-END> 17.09
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 21
<NAME> THE CAROLINASFUND (INVESTOR SHARES)
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 22,903
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<REALIZED-GAINS-CURRENT> 3,855
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<NUMBER-OF-SHARES-SOLD> 135,220
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<SHARES-REINVESTED> 329
<NET-CHANGE-IN-ASSETS> 1,650,007
<ACCUMULATED-NII-PRIOR> 1,236
<ACCUMULATED-GAINS-PRIOR> (249)
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 107,121
<AVERAGE-NET-ASSETS> 1,130,159
<PER-SHARE-NAV-BEGIN> 10.54
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 1.95
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> .03
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<PER-SHARE-NAV-END> 12.44
<EXPENSE-RATIO> 2.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 22
<NAME> THE CAROLINASFUND (INSTITUTIONAL SHARES)
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 265
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 201,293
<NET-ASSETS> 1,922,390
<DIVIDEND-INCOME> 22,903
<INTEREST-INCOME> 2,476
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<NET-INVESTMENT-INCOME> 752
<REALIZED-GAINS-CURRENT> 3,855
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<DISTRIBUTIONS-OF-GAINS> 5
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<SHARES-REINVESTED> 1
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<ACCUMULATED-NII-PRIOR> 1,236
<ACCUMULATED-GAINS-PRIOR> (249)
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<PER-SHARE-NAV-BEGIN> 10.72
<PER-SHARE-NII> .02
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<PER-SHARE-DIVIDEND> .02
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<PER-SHARE-NAV-END> 12.57
<EXPENSE-RATIO> 1.69
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 4
<NAME> LEGACY EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
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<INVESTMENTS-AT-VALUE> 1,701,626
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<OTHER-ITEMS-ASSETS> 400
<TOTAL-ASSETS> 1,728,004
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<TOTAL-LIABILITIES> 113,525
<SENIOR-EQUITY> 0
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<SHARES-COMMON-STOCK> 126,045
<SHARES-COMMON-PRIOR> 60,001
<ACCUMULATED-NII-CURRENT> 113
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,401
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 222,888
<NET-ASSETS> 1,614,479
<DIVIDEND-INCOME> 17,521
<INTEREST-INCOME> 3,240
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 20,761
<REALIZED-GAINS-CURRENT> 5,857
<APPREC-INCREASE-CURRENT> 209,288
<NET-CHANGE-FROM-OPS> 235,906
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,269
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114,039
<NUMBER-OF-SHARES-REDEEMED> 49,738
<SHARES-REINVESTED> 1,743
<NET-CHANGE-IN-ASSETS> 992,911
<ACCUMULATED-NII-PRIOR> 621
<ACCUMULATED-GAINS-PRIOR> (2,456)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,328
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 88,662
<AVERAGE-NET-ASSETS> 1,030,003
<PER-SHARE-NAV-BEGIN> 10.36
<PER-SHARE-NII> .28
<PER-SHARE-GAIN-APPREC> 2.46
<PER-SHARE-DIVIDEND> .29
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 12.81
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 51
<NAME> MISSISSIPPI OPPORTUNITY FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 1,773,190
<INVESTMENTS-AT-VALUE> 1,897,394
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<TOTAL-LIABILITIES> 18,682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,816,678
<SHARES-COMMON-STOCK> 129,131
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,735
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,204
<NET-ASSETS> 1,962,617
<DIVIDEND-INCOME> 22,916
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 29,433
<NET-INVESTMENT-INCOME> (6,517)
<REALIZED-GAINS-CURRENT> 30,359
<APPREC-INCREASE-CURRENT> 124,204
<NET-CHANGE-FROM-OPS> 148,046
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,707
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 132,050
<NUMBER-OF-SHARES-REDEEMED> 3,081
<SHARES-REINVESTED> 162
<NET-CHANGE-IN-ASSETS> 1,962,617
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,633
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93,217
<AVERAGE-NET-ASSETS> 1,081,532
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 1.27
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.22
<EXPENSE-RATIO> 2.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 53
