Registration No. 33-51910
811-7160
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No.
Post-Effective Amendment No. 13
--
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 14
--
Maplewood Investment Trust, a series company
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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
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ X/ immediately upon filing pursuant to Rule 485(b)
/ / on ( ) pursuant to Rule 485(b)
/ / 60 days after filing pursuant to Rule 485(a)
/ / on ( ) pursuant to Rule 485(a)
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 28, 1997 was filed on April 23, 1997.
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MAPLEWOOD INVESTMENT TRUST, A SERIES COMPANY
Cross-Reference Sheet Pursuant to Rule 495(a)
PART A PROSPECTUS
FORM ITEM CROSS-REFERENCE
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
PART B STATEMENT OF ADDITIONAL INFORMATION
FORM ITEM CROSS-REFERENCE
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
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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;
Other Services 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 and
Securities Being Redemption Information; How Share
Offered 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
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PROSPECTUS
July 1, 1997
AMELIA EARHART: EAGLE EQUITY FUND
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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
26100 Northwestern Highway, Suite 1913
Southfield, Michigan 48076
The Amelia Earhart: Eagle Equity Fund (the "Fund") is a diversified, open-end
series of Maplewood Investment Trust, a series company, 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 July 1, 1997, 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
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 PLANS. . . . . . . . . . ........................
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 Amelia Earhart: Eagle Equity Fund (the "Fund") is a diversified,
open-end 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
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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 and 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.")
MANAGEMENT. The Fund is a series of Maplewood Investment Trust, a series
company, (the "Trust"), the Board of Trustees of which is responsible for
overall management of the Trust and the Fund. The Trust has employed
Countrywide Fund Services, Inc. (the "Administrator") to provide administration,
accounting and transfer agent services. (See "Management of the Fund.")
DISTRIBUTOR. Alpha-Omega Capital Corp. (the "Distributor") serves as
the national distributor of shares of the Fund. For its services, the
Distributor receives commissions on the sale of Fund shares consisting
of the portion of the sales charge remaining after the discounts it
allows to securities dealers. (See "Distributor and Distribution Plans.")
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SYNOPSIS OF COSTS AND EXPENSES
Class A Class B
Shares Shares
SHAREHOLDER TRANSACTION EXPENSES: ------- --------
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price) 4.50% None
Maximum Contingent Deferred Sales Charge None 5.00%
(As a percentage of original purchase price
or redemption proceeds, whichever is lower)
Sales Charge Imposed on Reinvested Dividends None None
Redemption Fee None None
Class A Class B
Shares Shares
ANNUAL FUND OPERATING EXPENSES: -------- --------
(As a percentage of average net assets)
Management Fees After Waivers(1) .00% .00%
12b-1 Fees(2) .08% 1.00%
Other Expenses 1.81% 1.65%
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Total Fund Operating Expenses After Waivers
and Expense Reimbursements(3) 1.89% 2.65%
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(1) Absent waivers of management fees, such fees would have been
1% for the fiscal year ended February 28, 1997.
(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 loads permitted by the National Association of Securities
Dealers.
(3) Absent waivers of management fees and expense reimbursements
by the Advisor, total operating expenses would have been
5.67% for Class A shares for the fiscal year ended February
28, 1997.
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 Shares Class B Shares
-------------- --------------
1 Year $ 63 $ 77
3 Years 102 113
5 Years 143 151
10 Years 256 281*
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:
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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 28, 1997. The Annual Fund Operating Expenses shown above for Class B
shares are based on estimated amounts for the current fiscal year since Class B
shares have no operating history. 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.
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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 28, 1997 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.
<TABLE>
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<C> <C> <C> <C> <C>
Year Year Year Year
Ended Ended Ended Ended
February 28, February 29, February 28, February 28,
1997 1996 1995 1994
------------ ------------- ------------- ------------
Net asset value at beginning of year $ 17.09 $ 13.44 $ 12.25 $ 10.00
-------- ------- -------- ---------
Income from investment operations:
Net investment loss (0.13) (0.12) (0.02) (0.07)
Net realized and unrealized gains
on investments 2.78 4.20 1.21 2.49
---- ---- ---- ----
Total from investment operations 2.65 4.08 1.19 2.42
---- ---- ---- ----
Less distributions:
Dividends from net investment income -- -- -- (0.12)
Distributions from net realized gains (0.28) (0.43) -- (0.05)
------ ------ ------ ------
Total distributions (0.28) (0.43) -- (0.17)
------ ------ ------- -------
Net asset value at end of year $ 19.46 $ 17.09 $ 13.44 $ 12.25
============ ========== ============= ===========
Total return (A) 15.53% 30.59% 9.66% 24.39%
============= =========== ============== ============
Net assets at end of year $ 2,593,632 $ 1,781,734 $ 820,139 $ 244,385
============== ============ =============== =============
Ratio of expenses to average net assets
Before expense reimbursement and waived fees 5.67% 8.53% 21.00% 24.60%
After expense reimbursement and waived fees 1.89% 1.90% 1.86% 1.85%
Ratio of net investment loss to average net assets
Before expense reimbursement and waived fees (4.61)% (7.47)% (19.32)% (23.39)%
After expense reimbursement and waived fees (0.83)% (0.86)% (0.17)% (0.72)%
Portfolio turnover rate 28% 64% 2% 48%
Average commission rate per share (B) $ .0727 -- -- --
(A)The total returns shown do not include the effect of applicable sales loads.
(B)For fiscal years beginning in 1997, the Fund is required to disclose its average commission rate paid per share
for purchases and sales of investment securities.
</TABLE>
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.
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<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 (the "1940 Act")
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
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<PAGE>
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.
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.
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
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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.
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
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<PAGE>
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."
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
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<PAGE>
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."
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 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
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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.
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
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<PAGE>
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.
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 28,
1997 was 28%.
BORROWING. The Fund may borrow from a bank up to 5% of its total assets, but
only for temporary or emergency purposes. 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
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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.
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.
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<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 for your account may be made through 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.
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<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 shareholders 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.
Shareholders may change the amount of the investment or discontinue the plan at
any time by writing to the Administrator.
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<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 shareholders 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
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<PAGE>
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.
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:
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<PAGE>
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
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. Shareholders 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, shareholders 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 a shareholder
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 a shareholder 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 shareholder to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the period,
the shareholder 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 shareholder, the Administrator is authorized by the shareholder to
liquidate a sufficient number of shares held by the shareholder 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 shareholder) for this purpose. The value
of any shares redeemed or otherwise disposed of by the shareholder prior to
termination or completion of the letter of intent will be deducted from the
total purchases made under such letter of intent.
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<PAGE>
A 90-day backdating period can be used to include earlier purchases at the
shareholder'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. Shareholders must notify
the Administrator whenever a purchase is being made pursuant to a letter of
intent.
Shareholders 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. Shareholders 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 a shareholder realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If a
shareholder 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
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<PAGE>
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.
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
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<PAGE>
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.
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
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<PAGE>
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.
3. MINIMUM REQUIRED DISTRIBUTIONS. The CDSC is waived in connection
with distributions from IRA, 403(b)(7), and qualified employee benefit
plan accounts due to a shareholder reaching age 70 1/2.
4. 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
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<PAGE>
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 such 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.
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
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<PAGE>
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
1-800-326-6580. 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
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<PAGE>
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 with the Fund a
letter including your new redemption instructions. (See "Signature Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any 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 shareholders 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. A shareholder 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. A shareholder may establish this service whether dividends
and distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder'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
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<PAGE>
B shares pursuant to a Systematic Withdrawal Plan will be reduced by any
applicable contingent deferred sales charge. 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.
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 are 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 allocated among each 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 bid price. 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.
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<PAGE>
MANAGEMENT OF THE FUND
The Fund is a diversified series of Maplewood Investment Trust, a series company
(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.
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 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 Countrywide Fund Services, Inc., P.O. Box
5354, Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying
agent and shareholder service agent. The Administrator is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending.
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 $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, 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
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<PAGE>
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
Alpha-Omega Capital Corp., 700 Pete Rose Way, Cincinnati, Ohio 45203 (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 controlling shareholders of the
Distributor are Bryan E. Pifer and William C. Riffle.
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
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<PAGE>
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 load,
12b-1 fees or contingent deferred load - 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
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<PAGE>
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).
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.
During the fiscal year ended February 28, 1997, Class A shares incurred $1,579
in expenses under the Class A Plan.
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, annually and will keep 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.
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<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 shareholders on the conversion of
their Class B shares into Class A shares. A shareholder's basis in the Class A
shares acquired will be the same as such shareholder'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.
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<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 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.
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<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.
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<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
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-543-8721
Distributor
Alpha-Omega Capital Corp.
700 Pete Rose Way
Cincinnati, Ohio 45203
Independent Auditors
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
Board of Trustees
Jack E. Brinson
David S. Brollier
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.
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<PAGE>
AMELIA EARHART:EAGLE EQUITY FUND
Supplement to Prospectus dated July 1, 1997
The Prospectus dated July 1, 1997 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.
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<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
ACCOUNT APPLICATION (check appropriate share class)
- -- Class A Shares (W7) $__________________
Please mail account application to:
Amelia Earhart: Eagle Equity 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 $____________ ($2,500 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 I.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. The
Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.
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 I 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 Countrywide Fund Services, Inc. as his agent to enter orders for
shares whether by direct purchase or exchange, 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 Countrywide Fund Services, Inc. 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 Countrywide Fund Services, Inc., the Amelia Earhart: Eagle Equity
Fund, Alpha-Omega Capital Corp., Inc., and their respective officers, employees,
agents and affiliates from any and all liability in the performance of the acts
instructed herein. Neither the Fund, Countrywide Fund Services, Inc., 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 investor(s)
will bear the risk of any such loss. The Fund or Countrywide Fund Services,
Inc., or both, will employ reasonable procedures to determine that telephone
instructions are genuine. If the Trust and/or Countrywide Fund Services, Inc.
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.
_______________________________________________________________
Signature of Individual Owner, Corporate Officer, Trustee, etc.
_______________________________________________________________
Signature of Joint Owner, if Any
_______________________________________________________________
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 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.
ABA Routing Number_____________________
FI Account Number______________________
o Checking Account o Savings Account
_______________________________________
Name of Financial Institution (FI)
_______________________________________
City State
X______________________________________ X_________________________________
(Signature of Depositor EXACTLY as (Signature of Joint Tenant -
it appears on FI Records) 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.
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
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("CFS") 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 CFS, CFS hereby agrees:
CFS 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. CFS 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. CFS 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 Countrywide Fund
Services, Inc. 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
July 1, 1997
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 diversified, open-end series of
Maplewood Investment Trust, a series company (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 July 1, 1997, 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 diversified, open-end
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 and net capital gains, if
any, of the Fund 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, a
series company (the "Trust"), the Board of Trustees of which is
responsible for overall management of the Trust and the Fund. The
Trust has employed Countrywide Fund Services, Inc. (the
"Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Fund.")
DISTRIBUTOR. Alpha-Omega Capital Corp. (the "Distributor") serves as
the national 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>
SYNOPSIS OF COSTS AND EXPENSES
Investor Institutional
Shares Shares
Shareholder Transaction Expenses:
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
Investor Institutional
Shares Shares
Annual Fund Operating Expenses:
(As a percentage of average net assets)
Management Fees After Waivers(1) .00% .00%
12b-1 Fees(2) .41% None
Other Expenses 1.81% 1.73%
----- -----
Total Operating Expenses After Waivers
and Expense Reimbursements(3) 2.22% 1.73%
===== =====
(1) Absent waivers of management fees, such fees would have been
1% for the fiscal year ended February 28, 1997.
(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 operating expenses
would have been 5.33% and 4.85% for Investor Shares and
Institutional Shares, respectively, for the fiscal year
ended February 28, 1997.
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 102 54
5 Years 150 94
10 Years 281 204
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 actual operating history for the fiscal year ended February 28, 1997.
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.
- 4 -
<PAGE>
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 28, 1997 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.
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD
INVESTOR CLASS
Year Year Period
Ended Ended Ended
February 28, February 29, February 28,
1997 1996 1995(A)
Net asset value at beginning of
period $12.44 $10.54 $10.00
------ ------ ------
Income from investment operations:
Net investment income (loss) (0.02) 0.01 0.04
Net realized and unrealized
gains on investments 0.94 1.95 0.50
------ -------- -------
Total from investment
operations 0.92 1.96 0.54
------ -------- -------
Less distributions:
Dividends from net
investment income -- (0.03) --
Distributions from net
realized gains -- (0.03) --
------ -------- -----
Total distributions -- (0.06) --
------ -------- -----
Net asset value at end of period $13.36 $12.44 $10.54
====== ======== ======
Total return(B) 7.41% 18.59% 5.40%
======= ======== =======
Net assets at end of period $2,706,214 $1,897,814 $272,383
========== ========== ========
Ratio of expenses to average net assets
Before expense reimbursement
and waived fees 5.33% 9.45% 37.10%(D)
After expense reimbursement
and waived fees 2.22% 2.17% 2.21%(D)
Ratio of net investment income (loss)
to average net assets
Before expense reimbursement
and waived fees (3.31)% (7.21)% (32.27)%(D)
After expense reimbursement
and waived fees (0.20)% 0.06% 2.62%(D)
Portfolio turnover rate 5% 16% 0%
Average commission rate per share(C) $0.0600
- 5 -
(A) Represents the period from the commencement of operations (January 3,
1995) through February 28, 1995.
(B) The total returns shown do not include the effect of applicable sales
loads.
(C) For fiscal years beginning in 1997, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of
investment securities.
(D) Annualized.
<PAGE>
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD
INSTITUTIONAL CLASS
Year Period
Ended Ended
February 28, February 29,
1997 1996(A)
Net asset value at beginning of
period $12.57 $10.72
------ ------
Income from investment operations:
Net investment income 0.01 0.02
Net realized and unrealized
gains on investments 0.97 1.88
------ ------
Total from investment
operations 0.98 1.90
------ ------
Less distributions:
Dividends from net
investment income -- (0.02)
Distributions from net
realized gains -- (0.03)
------ -------
Total distributions -- (0.05)
------ -------
Net asset value at end of period $13.55 $12.57
====== ======
Total return(B) 7.81% 17.68%
======= =======
Net assets at end of period $735,087 $ 24,576
======== ========
Ratio of expenses to average net assets
Before expense reimbursement
and waived fees 4.85% 8.40%(D)
After expense reimbursement
and waived fees 1.73% 1.69%(D)
Ratio of net investment income (loss)
to average net assets
Before expense reimbursement
and waived fees (2.89)% (6.07)%(D)
After expense reimbursement
and waived fees 0.22% 0.64%(D)
Portfolio turnover rate 5% 16%
Average commission rate per share(C) $0.0600
(A) Represents the period from the commencement of operations (May 22, 1995)
through February 29, 1996.
(B) The total returns shown do not include the effect of applicable sales
loads.
(C) For fiscal years beginning in 1997, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of
investment securities.
(D) 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.
- 7 -
<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 (the "1940 Act") 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.
- 8 -
<PAGE>
The equity securities in which the Fund may invest include common stocks,
convertible preferred stocks, straight preferred stocks 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 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, insurance, mortgage, finance, varied service sectors, technology, real
estate 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 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.
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 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
- 9 -
<PAGE>
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.
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 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.
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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.
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 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 28, 1997 was 5%.
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
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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 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
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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.
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 for your account may be made through 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.
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.
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<PAGE>
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.
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 shareholders
to make regular monthly or bimonthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Administrator
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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. Shareholders may purchase Investor
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, shareholders 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
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<PAGE>
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. Shareholders in Investor Shares may qualify for a lower sales
charge by executing a letter of intent. A letter of intent allows a shareholder
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 a shareholder 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 shareholder to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the period,
the shareholder 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 shareholder, the Administrator is authorized by the shareholder to
liquidate a sufficient number of shares held by the shareholder 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 shareholder) 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
shareholder'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. Shareholders must notify
the Administrator whenever a purchase is being made pursuant to a letter of
intent.
Shareholders 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. Shareholders may reinvest proceeds from a redemption of Investor
Shares, without a sales charge, in
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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 a shareholder realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If a
shareholder 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
Investor 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
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<PAGE>
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.
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,
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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
1-800-934- 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 with the Fund including your new redemption instructions. (See "Signature
Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any or all shareholders, without
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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 shareholders 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. A shareholder 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. Shareholders may establish this service whether dividends and
distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder'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
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<PAGE>
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. Securities that are
listed on an exchange and which are not traded on the valuation date are valued
at the bid price. 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, a series
company (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.
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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 a management group consisting of Robert B.
Thompson, Benjamin Richter, Lloyd Richter, J.C. Blucher Ehringhaus III and
Richard K. Bryant. The Advisor's address is 1712 East Boulevard, Charlotte,
North Carolina 28203.
Robert B. Thompson is primarily responsible for managing the portfolio of the
Fund and has acted in this capacity since October 1996. Mr. Thompson has served
as President of the Advisor since 1994. From 1993 until 1995 he was President of
Morehead Investment Advisors, a registered broker-dealer, and from 1987 until
1992 he was a Senior Vice President of Barclays Bank of North Carolina.
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.
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 Countrywide Fund Services, Inc., P.O. Box
5354, Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying
agent and shareholder service agent. The Administrator is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending.
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<PAGE>
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 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 $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, 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.
- 23 -
<PAGE>
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
Alpha-Omega Capital Corp., 700 Pete Rose Way, Cincinnati, Ohio 45203 (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 controlling shareholders of the
Distributor are Bryan E. Pifer and William C. Riffle.
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 the 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. During the fiscal year ended February 28, 1997, Investor Shares
incurred $10,373 in distribution expenses.
Amounts accrued under the Plan in one year but which are not actually paid in
that year, may be paid in subsequent years.
- 24 -
<PAGE>
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, annually 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.
- 25 -
<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. 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
- 26 -
<PAGE>
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 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
- 27 -
<PAGE>
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.
- 28 -
<PAGE>
THE CAROLINASFUND
Investment Advisor
Morehead Capital Advisors, LLC
1712 East Boulevard
Charlotte, North Carolina 28203
Administrator
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-934-1012
Distributor
Alpha-Omega Capital Corp.
700 Pete Rose Way
Cincinnati, OH 45203
Independent Auditors
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
Board of Trustees
Jack E. Brinson
David S. Brollier
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.
- 29 -
<PAGE>
THE CAROLINASFUND
ACCOUNT APPLICATION (check appropriate share class)
- -- Investor Shares (W2) $__________________
- -- 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 I.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. The
Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.
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 I 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 Countrywide Fund Services, Inc. as his agent to enter orders for
shares whether by direct purchase or exchange, 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 Countrywide Fund Services, Inc. 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 Countrywide Fund Services, Inc., The CarolinasFund,
Alpha-Omega Capital Corp., Inc., and their respective officers, employees,
agents and affiliates from any and all liability in the performance of the acts
instructed herein. Neither the Fund, Countrywide Fund Services, Inc., 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 investor(s)
will bear the risk of any such loss. The Fund or Countrywide Fund Services,
Inc., or both, will employ reasonable procedures to determine that telephone
instructions are genuine. If the Trust and/or Countrywide Fund Services, Inc.
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.
_______________________________________________________________
Signature of Individual Owner, Corporate Officer, Trustee, etc.
_______________________________________________________________
Signature of Joint Owner, if Any
_______________________________________________________________
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
X______________________________________ X_________________________________
(Signature of Depositor EXACTLY as (Signature of Joint Tenant -
it appears on FI Records) 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.
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
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("CFS") 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 CFS, CFS hereby agrees:
CFS 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. CFS 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. CFS 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 Countrywide Fund
Services, Inc. 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
July 1, 1997
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 series company, 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 July 1, 1997, 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 ............................................................
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 PLANS............................................
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 Mississippi Opportunity Fund (the "Fund") is a non-diversified,
open-end 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 and net capital gains, if
any, of the Fund 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, a
series company (the "Trust"), the Board of Trustees of which is
responsible for overall management of the Trust and the Fund. The
Trust has employed Countrywide Fund Services, Inc. (the
"Administrator") to provide administration, accounting and transfer
agent services. (See "Management of the Fund.")
DISTRIBUTOR. Alpha-Omega Capital Corp. (the "Distributor") serves as
the national 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.")
- 3 -
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
Class A Class C
Shares Shares
Shareholder Transaction Expenses: -------- --------
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 Dividend None None
Redemption Fee None None
Class A Class C
Shares Shares
------- -------
Annual Fund Operating Expenses:
(As a percentage of average net assets)
Management Fees After Waivers(1) .00% .00%
12b-1 Fees(2) .50% 1.00%
Other Expenses 1.61% 1.61%
----- -----
Total Operating Expenses After Waivers
and Expense Reimbursements(3) 2.11% 2.61%
===== =====
(1) Absent waivers of management fees, such fees would have been .875%
for the fiscal year ended February 28, 1997.
(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 operating expenses would have been 5.29% and
5.79% for Class A shares and Class C shares, respectively, for the
fiscal year ended February 28, 1997.
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 Shares Class C Shares
-------------- --------------
1 Year $ 56 $ 26
3 Years 99 81
5 Years 144 139
10 Years 271 294
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 actual operating history for the fiscal year ended February 28, 1997.
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.
- 4 -
<PAGE>
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 28, 1997 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.
<TABLE>
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<C> <C> <C> <C> <C>
CLASS A CLASS C
Year Period Year Period
Ended Ended Ended Ended
February 28, February 29, February 28, February 29,
1997 1996(A) 1997 1996(A)
--------- ---------- ------------ -----------
Net asset value at beginning of period $11.22 $ 10.00 $11.17 10.00
------ ------- ------ ------
Income from investment operations:
Net investment loss (0.10) (0.03) (0.16) (0.05)
Net realized and unrealized gains
on investments 0.76 1.27 0.76 1.24
---- ----- ----- ----
Total from investment operations 0.66 1.24 0.60 1.19
---- ----- ----- ----
Less distributions from net realized gains (0.10) (0.02) (0.10) (0.02)
------ ------ ------ ------
Net asset value at end of period $11.78 $ 11.22 $ 11.67 $11.17
======= ======== ======== ========
Total return(B) 5.92% 12.41% 5.37% 11.86%
Net assets at end of period $1,813,797 $1,448,527 $ 685,191 $ 514,090
========== ========== ========= =========
Ratio of expenses to average net assets
Before expense reimbursement and waived fees 5.29% 6.90%(D) 5.79% 7.40%(D)
After expense reimbursement and waived fees 2.11% 2.12%(D) 2.61% 2.49%(D)
Ratio of net investment loss to average net assets
Before expense reimbursement and waived fees (4.08)% (5.20)%(D) (4.58)% (5.60)% (D)
After expense reimbursement and waived fees (0.89)% (0.42)%(D) (1.40)% (0.69)% (D)
Portfolio turnover rate 15% 7% 15% 7%
Average commission rate per share (C) $0.0877 -- $ 0.0877 --
(A)Represents the period from the commencement of operations (April 4, 1995) through February 29, 1996.
(B)The total returns shown do not include the effect of applicable sales loads.
(C)For fiscal years beginning in 1997, the Fund is required to disclose its average commission rate paid per share for purchases
and sales of invesment securities.
(D)Annualized.
</TABLE>
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.
<PAGE>
- 5 -
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, (the "1940 Act") 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 stocks,
convertible preferred stocks, straight preferred stocks 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.")
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
- 6 -
<PAGE>
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 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.
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
- 7 -
<PAGE>
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 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
- 8 -
<PAGE>
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.
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 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.")
- 9 -
<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 portfolio turnover of the Fund for the fiscal
year ended February 28, 1997 was 15%.
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
- 10 -
<PAGE>
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)
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
- 11 -
<PAGE>
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.
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.
- 12 -
<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.
- 13 -
<PAGE>
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders 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. A
shareholder 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
Shareholders must specify at the time of purchase whether they are purchasing
Class A or Class C shares. Shareholders 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. Shareholders 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
- 14 -
<PAGE>
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, a shareholder 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.
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. A shareholder 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, shareholders 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, a
shareholder must, at the time of purchase, provide sufficient information to
permit confirmation of qualification. The
- 15 -
<PAGE>
right of accumulation may be modified or eliminated at any time or from time to
time by the Trust without notice.
LETTERS OF INTENT. Shareholders 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 shareholder to purchase, or the Fund
to sell, the indicated amount. If such amount is not invested within the period,
the shareholder 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 shareholder, the Administrator is authorized by the shareholder to
liquidate a sufficient number of shares held by the shareholder 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 shareholder) for this purpose. The value
of any shares redeemed or otherwise disposed of by the shareholder 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
shareholder'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. Shareholders must notify
the Administrator whenever a purchase is being made pursuant to a letter of
intent.
Shareholders 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. Shareholders 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.
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If a shareholder realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If a
shareholder 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 arrangement 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.
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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
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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
1-800-580-4820. 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 with the Fund including your new redemption instructions. (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 shareholders 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
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<PAGE>
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. A shareholder 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. A shareholder may establish this service whether dividends
and distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholders' 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
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<PAGE>
of shares will be affected by the expenses accrued and payable by such class.
Because certain expenses such as distribution fees are allocated among each
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 bid price. 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, a series
company, (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 currently serves 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, 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.
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<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 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 Countrywide Fund Services, Inc., P.O. Box
5354, Cincinnati, Ohio 45201, to serve as its transfer agent, dividend paying
agent and shareholder service agent. The Administrator is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending.
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 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 $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.
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<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
Alpha-Omega Capital Corp., 700 Pete Rose Way, Cincinnati, Ohio 45203 (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 controlling shareholders of the
Distributor are Bryan E. Pifer and William C. Riffle.
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<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 shares of the
applicable class 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. 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.
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).
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<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.
For the fiscal year ended February 28, 1997, Class A shares and Class C shares
of the Fund paid $8,519 and $6,900, 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, annually 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.
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<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. 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.
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.
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<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.
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 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.
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.
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<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.
- 28 -
<PAGE>
THE MISSISSIPPI OPPORTUNITY FUND
Investment Advisor
Vector Money Management, Inc.
4266 I-55 North, Suite 102
Jackson, Mississippi 39211
Administrator
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-580-4820
Distributor
Alpha-Omega Capital Corp.
700 Pete Rose Way
Cincinnati, Ohio 45203
Independent Auditors
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
Board of Trustees
Jack E. Brinson
David S. Brollier
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.
- 29 -
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
ACCOUNT APPLICATION (check appropriate share class)
- -- Class A Shares (W8) $__________________
- -- 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 I.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. The
Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.
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 I 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 Countrywide Fund Services, Inc. as his agent to enter orders for
shares whether by direct purchase or exchange, 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 Countrywide Fund Services, Inc. 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 Countrywide Fund Services, Inc., the Mississippi Opportunity
Fund, Alpha-Omega Capital Corp., Inc., and their respective officers, employees,
agents and affiliates from any and all liability in the performance of the acts
instructed herein. Neither the Fund, Countrywide Fund Services, Inc., 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 investor(s)
will bear the risk of any such loss. The Fund or Countrywide Fund Services,
Inc., or both, will employ reasonable procedures to determine that telephone
instructions are genuine. If the Trust and/or Countrywide Fund Services, Inc.
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.
_______________________________________________________________
Signature of Individual Owner, Corporate Officer, Trustee, etc.
_______________________________________________________________
Signature of Joint Owner, if Any
_______________________________________________________________
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 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.
ABA Routing Number_____________________
FI Account Number______________________
o Checking Account o Savings Account
_______________________________________
Name of Financial Institution (FI)
_______________________________________
City State
X______________________________________ X_________________________________
(Signature of Depositor EXACTLY as (Signature of Joint Tenant -
it appears on FI Records) 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.