<NAME> MISSISSIPPI OPPORTUNITY FUND CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 1,773,190
<INVESTMENTS-AT-VALUE> 1,897,394
<RECEIVABLES> 46,737
<ASSETS-OTHER> 37,168
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<TOTAL-ASSETS> 1,981,299
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18,682
<TOTAL-LIABILITIES> 18,682
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,816,678
<SHARES-COMMON-STOCK> 46,039
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,735
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,204
<NET-ASSETS> 1,962,617
<DIVIDEND-INCOME> 22,916
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 29,433
<NET-INVESTMENT-INCOME> (6,517)
<REALIZED-GAINS-CURRENT> 30,359
<APPREC-INCREASE-CURRENT> 124,204
<NET-CHANGE-FROM-OPS> 148,046
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 400
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47,103
<NUMBER-OF-SHARES-REDEEMED> 1,102
<SHARES-REINVESTED> 38
<NET-CHANGE-IN-ASSETS> 1,962,617
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,633
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93,217
<AVERAGE-NET-ASSETS> 380,088
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 1.24
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.17
<EXPENSE-RATIO> 2.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 31
<NAME> GREATER CINCINNATI FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 671,830
<INVESTMENTS-AT-VALUE> 705,666
<RECEIVABLES> 30,498
<ASSETS-OTHER> 37,346
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 773,510
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,026
<TOTAL-LIABILITIES> 14,026
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 709,835
<SHARES-COMMON-STOCK> 68,342
<SHARES-COMMON-PRIOR> 23,302
<ACCUMULATED-NII-CURRENT> 1,414
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,399
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,836
<NET-ASSETS> 759,484
<DIVIDEND-INCOME> 6,907
<INTEREST-INCOME> 10,494
<OTHER-INCOME> 0
<EXPENSES-NET> 12,168
<NET-INVESTMENT-INCOME> 5,233
<REALIZED-GAINS-CURRENT> 51,230
<APPREC-INCREASE-CURRENT> 34,016
<NET-CHANGE-FROM-OPS> 90,479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,068
<DISTRIBUTIONS-OF-GAINS> 36,825
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45,877
<NUMBER-OF-SHARES-REDEEMED> 3,351
<SHARES-REINVESTED> 2,514
<NET-CHANGE-IN-ASSETS> 526,486
<ACCUMULATED-NII-PRIOR> 250
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,850
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 99,803
<AVERAGE-NET-ASSETS> 574,150
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> 1.74
<PER-SHARE-DIVIDEND> .09
<PER-SHARE-DISTRIBUTIONS> .64
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.11
<EXPENSE-RATIO> 2.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891522
<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 33
<NAME> GREATER CINCINNATI FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 671,830
<INVESTMENTS-AT-VALUE> 705,666
<RECEIVABLES> 30,498
<ASSETS-OTHER> 37,346
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 773,510
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,026
<TOTAL-LIABILITIES> 14,026
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 709,835
<SHARES-COMMON-STOCK> 119
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,414
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14,399
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,836
<NET-ASSETS> 759,485
<DIVIDEND-INCOME> 6,907
<INTEREST-INCOME> 10,494
<OTHER-INCOME> 0
<EXPENSES-NET> 12,168
<NET-INVESTMENT-INCOME> 5,233
<REALIZED-GAINS-CURRENT> 51,230
<APPREC-INCREASE-CURRENT> 34,016
<NET-CHANGE-FROM-OPS> 90,479
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 6
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 526,486
<ACCUMULATED-NII-PRIOR> 250
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 99,803
<AVERAGE-NET-ASSETS> 111
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> 1.68
<PER-SHARE-DIVIDEND> .13
<PER-SHARE-DISTRIBUTIONS> .64
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.18
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE NOTTINGHAM INVESTMENT TRUST, a business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter referred to as
the "Trust"), has filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, a registration statement with respect to the issuance and sale of
the shares of the Trust; and
WHEREAS, the undersigned is a Trustee of the Trust, as
indicated beside his name;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN F.