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
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("CFS") 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 CFS, CFS hereby agrees:
CFS 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. CFS 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. CFS 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 Countrywide Fund
Services, Inc. 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
July 1, 1997
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 (the "Fund") is a non-diversified, open-end series
of Maplewood Investment Trust, a series company, 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 July 1, 1997, 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. The Fund's
telephone number is nationwide, 1-888-289-6465, in Cincinnati 629-2273. 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 PLANS. . . . . . . . . . ...............
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 Regional Opportunity Fund: Ohio Indiana Kentucky (the "Fund") is a
non-diversified, open-end 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 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. 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.")
- 2 -
<PAGE>
DIVIDENDS AND DISTRIBUTIONS. Net investment income and 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.")
MANAGEMENT. The Fund is a series of Maplewood Investment Trust, a series
company, (the "Trust"), the Board of Trustees of which is responsible for
overall management of the Trust and the Fund. The Trust has employed
Countrywide Fund Services, Inc. (the "Administrator") to provide administration,
accounting and transfer agent services. (See "Management of the Fund.")
DISTRIBUTOR. Alpha-Omega Capital Corp. (the "Distributor") serves as
the national distributor of shares of the Fund. For its services, the
Distributor receives commissions on the sale of Fund shares consisting
of the portion of the sales charge remaining after the discounts it
allows to securities dealers. (See "Distributor and Distribution Plans.")
- 3 -
<PAGE>
SYNOPSIS OF COSTS AND EXPENSES
Class A Class B
Shares Shares
Shareholder Transaction Expenses:
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price) 4.00% None
Maximum Contingent Deferred Sales Charge None 5.00%
(As a percentage of original purchase price
or redemption proceeds, whichever is lower)
Sales Charge Imposed on Reinvested Dividends None None
Redemption Fee None None
Class A Class B
Shares Shares
Annual Fund Operating Expenses:
(As a percentage of average net assets)
Management Fees After Waivers(1) .00% .00%
12b-1 Fees(2) .25% 1.00%
Other Expenses 1.70% 1.70%
----- -----
Total Operating Expenses After Waivers
and Expense Reimbursements(3) 1.95% 2.70%
===== =====
(1) Absent waivers of management fees, such fees would have been 1.25%
for the fiscal year ended February 28, 1997.
(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 loads permitted by the National
Association of Securities Dealers.
(3) Absent waivers of management fees and expense reimbursements
by the Advisor, total operating expenses would have been
11.50% and 12.14% for Class A shares and Class B shares,
respectively, for the fiscal year ended February 28, 1997.
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 Shares Class B Shares
-------------- --------------
1 Year $ 59 $ 77
3 Years 99 114
5 Years 141 153
10 Years 258 285*
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:
- 4 -
<PAGE>
Class B Shares
1 Year $ 27
3 Years 84
5 Years 143
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 actual operating history for the fiscal year ended February 28, 1997,
adjusted to reflect the Advisor's current intention to waive its investment
advisory fees and reimburse the Fund for expenses to the extent necessary to
limit total operating expenses to 1.95% and 2.70% for Class A shares and Class B
shares, respectively. 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.
- 5 -
<PAGE>
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 28, 1997 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.
<TABLE>
SELECTED PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<C> <C> <C> <C> <C>
CLASS A CLASS B
------------------------------------------ --------
Year Year Period Period
Ended Ended Ended Ended
February 28, February 29, February 28, February 28,
1997 1996 1995(A) 1997(B)
------------- ------------- ---------------- ----------------
Net asset value at beginning of period $ 11.11 $ 10.00 $ 10.00 $ 10.46
-------- -------- ------- --------
Income from investment operations:
Net investment income (loss) (0.06) 0.10 0.01 (0.02)
Net realized and unrealized gains (losses)
on investments 0.76 1.74 (0.01) 1.30
-------- -------- ------- -------
Total from investment operations 0.70 1.84 0.00 1.28
-------- -------- ------- -------
Less distributions:
Dividends from net investment income (0.02) (0.09) -- --
Distributions from net realized gains (0.41) (0.64) -- (0.41)
-------- -------- -------- -------
Total distributions (0.43) (0.73) -- (0.41)
-------- -------- -------- -------
Net asset value at end of period $ 11.38 $ 11.11 $ 10.00 $ 11.33
============ ========== ========== ========
Total return (C) 6.32% 18.41% 0.00% 12.25%
============= ============ =========== =========
Net assets at end of period $ 502,116 $ 759,366 $ 232,998 $ 646,067
============== ============= ============ ===========
Ratio of expenses to average net assets:
Before expense reimbursement and waived fees 11.50% 18.26% 80.88%(E) 12.14%(E)
After expense reimbursement and waived fees 2.02% 2.23% 2.05%(E) 2.66%(E)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and waived fees (9.85)% (15.08)% (77.35)%(E) (10.52)% (E)
After expense reimbursement and waived fees (0.37)% 0.96% 1.54%(E) (1.04)% (E)
Portfolio turnover rate 39% 108% 0% 39%(E)
Average commission rate per share (D) $ 0.0630 -- -- $ 0.0630
(A) Represents the period from the commencement of operations (January 3, 1995) through February 28, 1995.
(B) Represents the period from the first public offering to shareholders (July 24, 1996) through
February 28, 1997. Class B shares were initially purchased on April 10, 1995 by the Advisor,
who subsequently redeemed the initial shares on March 13, 1996.
(C) The total returns shown do not include the effect of applicable sales loads.
(D) For fiscal years beginning in 1997, the Fund is required to disclose its average commission rate paid
per share for purchases and sales of investment securities.
(E) Annualized.
</TABLE>
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.
- 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 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 (the "1940 Act")
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.
- 7 -
<PAGE>
The equity securities in which the Fund may invest include common stocks,
convertible preferred stocks, straight preferred stocks 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 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
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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 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 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
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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.
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
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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 28, 1997 was 39%.
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.
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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.
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
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"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.
HOW TO PURCHASE SHARES
Assistance in opening accounts may be obtained from the Administrator by calling
nationwide 1-888-289-6465, in Cincinnati 629-2273, 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 for your account may be made through 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.
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<PAGE>
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
Regional Opportunity Fund, and mail it to:
Regional 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,
nationwide 1-888-289-6465, in Cincinnati 629-2273 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
(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 then current net asset value or public offering
price as aforementioned. Before making additional investments by bank wire,
please call the Fund, nationwide 1-888-289- 6465, in Cincinnati 629-2273 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 shareholders 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.
Shareholders 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
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<PAGE>
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 shareholder 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. Shareholders 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.
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, shareholders should understand that the Fund's future return
cannot be predicted, and that there is no assurance that
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<PAGE>
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 and
brokerage commissions 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 4.17% 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 2.04 2.00 1.80
$1,000,000 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
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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. Shareholders in Class A shares may qualify for a lower sales
charge by executing a letter of intent. A letter of intent allows a shareholder
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 a shareholder 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 a shareholder to purchase, or the Fund to
sell, the indicated amount. If such amount is not invested within the period,
the shareholder 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 shareholder, the Administrator is authorized by the shareholder 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 shareholder) for this purpose. The value of any
shares redeemed or otherwise disposed of by the shareholder 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
shareholder'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. Shareholders must notify
the Administrator whenever a purchase is being made pursuant to a letter of
intent.
Shareholders 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. Shareholders 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 a shareholder realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If a
shareholder realizes a loss on the redemption, the
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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.
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
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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 CHARGE. 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.
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
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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 a shareholder's state of
affairs unexpectedly changes or under the other limited circumstances described
below. For the waiver to become effective, the shareholder or shareholder'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
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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. 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 70 1/2.
4. 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.
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
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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, nationwide 1-888-289-6465, in Cincinnati 629-2273 or write to the address
shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to the
Regional 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
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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
nationwide, 1-888-289-6465, in Cincinnati 629-2273. 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 with the Fund including your new redemption instructions. (See "Signature
Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any 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 shareholders 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
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<PAGE>
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. A shareholder 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 shareholder may establish this service whether dividends
and distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder'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. 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.
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.
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<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 allocated among each 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 bid price. 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, a series
company (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
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<PAGE>
for the selection of broker-dealers through which the Fund executes portfolio
transactions, subject to brokerage policies established by the Trustees. The
Advisor's address is P.O. Box 54944, Cincinnati, Ohio 45254-0944. The
controlling shareholders of the Advisor are Jasen M. Snelling and Jerry A.
Smith.
Jill H. Travis is primarily responsible for the day-to-day management of the
Fund's portfolio and has been managing the Fund since November 1995. In addition
to being employed by the Advisor, Ms. Travis is 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.
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 Countrywide Fund Services, Inc. (the
"Administrator"), P.O. Box 5354, Cincinnati, Ohio 45201, to serve as its
transfer agent, dividend paying agent and shareholder service agent. The
Administrator is an indirect wholly-owned subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending.
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 Commission and state securities authorities. The Fund
pays
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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 $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, 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. 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.
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<PAGE>
DISTRIBUTOR AND DISTRIBUTION PLANS
Alpha-Omega Capital Corp., 700 Pete Rose Way, Cincinnati, Ohio 45203 (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 controlling shareholders of the
Distributor are Bryan E. Pifer and William C. Riffle.
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.
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<PAGE>
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).
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.
For the fiscal year ended February 28, 1997, Class A shares and Class B shares
of the Fund paid $1,131 and $1,335, respectively, for distribution expenses.
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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, annually 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 shareholders on the conversion of
their Class B shares into Class A shares. A shareholder's basis in the Class A
shares acquired will be the same as such shareholder'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
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<PAGE>
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.
- 32 -
<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.
As of the date of this Prospectus, Donaldson, Lufkin & Jenrette Securities
Corporation, P.O. Box 2052, Jersey City, New Jersey owned of record more than
25% of the Class A shares of the Fund. Accordingly, this entity may be deemed to
be a "controlling person" of Class A 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 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 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
- 33 -
<PAGE>
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.
- 34 -
<PAGE>
REGIONAL OPPORTUNITY FUND
Investment Advisor
CityFund Advisory, Inc.
P.O. Box 54944
Cincinnati, Ohio 45254-0944
Administrator
Countrywide Fund Services, Inc.
312 Walnut Street
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Nationwide 1-888-289-6465
In Cincinnati, 629-2273
Distributor
Alpha-Omega Capital Corp.
700 Pete Rose Way
Cincinnati, Ohio 45203
Independent Auditors
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
Board of Trustees
Jack E. Brinson
David S. Brollier
O. James Peterson III
Christopher J. Smith
REGIONAL OPPORTUNITY FUND
Ohio, Indiana, Kentucky
ACCOUNT APPLICATION (check appropriate share class)
- -- Class A Shares (W4) $__________________
- -- 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 I.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. The
Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding.
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 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 I 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 Countrywide Fund Services, Inc. as his agent to enter orders for
shares whether by direct purchase or exchange, 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 Countrywide Fund Services, Inc. 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 Countrywide Fund Services, Inc., the Regional Opportunity
Fund, Alpha-Omega Capital Corp., Inc., and their respective officers, employees,
agents and affiliates from any and all liability in the performance of the acts
instructed herein. Neither the Fund, Countrywide Fund Services, Inc., 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 investor(s)
will bear the risk of any such loss. The Fund or Countrywide Fund Services,
Inc., or both, will employ reasonable procedures to determine that telephone
instructions are genuine. If the Trust and/or Countrywide Fund Services, Inc.
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.
_______________________________________________________________
Signature of Individual Owner, Corporate Officer, Trustee, etc.
_______________________________________________________________
Signature of Joint Owner, if Any
_______________________________________________________________
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 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 $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 Regional Opportunity Fund.
ABA Routing Number_____________________
FI Account Number______________________
o Checking Account o Savings Account
_______________________________________
Name of Financial Institution (FI)
_______________________________________
City State
X______________________________________ X_________________________________
(Signature of Depositor EXACTLY as (Signature of Joint Tenant -
it appears on FI Records) 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.
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
INDEMNIFICATION TO DEPOSITOR'S BANK
In consideration of your participation in a plan which Countrywide Fund
Services, Inc. ("CFS") 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 CFS, CFS hereby agrees:
CFS 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. CFS 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. CFS 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 Countrywide Fund
Services, Inc. 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>
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.
- 35 -
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
AMELIA EARHART: EAGLE EQUITY FUND
July 1, 1997
A Series of
MAPLEWOOD INVESTMENT TRUST, A SERIES COMPANY
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............................................. 9
INVESTMENT ADVISOR.................................................12
ADMINISTRATOR......................................................13
DISTRIBUTOR........................................................14
OTHER SERVICES.....................................................14
BROKERAGE..........................................................15
DISTRIBUTION PLANS UNDER RULE 12b-1................................17
SPECIAL SHAREHOLDER SERVICES.......................................19
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.....................22
HOW SHARE PRICE IS DETERMINED......................................22
ADDITIONAL TAX INFORMATION.........................................23
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 July 1, 1997 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;
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<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.
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 28, 1997:
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<PAGE>
<TABLE>
<C> <C> <C>
Name, Position, Principal Occupation(s) Compensation
Age and Addres During Past 5 Years From the Trust
- -------------- ------------------- --------------
Jack E. Brinson (age 65) President, Brinson Investment Co. $7,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina;
Tarboro, North Carolina 27886 Trustee, The Nottingham Investment
Trust II and Gardner Lewis Investment
Trust, Raleigh, North Carolina
David S. Brollier (age 54) President, America's Utility Fund, $3,500
Trustee Inc.; previously Director, Vice
1633 Monument Avenue President and Assistant
Richmond, Virginia 23220 Treasurer of Dominion Capital, Inc.;
and Assistant Treasurer of Dominion
Resources, Inc., Richmond, Virginia
O. James Peterson III (age 61) Chief Financial Officer $7,750
Trustee Colonial Downs,
6201 North Courthouse Road New Kent, Virginia;
New Kent, Virginia 23124 Trustee, The Nottingham Investment
Trust II, Raleigh, North Carolina;
previously, Chief Financial Officer of
Pimlico Race Course, Laurel, Maryland;
previously, Senior Vice President and Chief Financial
Officer of Dominion Resources, Inc.,
Richmond, Virginia
Christopher J. Smith (age 30) President $7,750
Trustee* ObjectTiger Ltd.