SPLAIN and THOMAS J. WESTERFIELD, and each of them, his attorneys for him and in
his name, place and stead, to execute and file any amended registration
statement or statements and amended prospectus or prospectuses or amendments or
supplements to any of the foregoing, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd
day of May, 1996.
/s/ John P. Boone
-----------------
John P. Boone, Trustee
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
On the 23rd day of May, 1996, personally appeared before me, JOHN P.
BOONE, known to me to be the person described in and who executed the foregoing
instrument, and who acknowledged to me that he executed and delivered the same
for the purposes therein expressed.
WITNESS my hand and official seal this 23rd day of May, 1996.
/s/ Elizabeth A. Santen
------------------------
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE NOTTINGHAM INVESTMENT TRUST, a business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter referred to as
the "Trust"), has filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, a registration statement with respect to the issuance and sale of
the shares of the Trust; and
WHEREAS, the undersigned is a Trustee of the Trust, as
indicated beside his name;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN F.
SPLAIN and THOMAS J. WESTERFIELD, and each of them, his attorneys for him and in
his name, place and stead, to execute and file any amended registration
statement or statements and amended prospectus or prospectuses or amendments or
supplements to any of the foregoing, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd
day of May, 1996.
/s/ O. James Peterson III
------------------------------
O. JAMES PETERSON III, Trustee
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
On the 23rd day of May, 1996, personally appeared before me, O. JAMES
PETERSON III, known to me to be the person described in and who executed the
foregoing instrument, and who acknowledged to me that he executed and delivered
the same for the purposes therein expressed.
WITNESS my hand and official seal this 23rd day of May, 1996.
/s/ Elizabeth A. Santen
-------------------------
Notary Public
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE NOTTINGHAM INVESTMENT TRUST, a business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter referred to as
the "Trust"), has filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, a registration statement with respect to the issuance and sale of
the shares of the Trust; and
WHEREAS, the undersigned is a Trustee of the Trust, as
indicated beside his name;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN F.
SPLAIN and THOMAS J. WESTERFIELD, and each of them, his attorneys for him and in
his name, place and stead, to execute and file any amended registration
statement or statements and amended prospectus or prospectuses or amendments or
supplements to any of the foregoing, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd
day of May, 1996.
/s/ Christopher J. Smith
-------------------------
CHRISTOPHER J. SMITH, Trustee
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
On the 23rd day of May, 1996, personally appeared before me,
CHRISTOPHER J. SMITH, known to me to be the person described in and who executed
the foregoing instrument, and who acknowledged to me that he executed and
delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 23rd day of May, 1996.
/s/ Elizabeth A. Santen
------------------------
Notary Public
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, THE NOTTINGHAM INVESTMENT TRUST, a business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter referred to as
the "Trust"), has filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, a registration statement with respect to the issuance and sale of
the shares of the Trust; and
WHEREAS, the undersigned is a Trustee of the Trust, as
indicated beside his name;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JOHN F.
SPLAIN and THOMAS J. WESTERFIELD, and each of them, his attorneys for him and in
his name, place and stead, to execute and file any amended registration
statement or statements and amended prospectus or prospectuses or amendments or
supplements to any of the foregoing, hereby giving and granting to said
attorneys full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd
day of May, 1996.
/s/ Jack E. Brinson
-----------------------
JACK E. BRINSON, Trustee
STATE OF NORTH CAROLINA )
) ss:
COUNTY OF EDGECOMB )
On the 23rd day of May, 1996, personally appeared before me, JACK E.
BRINSON, known to me to be the person described in and who executed the
foregoing instrument, and who acknowledged to me that he executed and delivered
the same for the purposes therein expressed.
WITNESS my hand and official seal this 23rd day of May, 1996.
/s/ Jean W. Harris
-------------------------
Notary Public
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