867 Thorntree Court Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel of
Seligman & Associates and
Director of Amelia Earhart
Capital Management, Inc.,
Southfield, Michigan
Ashby M. Foote III (age 45) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
4266 I-55 North, Suite 102
Jackson, Mississippi 39211
Jasen M. Snelling (age 33 ) President
President CityFund Advisory, Inc; previously,
Regional Opportunity Fund: Registered Representative of
- 10 -
<PAGE>
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 and of Provident
Cincinnati, Ohio 45254 Securities Investment Co.,
Cincinnati, Ohio
Robert B. Thompson (age 50) Chief Executive Officer
President Morehead Capital Advisors LLC,
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 48) 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
Robert G. Dorsey (age 40) President and Treasurer, Countrywide Fund
Vice President Services, Inc.; Vice President-Finance and
312 Walnut Street, 21st Floor Treasurer, Countrywide Financial Services,
Cincinnati, Ohio 45202 Inc.; Treasurer, Countrywide Investments, Inc.;
Vice President, Countrywide Investment Trust,
Countrywide Tax-Free Trust and Countrywide
Strategic Trust, Cincinnati, Ohio
John F. Splain (age 40) Vice President, Secretary and General
Secretary Counsel, Countrywide Fund Services, Inc;
312 Walnut Street, 21st Floor Secretary and General Counsel, Countrywide
Cincinnati, Ohio 45202 Financial Services, Inc. and Countrywide
Investments, Inc.; Secretary, Countrywide
Investment Trust, Countrywide Tax-Free
Trust and Countrywide Stragetic Trust
Cincinnati, Ohio
Mark J. Seger (age 35) Vice President, Countrywide Fund Services, Inc.;
Treasurer Treasurer, Countrywide Investment Trust,
312 Walnut Street, 21st Floor Countrywide Tax-Free Trust and Countrywide
Cincinnati, Ohio 45202 Strategic Trust, Cincinnati, Ohio
- -------------------------------------
</TABLE>
* Indicates that Trustee is an "interested person" for purposes of the 1940 Act.
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. All Trustees are reimbursed for any
out-of-pocket
- 11 -
<PAGE>
expenses incurred in connection with their attendance at Board meetings.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 13, 1997, 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 18.0% of the then outstanding shares of the
Fund; Metro United Gas Service, One Towne Square Suite 1913, Southfield,
Michigan 48076, owned of record 14.3% of the then outstanding shares of
the Fund; and Amelia Earhart Capital Management, Inc., One Towne Square, Suite
1913, Southfield, Michigan 48076, owned of record 15.9% of the then outstanding
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 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. For the fiscal year ended February 28, 1997, the Advisor
voluntarily waived its entire advisory fee of $20,680 and reimbursed the Fund
$57,463 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 $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.
The Advisor is controlled by Sandra J. Seligman, Jill H. Travis and Scott J.
Seligman.
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
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<PAGE>
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
Countrywide Fund Services, Inc. (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 $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
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<PAGE>
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, provided,
however, that the minimum fee is $1,000 per month.
For the fiscal year ended February 28, 1997, the Administrator received from
the Fund transfer agent fees of $7,500, accounting and pricing fees of $15,000
and administrative fees of $7,500. Prior to June 1, 1996 the administrator to
the Fund was The Nottingham Company, Rocky Mount, North Carolina. For the
fiscal years ended February 28, 1997 and February 29, 1996, The Nottingham
Company received from the Fund fees of $9,000 and $36,000, respectively.
DISTRIBUTOR
Alpha-Omega Capital Corp. (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 April 21, 1997, Countrywide
Investments, Inc. (formerly Midwest Group Financial Services, Inc.) served as
the distributor for the Fund. For the fiscal year ended February 28, 1997,
Countrywide Investments, Inc. earned $644 in underwriting and broker
commissions. 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. earned $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 Fund.
- 14 -
<PAGE>
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 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
- 15 -
<PAGE>
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.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order
- 16 -
<PAGE>
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 28, 1997, February 29, 1996 and February 28,
1995, the total amount of brokerage commissions paid by the Fund were $1,639,
$20,151 and $5,144, respectively. The decrease in brokerage commissions during
the fiscal year ended February 29, 1997 is due to a lower portfolio turnover
rate.
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 B shares (the "Class B 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,
- 17 -
<PAGE>
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 may 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.
During the fiscal year ended February 28, 1997, Class A shares incurred $1,579
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
- 18 -
<PAGE>
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.
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
- 19 -
<PAGE>
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 Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Payments 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
1-800-326-6580, 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
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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 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 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.
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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 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 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,
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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 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
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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
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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 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
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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 four series: The CarolinasFund managed by Morehead Capital Advisors
LLC of Charlotte, North Carolina; 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 each series of the Trust.
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
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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.
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
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distributions and the deduction of the current maximum sales load from the
initial $1,000 payment. The average annual total returns for Class A
shares for the one year period ended February 28, 1997 and for the period since
inception (March 5, 1993) to February 28, 1997 are 10.33% and 18.41%,
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 (computed without the
applicable sales load) for the period since inception (March 5, 1993) to
February 28, 1997 is 105.85%. The average annual Nonstandardized
Returns of Class A shares (computed without the applicable sales load)
for the one year period and the three year period ended February 28, 1997
and for the period since inception (March 5, 1993) to February 28, 1997 are
15.53%, 18.28% and 19.78%, 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
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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.
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
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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.
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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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<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.
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<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.
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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
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<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 28,
1997, together with the report of the independent accountants thereon, are
included on the following pages.
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<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
Annual Report
February 28, 1997
Investment Adviser Administrator
Amelia Earhart Capital Management, Inc. Countrywide Fund Services, Inc.
One Towne Square 312 Walnut Street
Suite 1913 P.O. Box 5354
Southfield, MI 48076 Cincinnati, Ohio 45202-5354
1.810.351.4856 1.800.543.8721
Shareholder Services
1.800.580.4820
<PAGE>
Amelia Earhart
Capital Management, Inc.
Dear Shareholder:
The stock market performed above our expectations in 1996, providing investors
with another year of superior gains. Strength was in large capitalization
stocks with sector rotation from financial to technology to consumer
non-durable stocks. The technology sector, which led the market upward in the
first half of 1996, led the market downward in July. Volatility in the
technology sector should be expected, however the technology sector will again
resume market leadership. Technology is growing at an exponential rate and the
world is in the midst of a technological revolution comparable to the
industrial revolution of the 19th and early 20th centuries. More than 50% of
capital spending in the U.S. is technology related.
The Amelia Earhart: Eagle Equity Fund returned 15.53% to shareholders for the
fiscal year March 1, 1996 to February 28, 1997. The Fund's comparative indices,
the Pacific Stock Exchange Technology Index (PSE Tech Index) and the Dow
Jones Industrial Average (DJIA), rose 21.13% and 28.17%, respectively, for
the same time period. Fiscal year performance is influenced by short term
market fluctuations, quarterly stock price fluctuations and the addition or
deletion of securities from the portfolio. Investors should look at annualized
rate of return since inception when evaluating performance. Morningstar
reports that the Fund's annualized rate of return to shareholders since
inception (3/93) was 19.78% through 2/28/97 vs. 15.34% for the average growth
fund and 18.55% for the S&P 500 for the same period. Net of the maximum 4.50%
sales load, the Fund's average annual return since inception was 18.45%
through 2/28/97.
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 economy in 1997
is stronger than anticipated and additional interest rate hikes by the Federal
Reserve are on the horizon. This could cause lower corporate earnings and
result in smaller gains in stock prices than in the past two years. Investors
can expect continued volatility in the stock market, therefore it is important
to have at least a five year time horizon for equity investments and a well
diversified portfolio.
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
AMELIA EARHART CAPITAL MANAGEMENT, INC.
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ONE TOWNE SQUARE 26100 NORTHWESTERN HIGHWAY SUITE 1913 SOUTHFIELD MICHIGAN 48076
(810) 351-4856 FAX (810) 827-4278
<PAGE>
A Representation of the graphic material contained in the Amelia Earhart: Eagle
Equity Fund Annual Report is set forth below:
Comparison of the Change in Value of a $10,000 Investment in the Amelia
Earhart: Eagle Equity Fund*, Dow Jones Industrial Average Index and the
Pacific Stock Exchange Technology Index
DJIA: (w/ reinvested divds)
QTRLY
DATE RETURN BALANCE
03/05/93 10,000
03/31/93 1.19% 10,119
06/30/93 3.08% 10,431
09/30/93 1.79% 10,618
12/31/93 6.32% 11,289
03/31/94 -2.51% 11,005
06/30/94 0.38% 11,048
09/30/94 6.76% 11,795
12/31/94 0.51% 11,855
03/31/95 9.19% 12,944
06/30/95 10.26% 14,273
09/30/95 5.76% 15,094
12/31/95 7.48% 16,223
03/31/96 9.77% 17,809
06/30/96 1.76% 18,121
09/30/96 4.66% 18,967
12/31/96 10.24% 20,909
02/28/97 7.03% 22,378
Pacific Technology: (w/ reinvested divds)
QTRLY
DATE RETURN BALANCE
03/05/93 10,000
03/31/93 -0.11% 9,989
06/30/93 8.96% 10,884
09/30/93 2.41% 11,146
12/31/93 7.35% 11,965
03/31/94 3.52% 12,386
06/30/94 * -4.66% 11,809
09/30/94 15.04% 13,584
12/31/94 7.45% 14,596
03/31/95 9.68% 16,009
06/30/95 21.85% 19,508
09/30/95 12.27% 21,901
12/31/95 -0.81% 21,723
03/31/96 -0.20% 21,680
06/30/96 3.49% 22,437
09/30/96 6.84% 23,973
12/31/96 9.22% 26,182
02/28/97 5.90% 27,725
EAGLE EQUITY FUND:
QTRLY
DATE RETURN BALANCE
03/05/93 9,550
03/31/93 0.10% 9,560
06/30/93 4.44% 9,984
09/30/93 8.30% 10,813
12/31/93 -0.30% 10,780
03/31/94 7.37% 11,574
06/30/94 -3.13% 11,212
09/30/94 6.36% 11,924
12/31/94 6.43% 12,691
03/31/95 4.61% 13,277
06/30/95 17.37% 15,582
09/30/95 8.54% 16,914
12/31/95 -5.14% 16,044
03/31/96 2.19% 16,396
06/30/96 4.74% 17,172
09/30/96 6.14% 18,227
12/31/96 3.92% 18,941
02/28/97 3.79% 19,658
Past performance is not predictive of future performance.
The Amelia Earhart: Eagle Equity Fund Average Annual Total Returns
1 Year Since Inception*
10.33% 18.45%
*Fund inception was March 1, 1993, and the initial public offering
of shares was March 5, 1993.
<PAGE>
KPMG Peat Marwick LLP
1600 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Dayton, OH
Independent Auditors' Report
----------------------------
The Board of Trustees and Shareholders
The Maplewood 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 Maplewood Investment Trust, as of
February 28, 1997, 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 the financial highlights for each of the four 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 28, 1997 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
Amelia Earhart: Eagle Equity Fund as of February 28, 1997, the results of its
operations for the year then ended, and the changes in its net assets for each
of the two years in the period then ended, and financial highlights for each
of the four years in the period then ended in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Cincinnati, Ohio
March 21, 1997
Member Firm of
Klynveld Peat Marwick Goerdeler
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997
<TABLE>
<C> <C>
ASSETS
Investments in securities, at value (cost $1,379,620) (Note 1) $ 2,118,563
Investments in repurchase agreements (Note 1) 468,000
Cash 367
Receivable for capital shares sold 439
Dividends and interest receivable 1,305
Receivable from Adviser (Note 3) 2,915
Organization expenses, net (Note 1) 7,977
Other assets 1,679
TOTAL ASSETS 2,601,245
---------
LIABILITIES
Other accrued expenses and liabilities 7,613
TOTAL LIABILITIES 7,613
NET ASSETS $ 2,593,632
=========
Net assets consist of:
Capital shares $ 1,919,897
Accumulated net realized losses from security transactions (65,208)
Net unrealized appreciation on investments 738,943
Net assets $ 2,593,632
=========
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 133,287
=======
Net asset value and redemption price per share (Note 1) $ 19.46
========
Maximum offering price per share (Note 1) $ 20.38
=========
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
STATEMENT OF OPERATIONS
For the Year Ended February 28, 1997
<TABLE>
<C> <C>
INVESTMENT INCOME
Dividends $ 8,748
Interest 13,212
TOTAL INVESTMENT INCOME 21,960
------
EXPENSES
Accounting services fees (Note 3) 21,000
Investment advisory fees (Note 3) 20,680
Professional fees 11,608
Registration fees 10,347
Administration fees (Note 3) 10,328
Amortization of organization expenses (Note 1) 8,000
Shareholder services and transfer agent fees (Note 3) 7,672
Trustees' fees and expenses 6,982
Postage and supplies 4,819
Printing of shareholder reports 4,494
Custodian fees 4,223
Insurance expense 3,369
Distribution expenses (Note 3) 1,579
Other expenses 2,070
TOTAL EXPENSES 117,171
Fees waived and expenses reimbursed by the Adviser (Note 3) (78,143)
NET EXPENSES 39,028
------
NET INVESTMENT LOSS (17,068)
------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (65,208)
Net change in unrealized appreciation/depreciation on investments 387,956
--------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 322,748
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 305,680
=======
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended February 28, 1997 and February 29, 1996
<TABLE>
<C> <C> <C>
Year Year
Ended Ended
Feb. 28, 1997 Feb. 29, 1996
FROM OPERATIONS:
Net investment loss $ (17,068) $ (12,319)
Net realized gains (losses) from security transactions (65,208) 76,272
Net change in unrealized appreciation/depreciation
on investments 387,956 258,233
Net increase in net assets from operations 305,680 322,186
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains from security transactions (33,674) (42,598)
FROM CAPITAL SHARE TRANSACTIONS (A):
Proceeds from shares sold 674,650 714,005
Net asset value of shares issued in reinvestment
of distributions to shareholders 33,674 42,528
Payments for shares redeemed (168,432) (74,526)
Net increase in net assets from capital share transactions 539,892 682,007
TOTAL INCREASE IN NET ASSETS 811,898 961,595
NET ASSETS:
Beginning of year 1,781,734 820,139
End of year $ 2,593,632 $ 1,781,734
(A)Summary of capital share activity:
Shares sold 36,481 44,893
Shares issued in reinvestment of distributions to shareholders 1,796 2,641
Shares redeemed (9,228) (4,338)
Net increase in shares outstanding 29,049 43,196
Shares outstanding, beginning of year 104,238 61,042
Shares outstanding, end of year 133,287 104,238
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
<C> <C> <C> <C> <C>
Year Year Year Year
Ended Ended Ended Ended
Feb. 28, 1997 Feb. 29, 1996 Feb. 28, 1995 Feb. 28, 1994
Net asset value at beginning of year $ 17.09 $ 13.44 $ 12.25 $ 10.00
Income from investment operations:
Net investment loss (0.13) (0.12) (0.02) (0.07)
Net realized and unrealized gains
on investments 2.78 4.20 1.21 2.49
Total from investment operations 2.65 4.08 1.19 2.42
Less distributions:
Dividends from net investment income -- -- -- (0.12)
Distributions from net realized gains (0.28) (0.43) -- (0.05)
Total distributions (0.28) (0.43) -- (0.17)
Net asset value at end of year $ 19.46 $ 17.09 $ 13.44 $ 12.25
Total return (A) 15.53% 30.59% 9.66% 24.39%
Net assets at end of year $ 2,593,632 $ 1,781,734 $ 820,139 $ 244,385
Ratio of expenses to average net assets
Before expense reimbursement and waived fees 5.67% 8.53% 21.00% 24.60%
After expense reimbursement and waived fees 1.89% 1.90% 1.86% 1.85%
Ratio of net investment loss to average net assets
Before expense reimbursement and waived fees (4.61)% (7.47)% (19.32)% (23.39)%
After expense reimbursement and waived fees (0.83)% (0.86)% (0.17)% (0.72)%
Portfolio turnover rate 28% 64% 2% 48%
Average commission rate per share (B) $ .0727 -- -- --
(A)The total returns shown do not include the effect of applicable sales loads.
(B)For fiscal years beginning in 1997, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of investment
securities.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
COMMON STOCKS - 81.7%
Computers/Computer Technology Services - 19.6%
1,000 Chips & Technologies, Inc. (a) $ 12,750
1,000 Compaq Computer Corp. (a) 79,250
1,200 Computer Associates International, Inc. 52,200
1,000 Data General Corp. (a) 19,375
1,400 Dell Computer Corp. (a) 99,575
1,000 Gateway 2000, Inc. (a) 58,750
800 Hewlett-Packard Co. 44,800
500 Storage Technology Corp. (a) 20,875
2,800 Sun Microsystems, Inc. (a) 86,450
1,000 3Com Corp. (a) 33,109
507,134
Software & Processing - 16.3%
682 Automatic Data Processing, Inc. 29,070
1,556 BMC Software, Inc. (a) 66,616
2,060 Cisco Systems, Inc. (a) 114,587
500 Coherent, Inc. (a) 23,563
183 Computer Sciences Corp. (a) 12,353
1,236 Microsoft Corp. (a) 120,510
1,461 Oracle Corp. (a) 57,344
424,043
Drugs/Medical Equipment - 9.4%
940 Amgen, Inc. (a) 57,457
1,000 Biogen, Inc. (a) 49,250
500 Centocor, Inc. (a) 18,937
400 Medtronic, Inc. 25,900
1,000 Merck and CO., Inc. 92,000
243,544
Communications - 9.2%
2,304 ADC Telecommunications, Inc. (a) 62,208
500 COMSAT Corp. 13,125
10 Lucent Technologies, Inc. 539
1,000 Newbridge Networks Corp. (a) 31,875
962 Octel Communications Corp. (a) 17,557
2,860 Tellabs, Inc. (a) 114,043
239,347
<PAGE>
Semiconductor & Related - 6.2%
1,002 Intel Corp. $ 142,159
500 Micron Technology, Inc. 18,750
160,909
Industrial Technology, Inc. - 3.0%
852 Perkin-Elmer Corp. 60,492
500 Thermo Instrument Systems, Inc. (a) 17,000
77,492
Chemicals - 2.5%
300 E. I. du Pont de Nemours and Co. 32,175
700 Union Carbide Corp. 33,075
65,250
Industrial - 2.3%
500 AlliedSignal, Inc. 36,125
300 Caterpillar, Inc. 23,512
59,637
Beverages - 1.9%
800 Coca-Cola Co. 48,800
Financial Services - 1.7%
670 American Express Co. 43,801
Household Products (Non-Durable) - 1.4%
300 The Procter & Gamble Co. 36,038
Medical/Biotechnology - 1.3%
800 Millipore Corp. 34,500
Conglomerates - 1.2%
300 General Electric Co. 30,863
Aerospace - 1.2%
300 Boeing Co. 30,525
Retail Stores - 1.0%
500 Sears, Roebuck and Co. 27,125
<PAGE>
Fast Food Restaurants - 1.0%
600 McDonald's Corp. $ 25,950
Consumer Services - 0.8%
927 CUC International, Inc. (a) 22,132
Recreation - 0.8%
236 Eastman Kodak Co. 21,152
Energy - 0.8%
200 Texaco, Inc. 19,775
Cosmetics/Personal Care - 0.1%
115 BEC Group, Inc. (a) 546
Total Common Stocks (Cost $1,379,620) $ 2,118,563
Face
Value Value
REPURCHASE AGREEMENTS (b) - 18.0%
$ 468,000 Fifth Third Bank, 4.80%, dated 2/28/1997,
due 3/3/1997, repurchase proceeds $468,187
(cost $468,000) $ 468,000
Total Investments and Repurchase Agreements
at Value - 99.7% $ 2,586,563
Other Assets in Excess of Liabilities - 0.3% 7,069
Net Assets - 100.0% $ 2,593,632
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by $479,000 par value
FHLMC Pool #G10452, 7.00%, due 2/1/2011.
See accompanying notes to the financial statements.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
The Amelia Earhart: Eagle Equity Fund (the Fund) is a diversified, open-end
series of the Maplewood Investment Trust (the Trust), formerly the Nottingham
Investment Trust, a registered management investment company under the
Investment Company Act of 1940 (the 1940 Act). The Trust was organized as a
Massachusetts business trust on August 12, 1992. The Fund began operations on
March 1, 1993.
The Fund's investment objective 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 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.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded.
Repurchase agreements -- The Fund generally invests its cash reserves by
entering into repurchase agreements with the custodian bank. The repurchase
agreement, which is collateralized by U.S. Government obligations, is valued at
cost which, together with accrued interest, approximates market. At the time the
Fund enters into the repurchase agreement, the seller agrees that the value of
the underlying securities, including accrued interest, will at all times be
equal to or exceed the face amount of the repurchase agreement. In addition, the
Fund actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The maximum offering price per share is equal to
the net asset value per share plus a sales load equal to 4.71% of the net asset
value (or 4.5% of the offering price). The redemption price per share is equal
to the net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid annually to shareholders of the Fund. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations.
Organization expense -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years. 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.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period.
Actual results could differ from those estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from net
investment income or net realized gains, if any, may differ from their ultimate
characterization for federal income tax purposes. On the statement of assets and
liabilities, as a result of permanent book-to-tax differences, the following
reclassification was made: accumulated net investment loss has been decreased by
$17,068, accumulated capital loss has been increased by $77, resulting in a
reclassification adjustment to decrease paid-in capital by $16,991. This
reclassification has no effect on net assets or net asset value per share.
The following information is based upon the federal income tax cost of portfolio
investments of the Fund as of February 28, 1997:
Gross unrealized appreciation..............................$ 783,849
Gross unrealized depreciation...............................( 44,906)
Net unrealized appreciation..................................$ 738,943
==========
As of February 28, 1997, the tax cost basis of investments for the Fund was
$1,379,620 and the Fund had $65,208 of capital loss carryforwards for federal
income tax purposes, none of which expire prior to February 28, 2005. These
capital loss carryforwards may be utilized in future years to offset net
realized capital gains prior to distributing such gains to shareholders.
2. INVESTMENT TRANSACTIONS
During the fiscal year ended February 28, 1997, purchases and proceeds from
sales and maturities of investment securities, other than short-term
investments, amounted to $892,016 and $484,889, respectively.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
3. TRANSACTIONS WITH AFFILIATES
Certain officers of the Trust are also officers of Amelia Earhart Capital
Management, Inc. (the Adviser), Countrywide Fund Services, Inc. (CFS), the
administrator, transfer agent and accounting services agent for the Fund,
or Countrywide Investments, Inc. (Countrywide), the distributor and principal
underwriter for the Fund. Prior to February 28, 1997, CFS and Countrywide
were formerly named MGF Service Corp. and Midwest Group Financial Services,
Inc., respectively.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser under the terms of an
Investment Advisory Agreement. Under the Investment Advisory Agreement, the Fund
pays the Adviser a fee, which is computed and accrued daily and paid monthly at
an annual rate of 1.00% on its average daily net assets. The Adviser currently
intends to waive its advisory fees and reimburse expenses of the Fund to the
extent necessary to limit the total operating expenses of the Fund to 1.90% of
average net assets. Accordingly, for the fiscal year ended February 28, 1997,
the Adviser waived its entire advisory fee and reimbursed the Fund $57,463 for
other operating expenses.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement in effect since June 1, 1996, CFS
supplies non-investment related administrative and compliance services for the
Fund. CFS supervises the preparation of tax returns, reports to shareholders,
reports to and filings with the Securities and Exchange Commission and state
securities commissions, and materials for meetings of the Board of Trustees. For
these services, CFS receives a monthly fee from the Fund at an annual rate of
.15% on its average daily net assets up to $50 million; .125% on the next $50
million of such net assets; and .10% on such net assets in excess of $100
million, subject to a $1,000 minimum monthly fee. However, CFS reduced the
minimum monthly fee to $750 during the first six months of the Agreement. During
the fiscal year ended February 28, 1997, CFS earned $7,500 of fees under the
Agreement.
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
Under the terms of a Transfer Agent and Shareholder Servicing Agreement in
effect since June 1, 1996, CFS maintains the records of each shareholder's
account, answers shareholder's 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.
For these services, CFS receives a monthly fee based on the number of
shareholder accounts in the Fund, subject to a minimum monthly fee of $1,000.
However, CFS reduced the minimum monthly fee to $750 during the first six months
of the agreement. In addition, the Fund pays out-of-pocket expenses, including
but not limited to, postage and supplies. During the fiscal year ended February
28, 1997, CFS earned $7,500 of fees under the Agreement.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement in effect since June 1,
1996, CFS calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these services, CFS receives a
monthly fee of $2,000 from the Fund. However, CFS reduced the monthly fee to
$1,500 during the first six months of the agreement. During the fiscal year
ended February 28, 1997, CFS earned $15,000 of fees under the Agreement.
<PAGE>
AMELIA EARHART: EAGLE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
DISTRIBUTION PLAN AND UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement with the Trust, Countrywide is the
national distributor for the Fund and may sell Fund shares to or through
qualified securities dealers or others. During the fiscal year ended February
28, 1997, Countrywide earned $644 from underwriting and broker commissions on
the sale of Fund shares. The Trust has adopted a Distribution Plan (the Plan)
for the Fund pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that
the Fund may incur certain costs related to the distribution of Fund shares, not
to exceed 0.25% of average daily net assets. For the fiscal year ended February
28, 1997, the Fund incurred $1,579 of such expenses under the Plan.
PRIOR ADMINISTRATION AGREEMENT
Prior to June 1, 1996, The Nottingham Company (TNC) provided the administrative,
transfer agent, shareholder recordkeeping and accounting services referred to
above. As compensation for its administrative services, TNC received a fee at an
annual rate of 0.20% of the Fund's first $50 million of average net assets,
0.175% on the next $50 million of such assets, and 0.15% of such assets over
$100 million. In addition, TNC received a monthly fee of $2,000 for accounting
and recordkeeping services and a monthly fee for shareholder servicing. Under
the contract with TNC, the Fund was subject to a minimum monthly fee for all
services of $3,000. During the three months ended May 31, 1996, TNC received
$9,000 of fees under the contract. Certain Trustees and officers of the Fund
prior to June 1, 1996, were also officers of TNC.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE CAROLINASFUND
July 1, 1997
A Series of
MAPLEWOOD INVESTMENT TRUST, A SERIES COMPANY
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 July 1, 1997 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.
- 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
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<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;
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<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 28, 1997:
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<PAGE>
<TABLE>
<C> <C> <C>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ -------------------- --------------
Jack E. Brinson (age 65) President, Brinson Investment Co. $7,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina;
Tarboro, North Carolina 27886 Trustee, The Nottingham Investment
Trust II and Gardner Lewis Investment
Trust, Raleigh, North Carolina
David S. Brollier (age 54) President, America's Utility Fund, $3,500
Trustee Inc.; previously Director, Vice
1633 Monument Avenue President and Assistant
Richmond, Virginia 23220 Treasurer of Dominion Capital, Inc.
and Assistant Treasurer of Dominion
Resources, Inc., Richmond, Virginia
O. James Peterson III (age 61) Chief Financial Officer $7,750
Trustee Colonial Downs,
6201 North Courthouse Road New Kent, Virginia;
New Kent, Virginia 23124 Trustee, The Nottingham Investment
Trust II, Raleigh, North Carolina;
previously, Chief Financial Officer of
Pimlico Race Course, Laurel, Maryland;
previously Senior Vice President and Chief
Financial Officer of Dominion Resources, Inc.,
Richmond, Virginia
Christopher J. Smith (age 30) President $7,750
Trustee* ObjectTiger Ltd.
867 Thorntree Court Bloomfield Hills, Michigan; previously,
Bloomfield Hills, Michigan 48304 Corporate Counsel of
Seligman & Associates and
Director of Amelia Earhart
Capital Management, Inc.,
Southfield, Michigan
Ashby M. Foote III (age 45) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
4266 I-55 North, Suite 102
Jackson, Mississippi 39211
Jasen M. Snelling (age 33 ) President
President CityFund Advisory, Inc; previously,
Regional Opportunity Fund: Registered Representative of
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 and of Provident
Cincinnati, Ohio 45254 Securities Investment Co.,
Cincinnati, Ohio
- 7 -
<PAGE>
Robert B. Thompson (age 50) Chief Executive Officer
President Morehead Capital Advisors LLC,
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 48) 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
Robert G. Dorsey (age 40) President and Treasurer, Countrywide Fund
Vice President Services, Inc.; Vice President-Finance and
312 Walnut Street, 21st Floor Treasurer, Countrywide Financial Services,
Cincinnati, Ohio 45202 Inc.; Treasurer, Countrywide Investments, Inc.;
Vice President, Countrywide Investment Trust,
Countrywide Tax-Free Trust and Countrywide
Strategic Trust; Cincinnati, Ohio
John F. Splain (age 40) Vice President, Secretary and General
Secretary Counsel, Countrywide Fund Services, Inc;
312 Walnut Street, 21st Floor Secretary and General Counsel, Countrywide
Cincinnati, Ohio 45202 Financial Services, Inc. and Countrywide
Investments, Inc.; Secretary, Countrywide
Investment Trust, Countrywide Tax-Free
Trust and Countrywide Strategic Trust
Cincinnati, Ohio
Mark J. Seger (age 35) Vice President, Countrywide Fund Services, Inc.;
Treasurer Treasurer, Countrywide Investment Trust,
312 Walnut Street, 21st Floor Countrywide Tax-Free Trust and Countrywide
Cincinnati, Ohio 45202 Strategic Trust
Cincinnati, Ohio
- -------------------------------------
* Indicates that Trustee is an "interested person" for purposes of the 1940 Act.
</TABLE>
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. All Trustees are reimbursed for any
out-of-pocket expenses incurred in connection with their attendance at Board
meetings.
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<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of June 13, 1997, 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, Asheville, North Carolina 28803, owned of record 6.8% of the then
outstanding Investor Shares of the Fund; Robert Stowe Jr. Foundation Inc., P.O.
Box 351, Belmont, North Carolina 28012, owned of record 16.2% of the then
outstanding Institutional Shares of the Fund; J.C. Blucher Ehringhaus III IRA
Rollover, 2565 Roswell Avenue, Charlotte, North Carolina 28209, owned of record
14.3% of the then outstanding Institutional Shares of the Fund; Profit Sharing
Plan & Trust of Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers P.A., P.O.
Box 357, Myrtle Beach, South Carolina 29578, owned of record 7.7% of the then
outstanding Institutional Shares of the Fund; Chapin Company 401K Plan, P.O. Box
2568, Myrtle Beach, South Carolina 29578, owned of record 7.7% of the then
outstanding Institutional Shares of the Fund; John O. Fairey, Marie J. Fairey
JTWROS, 5016 Hillside Road, Columbia, South Carolina, owned of record 7.7% of
the then outstanding Institutional Shares of the Fund; The Niles Stevens Trust,
P.O. Box 357, Myrtle Beach, South Carolina 29578, owned of record 7.6% of the
then outstanding Institutional Shares of the Fund; Robert W. Donaldson Jr. IRA
Account, 2531 Forest Drive, Charlotte, North Carolina 28211, owned of record
7.1% of the then outstanding Institutional Shares of the Fund; and Premiere
Homes Inc. PSP, 4603 Western Boulevard, Raleigh, North Carolina 27606, owned of
record 6.1% of the then outstanding Institutional Shares of the Fund.
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. For the fiscal year ended February 28, 1997, the Advisor
waived its entire advisory fee of $27,685 and reimbursed the Fund $58,459 of
expenses in order to voluntarily reduce the operating expenses of the Fund. For
the fiscal year ended February 29, 1996, the Advisor waived its
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<PAGE>
entire advisory fee of $11,386 and reimbursed the Fund $69,248 of expenses in
order to 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 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
Countrywide Fund Services, Inc. (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 $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
- 10 -
<PAGE>
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, provided,
however, that the minimum fee is $1,000 per month.
For the fiscal year ended February 28, 1997, the Administrator received from
the Fund transfer agent fees of $15,000, accounting and pricing fees of $15,000
and administrative fees of $7,500. Prior to June 1, 1996 the administrator to
the Fund was The Nottingham Company, Rocky Mount, North Carolina. For the
fiscal years ended February 28, 1997 and February 29, 1996, The Nottingham
Company received from the Fund fees of $10,552 and $36,000, respectively.
DISTRIBUTOR
Alpha-Omega Capital Corp. (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 April 21, 1997, Countrywide Investments,
Inc. (formerly Midwest Group Financial Services, Inc.) served as the distributor
for the Fund. For the fiscal year ended February 28, 1997, Countrywide
Investments, Inc. earned $5,923 in underwriting and broker commissions. 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. earned $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
- 11 -
<PAGE>
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.
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 years ended February 28, 1997, February 29, 1996 and February
28, 1995, the total amount of brokerage commissions paid by the Fund were
$3,449, $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.
- 14 -
<PAGE>
During the fiscal year ended February 28, 1997, Investor Shares incurred $10,373
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 Executive Manager of the Advisor, may be deemed to
have a financial interest in the operation of the Plan and the Implementation
Agreements.
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.
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
Plan (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.
REDEMPTION IN KIND. The Fund does not intend, under normal
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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 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 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) the Exchange is closed for other than customary weekend and
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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 liabilities of the Trust, which are normally allocated in
proportion to the number of or the relative net assets of all
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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.
Another requirement for qualification as a regulated investment
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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 losses). The Fund intends to make sufficient distributions or
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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 four 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 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 each series of the Trust.
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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 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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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 28, 1997 and the period since inception (January 3, 1995) to February
28, 1997 are 3.65% and 12.77%, respectively. The average annual total returns of
Institutional Shares for the one year period ended February 28, 1997 and the
period since inception (May 22, 1995) to February 28, 1997 are 7.81% and 14.29%,
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 Investor Shares (computed without the
applicable sales load) for the period since inception (January 3, 1995) to
February 28, 1997 is 34.29%. The cumulative total return for
Institutional Shares for the period since inception (May 22, 1995) to
February 28, 1997 is 26.99%. The average annual Nonstandardized Returns of
Investor Shares for the one year period ended February 28, 1997 and for the
period since
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inception (January 3, 1995) to February 28, 1997 are 7.41% and 14.65%,
respectively. The average annual Nonstandardized Returns of Institutional Shares
(computed without the applicable sales load) for the one year period ended
February 28, 1997 and for the period since inception (May 22, 1995) to February
28, 1997 are 7.81% and 14.29%, 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. 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
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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 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
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<PAGE>
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.
ADDITIONAL INFORMATION ON NORTH AND SOUTH CAROLINA
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, 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.
Throughout the 1990's both North and South Carolina have diversified their
employment base through steady growth in services and trade. State unemployment
in 1996 averaged 4%-4.5% in North Carolina and 5.5% in South Carolina, below the
national level. North Carolina's strongest job gains in 1996 were in the
services, retail trade and durable goods manufacturing sectors. Manufacturing
remains the leading economic sector in North Carolina but its non-manufacturing
sector continues to enjoy strong employment growth, particularly in the
construction, financial services and high-technology sectors. South Carolina's
manufacturing sector continues to broaden beyond its traditional textile
orientation. Industrial expansion in nondurable manufacturing has been fueled by
the competitive tax structure, low cost of living and nonunion labor environment
in South Carolina, creating higher skill, higher wage, employment opportunities.
Steady services and trade sector growth, fueled largely by the tourism and
retirement industries, have contributed to South Carolina's diversifying
employment base and improved income levels. (Source: Standard & Poor's.)
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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.
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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 28,
1997, together with the report of the independent accountants thereon, are
included on the following pages.
- 32 -
<PAGE>
The CarolinasFund
Annual Report
February 28, 1997
Investment Adviser Administrator
Morehead Capital Advisors LLC Countrywide Fund Services, Inc.
1712 East Boulevard 312 Walnut Street
Charlotte, NC 28203 P.O. Box 5354
1.800.934.1012 Cincinnati, Ohio 45202-5354
1.800.543.8721
Shareholder Services
1.800.580.4820
<PAGE>
The CarolinasFund Post Office Box 561778
Charlotte, North Carolina
28256-1778
704/344-1012
800/934-1012
Fax 704/455-5642
April 28, 1997
REPORT TO SHAREHOLDERS:
The total return for Investor Class shares of the Fund for the fiscal year
ended February 28, 1997 was 7.41%. The net asset value increased from $12.44
at the beginning of the fiscal year to $13.36 as of February 28, 1997.
The fund continues to gain strength in financial holdings, including
NationsBank, First Union National Corp., HFNC Financial, and United Carolina
Bank. Retailers, including Ruddick and Family Dollar, also contributed
greatly to the performance of the Fund.
Technology issues have lagged the market across the country, and several
companies, such as Glenayre Technologies and Kemet, certainly affected the
performance of the Fund overall.
Our region is still buoyed by a strong economy, and we contine to remain
optomistic about the long term growth of the Fund.
Sincerely,
/s/ Robert B. Thompson
Robert B. Thompson
President
<PAGE>
A representation of the graphic material contained in The CarolinasFund Annual
Report is set forth below:
Comparison of the Change in Value of a $10,000 Investment in The CarolinasFund*
and the S&P 500 Index
S&P 500 INDEX: (w/ reinvested divds)
QTRLY
DATE RETURN BALANCE
01/03/95 10,000
03/31/95 9.74% 10,974
06/30/95 9.55% 12,021
09/30/95 7.95% 12,977
12/31/95 6.02% 13,758
03/31/96 5.37% 14,496
06/30/96 4.49% 15,147
09/30/96 3.09% 15,615
12/31/96 8.34% 16,917
02/28/97 7.08% 18,115
THE CAROLINASFUND: (INVESTOR)
QTRLY
DATE RETURN BALANCE
01/03/95 9,650
03/31/95 5.12% 10,144
06/30/95 5.18% 10,669
09/30/95 10.48% 11,787
12/31/95 -1.17% 11,648
03/31/96 5.24% 12,258
06/30/96 0.96% 12,376
09/30/96 -1.80% 12,153
12/31/96 4.64% 12,717
02/28/97 1.91% 12,959
Past poerformance is not predictive of future performance.
The CarolinasFund
Average Annual Total Returns
1 Year Since Inception*
Investor Class 3.65% 12.80%
Institutional Class 7.81% 14.36%
* The chart above represents performance of Investor Class shares only, which
will vary from the performance of Institutional Class shares based on the
differences in loads and fees paid by shareholders in the different classes.
Fund inception was January 3, 1995, and the initial public offering of
Institutional Class shares commenced on May 22, 1995.
<PAGE>
KPMG Peat Marwick LLP
1600 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Dayton, OH
Independent Auditors' Report
----------------------------
The Board of Trustees and Shareholders
The Maplewood 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 Maplewood Investment Trust, as of February 28, 1997, and the related
statement of operations for the year then ended, and the statements of changes
in net assets for each of the two years in the period then ended, and the
highlights for the years ended February 28, 1997 and February 29, 1996
and the period from January 3, 1995 (commencement of operations) to Feburary
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 28, 1997 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
Carolinas Fund as of February 28, 1997, the results of its operations for the
year then ended, and the changes in its net assets for each of the two years in
the period then ended, and financial highlights for the years ended February
28, 1997 and 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
Cincinnati, Ohio
March 21, 1997
Member Firm of
Klynveld Peat Marwick Goerdeler
<PAGE>
The CarolinasFund
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997
<TABLE>
<C> <C>
ASSETS
Investments in securities, at value (cost $2,842,356) (Note 1) $3,299,831
Investments in repurchase agreements (Note 1) 53,000
Cash 991
Receivable for capital shares sold 106,221
Dividends and interest receivable 5,698
Receivable from Adviser (Note 3) 1,902
Organization expenses, net (Note 1) 26,384
Other assets 1,595
TOTAL ASSETS 3,495,622
=========
LIABILITIES
Payable for securities purchased 41,521
Other accrued expenses and liabilities 12,800
TOTAL LIABILITIES 54,321
NET ASSETS 3,441,301
=========
Net assets consist of:
Capital shares 3,036,958
Accumulated net realized losses from security transactions (53,132)
Net unrealized appreciation on investments 457,475
Net assets 3,441,301
==========
PRICING OF INVESTOR CLASS SHARES
Net assets applicable to Investor Class shares 2,706,214
==========
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 202,553
=======
Net asset value and redemption price per share (Note 1) 13.36
=====
Maximum offering price per share (Note 1) 13.84
=====
PRICING OF INSTITUTIONAL CLASS SHARES
Net assets applicable to Institutional Class shares 735,087
=======
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 54,234
======
Net asset value, offering price and redemption price per share 13.55
(Note 1) =====
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
The CarolinasFund
STATEMENT OF OPERATIONS
For the Year Ended February 28, 1997
<TABLE>
<C> <C>
INVESTMENT INCOME
Dividends $ 53,558
Interest 2,217
TOTAL INVESTMENT INCOME 55,775
------
EXPENSES
Investment advisory fees (Note 3) 27,685
Accounting services fees (Note 3) 23,250
Shareholder services and transfer agent fees (Note 3) 15,274
Professional fees 15,124
Distribution expenses, Investor Class (Note 3) 10,373
Administration fees (Note 3) 9,528
Amortization of organization expenses (Note 1) 9,296
Trustees' fees and expenses 6,982
Custodian fees 6,098
Registration fees 5,692
Postage and supplies 5,628
Printing of shareholder reports 4,910
Insurance expense 4,263
Other expenses 2,034
TOTAL EXPENSES 146,137
Fees waived and expenses reimbursed by the Adviser (Note 3) (86,144)
NET EXPENSES 59,993
NET INVESTMENT LOSS (4,218)
------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (53,045)
Net change in unrealized appreciation/depreciation on investments 256,182
-------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS 203,137
-------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 198,919
=======
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
The CarolinasFund
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended February 28, 1997 and February 29, 1996
<TABLE>
<C> <C> <C>
Year Year
Ended Ended
Feb. 28, 1997 Feb. 29, 1996
FROM OPERATIONS:
Net investment income (loss) $ (4,218) $ 752
Net realized gains (losses) from security transactions (53,045) 3,855
Net change in unrealized appreciation/depreciation
on investments 256,182 190,112
Net increase in net assets from operations 198,919 194,719
------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Investor Class -- (1,987)
From net investment income, Institutional Class -- (1)
From net realized gains - Investor Class (279) (3,336)
From net realized gains - Institutional Class (73) (5)
Decrease in net assets from distributions to shareholders (352) (5,329)
----- -------
FROM CAPITAL SHARES
TRANSACTIONS (A):
Investor Class
Proceeds from shares sold 1,380,508 1,540,284
Net asset value of shares issued in reinvestment
of distributions to shareholders 272 3,765
Payments for shares redeemed (747,596) (106,624)
Net increase in net assets from
from Investor Class share transactions 633,184 1,437,425
------- ---------
Institutional Class
Proceeds from shares sold 709,026 23,186
Net asset value of shares issued in reinvestment
of distributions to shareholders 73 6
Payments for shares redeemed (21,939) --
Net increase in net assets from
from Institutional Class share transactions 687,160 23,192
Net increase from capital share transactions 1,320,344 1,460,617
TOTAL INCREASE IN NET ASSETS 1,518,911 1,650,007
NET ASSETS:
Beginning of year 1,922,390 272,383
End of year $ 3,441,301 $ 1,922,390
========= =========
(A)Summary of capital share activity:
INVESTOR CLASS
Shares sold 107,377 135,220
Shares issued in reinvestment of distributions to shareholders 21 329
Shares redeemed (57,358) (8,872)
Net increase in shares outstanding 50,040 126,677
Shares outstanding, beginning of year 152,513 25,836
Shares outstanding, end of year 202,553 152,513
======= ========
INSTITUTIONAL CLASS
Shares sold 53,938 1,954
Shares issued in reinvestment of distributions to shareholders 5 1
Shares redeemed (1,664) --
Net increase in shares outstanding 52,279 1,955
Shares outstanding, beginning of year 1,955 --
Shares outstanding, end of year 54,234 1,955
======= ======
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
The CarolinasFund-Institutional Class
FINANCIAL HIGHLIGHTS
<TABLE>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
<C> <C> <C>
Year Period
Ended Ended
Feb. 28, 1997 Feb. 29, 1996(A)
Net asset value at beginning of period $ 12.57 $ 10.72
----- -----
Income from investment operations:
Net investment income 0.01 0.02
Net realized and unrealized gains
on investments 0.97 1.88
---- ----
Total from investment operations 0.98 1.90
---- -----
Less distributions:
Dividends from net investment income -- (0.02)
Distributions from net realized gains -- (0.03)
----- ------
Total distributions -- (0.05)
----- -------
Net asset value at end of period $ 13.55 $ 12.57
====== ======
Total return (B) 7.81% 17.68%
======= =======
Net assets at end of period $ 735,087 $ 24,576
======== ========
Ratio of expenses to average net assets
Before expense reimbursement and waived fees 4.85% 8.40%(D)
After expense reimbursement and waived fees 1.73% 1.69%(D)
Ratio of net investment income (loss) to average net assets
Before expense reimbursement and waived fees (2.89)% 6.07)%(D)
After expense reimbursement and waived fees 0.22% 0.64%(D)
Portfolio turnover rate 5% 16%
Average commission rate per share (C) $ 0.0600 --
(A)Represents the period from the commencement of operations (May 22, 1995) through February
29, 1996.
(B)The total returns shown do not include the effect of applicable sales loads.
(C)For fiscal years beginning in 1997, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of investment securities.
(D)Annualized.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
The CarolinasFund-Investor Class
FINANCIAL HIGHLIGHTS
<TABLE>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
<C> <C> <C> <C>
Year Year Period
Ended Ended Ended
Feb. 28, 1997 Feb. 29, 1996 Feb. 28, 1995(A)
Net asset value at beginning of period $ 12.44 $ 10.54 $ 10.00
------ ----- -----
Income from investment operations:
Net investment income (loss) (0.02) 0.01 0.04
Net realized and unrealized gains
on investments 0.94 1.95 0.50
------- ------ -----
Total from investment operations 0.92 1.96 0.54
------- ------- ------
Less distributions:
Dividends from net investment income -- (0.03) --
Distributions from net realized gains -- (0.03) --
-------- -------- ------
Total distributions -- (0.06) --
-------- --------- ------
Net asset value at end of period $ 13.36 $ 12.44 $ 10.54
========= ======== =======
Total return(B) 7.41% 18.59% 5.40%
========= ========= ========
Net assets at end of period $ 2,706,214 $ 1,897,814 $ 272,383
=========== ============= =========
Ratio of expenses to average net assets
Before expense reimbursement and waived fee 5.33% 9.45% 37.10%(D)
After expense reimbursement and waived fee 2.22% 2.17% 2.21%(D)
Ratio of net investment income (loss) to average net assets
Before expense reimbursement and waived fee (3.31)% (7.21)% (32.27)%(D)
After expense reimbursement and waived fee (0.20)% 0.06% 2.62%(D)
Portfolio turnover rate 5% 16% 0%
Average commission rate per share(C) $ 0.0600 -- --
(A)Represents the period from the commencement of operations (January 3, 1995) through February 28, 1995
(B)The total returns shown do not include the effect of applicable sales loads.
(C)For fiscal years beginning in 1997, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of investment securities.
(D)Annualized.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
COMMON STOCKS - 95.9%
FINANCIAL SERVICES - 34.3%
300 Bank of Granite Corp. $ 8,775
1,100 CCB Financial Corp. 75,488
1,800 Centura Banks, Inc. 78,750
900 First Citizens BancShares, Inc. - Class A 69,525
1,700 First Union Corp. 149,175
600 HFNC Financial Corp. 12,750
1,100 Highwoods Properties, Inc. 37,950
1,300 Insignia Financial Group, Inc. - Class A (a) 27,625
900 Integon Corp. 11,587
2,050 Jefferson-Pilot Corp. 120,950
1,400 Liberty Corp. 57,575
2,800 NationsBank Corp. 167,650
3,500 Southern National Corp. 136,063
1,200 Summit Properties, Inc. 24,300
1,550 United Carolina Bancshares 67,618
2,200 Wachovia Corp. 133,925
1,179,706
INDUSTRIAL - 21.5%
3,200 AVX Corp. 70,800
4,500 Burlington Industries, Inc. (a) 57,938
3,100 Collins & Aikman Corp. (a) 24,412
3,000 Coltec Industries, Inc. (a) 54,750
1,000 Guilford Mills, Inc. 28,625
3,200 Martin Marietta Materials, Inc. 84,400
1,800 Nucor Corp. 86,625
1,700 Quintiles Transnational Corp. (a) 111,138
800 Springs Industries, Inc. - Class A (a) 35,300
3,300 Unifi, Inc. (a) 105,187
3,000 United Dominion Industries, Ltd. 80,625
739,800
CONSUMER, CYCLICAL - 11.3%
4,600 Family Dollar Stores, Inc. 108,675
2,800 Lowe's Companies, Inc. 102,200
4,200 Oakwood Homes Corp. 82,950
2,900 Ryan's Family Steak Houses, Inc. (a) 21,388
3,100 Speedway Motorsports, Inc. (a) 72,850
388,063
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
UTILITIES - 9.8%
2,700 Carolina Power & Light Co. $ 100,238
1,900 Duke Power Co. 84,075
1,700 Piedmont Natural Gas Company, Inc. 40,162
1,000 Public Service Co. of North Carolina, Inc. 18,250
3,600 SCANA Corp. 94,050
336,775
TECHNOLOGY - 7.2%
2,425 Glenayre Technologies, Inc. (a) 32,131
2,100 Kemet Corp. (a) 46,725
1,900 Medic Computer Systems, Inc. (a) 68,400
1,100 Pharmaceutical Product Development, Inc. (a) 25,850
1,200 Policy Management Systems Corp. (a) 51,600
1,600 Vanguard Cellular Systems, Inc.- Class A(a) 22,600
247,306
CONSUMER, NON-CYCLICAL - 6.7%
700 Coca-Cola Bottling Co. 30,100
13,800 Food Lion, Inc. - Class A 109,538
1,600 Lance, Inc. 29,600
500 Personnel Group Of America, Inc. (a) 12,812
3,100 Ruddick Corp. 49,600
231,650
BASIC MATERIALS - 5.1%
2,100 Bowater, Inc. 88,988
3,335 Sonoco Products Co. 87,543
176,531
TOTAL COMMON STOCKS (Cost $2,842,356) $ 3,299,831
<PAGE>
The CarolinasFund
PORTFOLIO OF INVESTMENTS
February 28, 1997
Face
Value Value
REPURCHASE AGREEMENTS (b) - 1.5%
$ 53,000 Fifth Third Bank, 4.80%, dated 2/28/1997,
due 3/3/1997, repurchase proceeds $53,021
(cost $53,000) $ 53,000
Total Investments and Repurchase Agreements
at Value - 97.4% $ 3,352,831
Other Assets in excess of Liabilities - 2.6% 88,470
Net Assets - 100.0% $ 3,441,301
(a)Non-income producing securities.
(b)Repurchase agreement is fully collateralized by $55,000 par value, FHLMC Pool
#G10452, 7.00%, due 2/1/2011.
See accompanying notes to the financial statements.
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
1. Significant Accounting Policies
The CarolinasFund (the Fund) is a non-diversified, open-end series of the
Maplewood Investment Trust (the Trust), formerly the Nottingham Investment
Trust, a registered management investment company under the Investment Company
Act of 1940 (the 1940 Act). The Trust was organized as a Massachusetts business
trust on August 12, 1992. The Fund began operations on January 3, 1995.
The Fund's investment objective is to provide long-term capital growth by
investing primarily in common stocks of publicly-traded companies headquartered
in North and South Carolina.
The Fund offers two classes of shares: Investor Class shares (sold subject to a
maximum front-end sales load of 3.50% and a distribution fee of up to 0.50% of
average daily net assets) and Institutional Class shares (offered to
institutional investors at net asset value without a sales charge and not
subject to distribution fees). Each Investor and Institutional share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except that (i) Investor shares bear the expenses of distribution
fees, which is expected to cause Investor shares to have a higher expense ratio
and to pay lower dividends than Institutional shares; and (ii) each class has
exclusive voting rights with respect to matters relating to its own distribution
arrangements.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise, at
the last quoted bid price. Securities traded on a national stock exchange are
valued based upon the closing price on the principal exchange where the security
is traded.
Repurchase agreements -- The Fund generally invests its cash reserves by
entering into repurchase agreements with the custodian bank. The repurchase
agreement, which is collateralized by U.S. Government obligations, is valued at
cost which, together with accrued interest, approximates market. At the time the
Fund enters into the repurchase agreement, the seller agrees that the value of
the underlying securities, including accrued interest, will at all times be
equal to or exceed the face amount of the repurchase agreement. In addition, the
Fund actively monitors and seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each class of shares of the
Fund is calculated daily by dividing the total value of the Fund's assets
attributable to that class, less liabilities attributable to that class, by the
number of shares of that class outstanding. The maximum offering price of
Investor Class shares is equal to net asset value per share plus a sales load
equal to 3.63% of the net asset value (or 3.50% of the offering price). The
offering price of Institutional Class shares is equal to net asset value per
share. The redemption price per share of Investor Class shares and Institutional
Class shares is equal to net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date.
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid annually to shareholders of the Fund. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations.
Organization expense -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years. 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.
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
Allocation between classes -- Investment income earned by the Fund and realized
and unrealized gains and losses on investments are allocated daily to each class
of shares based upon its proportionate share of total net assets of the Fund.
Distribution expenses are charged directly to the class incurring the expense.
Common expenses which are not attributable to a specific class are allocated
daily to each class of shares based upon its proportionate share of total net
assets of the Fund.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from net
investment income or net realized gains, if any, may differ from their ultimate
characterization for federal income tax purposes. On the statement of assets and
liabilities, as a result of permanent book-to-tax differences, the following
reclassification was made: accumulated net investment loss has been decreased by
$4,218, resulting in a reclassification adjustment to decrease paid-in capital
by $4,218. This reclassification has no effect on net assets or net asset value
per share.
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
The following information is based upon the federal income tax cost of portfolio
investments of the Fund as of February 28, 1997:
Gross unrealized appreciation......................... $ 613,242
Gross unrealized depreciation........................... ( 155,767)
Net unrealized appreciation................................$ 457,475
As of February 28, 1997, the tax cost basis of investments for the Fund was
$2,842,356 and the Fund had $53,132 of capital loss carryforwards for federal
income tax purposes, none of which expire prior to February 28, 2005. These
capital loss carryforwards may be utilized in future years to offset net
realized capital gains prior to distributing such gains to shareholders.
2. Investment Transactions
During the fiscal year ended February 28, 1997, purchases and proceeds from
sales and maturities of investment securities, other than short-term
investments, amounted to $1,374,714 and $140,044, respectively.
3. Transactions with Affiliates
Certain officers of the Trust are also officers of Morehead Capital Advisors LLC
(the Adviser), Countrywide Fund Services, Inc. (CFS), the administrator,
transfer agent and accounting services agent for the Fund, or Countrywide
Investments, Inc. (Countrywide), the distributor and principal underwriter for
the Fund. Prior to February 28, 1997, CFS and Countrywide were formerly named
MGF Service Corp. and Midwest Group Financial Services, Inc., respectively.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser under the terms of an
Investment Advisory Agreement. Under the Investment Advisory Agreement, the Fund
pays the Adviser a fee, which is computed and accrued daily and paid monthly at
an annual rate of 1.00% on its average daily net assets. The Adviser currently
intends to waive its advisory fees and reimburse expenses of the Fund to the
extent necessary to limit the total operating expenses of the Fund to 2.25% and
1.75% of average daily net assets for Investor Class shares and Institutional
Class shares, respectively. Accordingly, for the fiscal year ended February 28,
1997, the Adviser waived its entire advisory fee and reimbursed the Fund $58,459
for other operating expenses.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement in effect since June 1, 1996, CFS
supplies non-investment related administrative and compliance services for the
Fund. CFS supervises the preparation of tax returns, reports to shareholders,
reports to and filings with the Securities and Exchange Commission and state
securities commissions, and materials for meetings of the Board of Trustees. For
these services, CFS receives a monthly fee from the Fund at an annual rate of
0.15% on its average daily net assets up to $50 million; 0.125% on the next $50
million of such net assets; and 0.10% on such net assets in excess of $100
million, subject to a $1,000 minimum monthly fee. However, CFS reduced the
minimum monthly fee to $750 during the first six months of the Agreement. During
the fiscal year ended February 28, 1997, CFS earned $7,500 of fees under the
Agreement.
<PAGE>
The CarolinasFund
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
Under the terms of a Transfer Agent and Shareholder Servicing Agreement in
effect since June 1, 1996, CFS 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.
For these services, CFS receives a monthly fee based on the number of
shareholder accounts in the Fund, subject to a $2,000 minimum monthly fee.
However, CFS reduced the minimum monthly fee to $1,500 during the first six
months of the Agreement. In addition, the Fund pays out-of-pocket expenses,
including but not limited to, postage and supplies. During the fiscal year ended
February 28, 1997, CFS earned $15,000 of fees under the Agreement.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement in effect since June 1,
1996, CFS calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these services, CFS receives a
monthly fee of $2,000 from the Fund. However, CFS reduced the monthly fee to
$1,500 during the first six months of the Agreement. During the fiscal year
ended February 28, 1997, CFS earned $15,000 of fees under the Agreement.
DISTRIBUTION PLAN AND UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement with the Trust, Countrywide is the
national distributor for the Fund and may sell Fund shares to or through
qualified securities dealers or others. During the fiscal year ended February
28, 1997, Countrywide earned $5,923 from underwriting and broker commissions on
the sale of Fund shares. The Trust has adopted a Distribution Plan (the Plan)
with respect to Investor Class shares pursuant to Rule 12b-1 under the 1940 Act.
The Plan provides that the Fund may incur certain costs related to the
distribution of Investor Class shares, not to exceed 0.50% of average daily net
assets applicable to Investor Class shares. For the fiscal year ended February
28, 1997, Investor Class shares incurred $10,373 of such expenses under the
Plan.
PRIOR ADMINISTRATION AGREEMENT
Prior to June 1, 1996, The Nottingham Company (TNC) provided the administrative,
transfer agent, shareholder recordkeeping and accounting services referred to
above. As compensation for its administrative services, TNC received a fee at an
annual rate of 0.20% of the Fund's first $50 million of average net assets,
0.175% on the next $50 million of such assets, and 0.15% of such assets over
$100 million. In addition, TNC received a monthly fee of $2,750 for accounting
and recordkeeping services and a monthly fee for shareholder servicing. Under
the contract with TNC, the Fund was subject to a minimum monthly fee for all
services of $3,000. During the three months ended May 31, 1996, TNC received
$10,551 of fees under the contract. Certain Trustees and officers of the Fund
prior to June 1, 1996, were also officers of TNC.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MISSISSIPPI OPPORTUNITY FUND
July 1, 1997
A Series of
MAPLEWOOD INVESTMENT TRUST, A SERIES COMPANY
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............................................................12
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.................................................24
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 July 1, 1997 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.
- 5 -
<PAGE>
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;
(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
- 6 -
<PAGE>
bonds, debentures or other debt securities; and (iii) acquire private
issues of debt securities subject to the limitations on investments in
illiquid securities; or
(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
- 7 -
<PAGE>
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 28, 1997:
<TABLE>
<C> <C> <C>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ -------------------- --------------
Jack E. Brinson (age 65) President, Brinson Investment Co. $7,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina;
Tarboro, North Carolina 27886 Trustee, The Nottingham Investment
Trust II and Gardner Lewis Investment
Trust, Raleigh, North Carolina
David S. Brollier (age 54) President, America's Utility Fund, $3,500
Trustee Inc.; previously Director, Vice
1633 Monument Avenue President and Assistant
Richmond, Virginia 23220 Treasurer of Dominion Capital, Inc.
and Assistant Treasurer of Dominion
Resources, Inc., Richmond, Virginia
O. James Peterson III (age 61) Chief Financial Officer $7,750
Trustee Colonial Downs,
6201 North Courthouse Road New Kent, Virginia;
New Kent, Virginia 23124 Trustee, The Nottingham Investment
Trust II, Raleigh, North Carolina;
previously, Chief Financial Officer of
Pimlico Race Course, Laurel, Maryland;
previously, Senior Vice President and Chief
Financial Officer of Dominion Resources, Inc.,
Richmond, Virginia
Christopher J. Smith (age 30) President $7,750
Trustee* ObjectTiger Ltd.
867 Thorntree Court Bloomfield Hills, Michigan; previously
Bloomfield Hills, Michigan 48304 Corporate Counsel of
Seligman & Associates and
Director of Amelia Earhart
Capital Management, Inc.,
Southfield, Michigan
- 8 -
<PAGE>
Ashby M. Foote III (age 45) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
4266 I-55 North, Suite 102
Jackson, Mississippi 39211
Jasen M. Snelling (age 33 ) President
President CityFund Advisory, Inc; previously,
Regional Opportunity Fund: Registered Representative of
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 and of Provident
Cincinnati, Ohio 45254 Securities Investment Co.,
Cincinnati, Ohio
Robert B. Thompson (age 50) Chief Executive Officer
President Morehead Capital Advisors LLC,
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 48) 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
Robert G. Dorsey (age 40) President and Treasurer, Countrywide Fund
Vice President Services, Inc.; Vice President-Finance and
312 Walnut Street, 21st Floor Treasurer, Countrywide Financial Services,
Cincinnati, Ohio 45202 Inc.; Treasurer, Countrywide Investments, Inc.;
Vice President, Countrywide Investment Trust,
Countrywide Tax-Free Trust and Countrywide
Strategic Trust, Cincinnati, Ohio
John F. Splain (age 40) Vice President, Secretary and General
Secretary Counsel, Countrywide Fund Services, Inc;
312 Walnut Street, 21st Floor Secretary and General Counsel, Countrywide
Cincinnati, Ohio 45202 Financial Services, Inc. and Countrywide
Investments, Inc.; Secretary, Countrywide
Investment Trust, Countrywide Tax-Free
Trust and Countrywide Stragetic Trust,
Cincinnati, Ohio
- 9 -
<PAGE>
Mark J. Seger (age 35) Vice President, Countrywide Fund Services, Inc.;
Treasurer Treasurer, Countrywide Investment Trust,
312 Walnut Street, 21st Floor Countrywide Tax-Free Trust and Countrywide
Cincinnati, Ohio 45202 Strategic Trust
Cincinnati, Ohio
- -----------------------------------
</TABLE>
* Indicates that Trustee is an "interested person" for purposes of the 1940 Act.
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. 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 13, 1997, 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 17.1% of the then outstanding Class
A shares of the Fund; Nancy S. Speed, 1220 Luse Road, Benton, Mississippi 39039,
owned of record 7.8% of the then outstanding Class A shares of the Fund; Gus
Primos Family Trust, P.O. Box 22567, Jackson, Mississippi 39225, owned of record
6.9% of the then outstanding Class A shares of the Fund; Capital Investors Inc.,
P.O. Box 1683, Jackson, Mississippi 39215, owned of record 6.9% 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 6.4% 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 36.7% of
the then outstanding Class C shares of the Fund; Raymond James & Associates,
Inc. CDSN William F. Lynch Jr. IRA, 304 Club C.V., Madison, Mississippi 39110,
owned of record 8.5% of the then outstanding Class C shares of the Fund; and
Demco Distributing Co. Inc. Combined Profit Sharing Plan, P.O. Box 189, Shelby,
Mississippi 38774, owned of record 6.8% 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
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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 .875% of the Fund's average
daily net assets. For the fiscal year ended February 28, 1997, the Advisor
waived its entire advisory fee of $20,989 and reimbursed the Fund $55,363 of
expenses in order to voluntarily reduce the operating expenses of the Fund. For
the fiscal period ended February 29, 1996, the Advisor waived its entire
advisory fee of $11,633 and reimbursed 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, 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
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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
Countrywide Fund Services, Inc. (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 $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, provided,
however, that the minimum fee is $1,000 per month.
For the fiscal year ended February 28, 1997, the Administrator received from
the Fund transfer agent fees of $15,000, accounting and pricing fees of $15,000
and administrative fees of $7,500. Prior to June 1, 1996 the administrator
to the Fund was The Nottingham Company, Rocky Mount, North Carolina. For the
fiscal years ended February 28, 1997 and February 29, 1996, The Nottingham
Company received from the Fund fees of $10,321 and $33,000, respectively.
DISTRIBUTOR
Alpha-Omega Capital Corp. (the "Distributor") is the principal underwriter
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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 April 21, 1997, Countrywide Investments, Inc. (formerly Midwest
Group Financial Services, Inc.), served as the distributor for the Fund. For the
fiscal year ended February 28, 1997, Countrywide Investments, Inc. earned
$629 in underwriting and broker commissions. 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. earned
$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 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.
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.
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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 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.
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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 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 years ended February 28, 1997 and February 29, 1996, the total
amount of brokerage commissions paid by the Fund were $2,949 and $7,178,
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")
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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 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.
During the fiscal year ended February 28, 1997, Class A and Class C shares
incurred $8,519 and $6,900, respectively, in distribution costs under the Plans
for payments to broker-dealers and others for the sale or retention of assets.
Ashby Foote III, 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.
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.
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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 timewithout 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 day or the last
business day of the month. The shareholder may change the amount of the
investment or discontinue the plan at
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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 Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Payments 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. 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)
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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 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 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
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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 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
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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.
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
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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 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.
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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 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.
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<PAGE>
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 four 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; and the Fund. The Board of Trustees has authorized
separate classes of shares for each series of the Trust.
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
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<PAGE>
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 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 for the one year period ended
February 28, 1997 and the period since inception (April 4, 1995) to February 28,
1997 are 2.22% and 7.53%, respectively. The average annual total returns of
Class C shares for the one year period ended February 28, 1997 and the period
since inception (April 4, 1995) to February 28, 1997 are 5.37% and 9.02%,
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
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<PAGE>
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 (computed without the
applicable sales load) for the period since inception (April 4, 1995) to
February 28, 1997 is 19.02%. The average annual Nonstandardized Return of Class
A shares (computed without the applicable sales load) for the one year period
ended February 28, 1997 and the period since inception (April 4, 1995) to
February 28, 1997 is 5.92% and 9.56%, 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
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<PAGE>
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 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
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<PAGE>
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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<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
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<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.
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<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,
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<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.
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<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.
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<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 28,
1997, together with the report of the independent accountants thereon, are
included on the following pages.
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<PAGE>
MISSISSIPPI OPPORTUNITY FUND
Annual Report
February 28, 1997
Investment Adviser Administrator
Vector Money Management, Inc. Countrywide Fund Services, Inc.
4266 I-55 North 312 Walnut Street
Suite 102 P.O. Box 5354
Jackson, MI 39211 Cincinnati, Ohio 45202-5354
1.601.981.1773 1.800.543.8721
Shareholder Services
1.800.580.4820
<PAGE>
VECTOR MONEY MANAGEMENT, INC.
<TABLE>
<C> <C>
May 2, 1997
Dear Fellow Shareholders,
As the investment advisor to The Mississippi Opportunity Fund, Vector Money Management is pleased
to provide you with the Fiscal Year 1997 Annual Report.
For the fiscal year, which ended February 28, 1997, the Fund returned performance numbers of 5.92%
for the Class A shares and 5.37% for the Class C shares. This compares with the S&P 500 return of
26.15% and the Russell 2000 return of 12.54%.
The year 1996 proved challenging for the Fund. The year was characterized by a marked divergence
between small capitalization stocks and the larger multinational stocks. Over the last six months of the
Fund's fiscal year, the Dow Jones Industrial Average outperformed the Russell 2000 by 13.8%. That
extraordinary divergence between the large cap and small cap stocks resulted in a tough market
environment for many Mississippi stocks, which have a distinctly small cap orientation. Consequently,
after a strong first 6 months of 1996 in which the Fund was up 13.23% through April - as we reported to
you in last year's Annual Report - the Fund sold off with the rest of the small cap market during the
second half of the year. In addition, specific situations penalized the Fund's performance. We would
like to give our comments on the current status of the Fund's largest holdings:
Currently, the Fund's largest position is Mobile Telecommunications (Mtel). Last year, while the market
was pushing the Dow Jones Industrial Average to new highs, it was very unforgiving to companies who
disappointed Wall Street's expectations. Nowhere was that more evident than with Mtel's poor
execution of an ambitious rollout of nationwide two way messaging services. In our opinion, the 74.8%
decline in Mtel's stock price from it's 1996 peak to it's February 1997 low was grossly overdone and did
not represent the significant steps the company took to improve its operations. The company brought in
an impressive new management team, reorganized its operations and is relaunching an operational two
way product. We feel Mtel is poised to reward patient shareholders, and we added to our position when
the stock reached the distressed levels of $5.60. As the company rolls out its new product lines, Mtel is
currently trading at $9.75.
Another large Fund position is telecommunications leader Worldcom. This company has transformed
itself over the last twelve months, evolving from a long distance telephone provider to - with the
purchase of MFS/UUNet - the leading integrated telecommunications provider in the world, offering the
synergies and efficiencies of long distance, local service and Internet access. The investment
community has been cautious on WorldCom's stock since the merger, choosing to wait for tangible
results. We, however, are firmly convinced that WorldCom will execute its business plan, and look for
performance results in the upcoming twelve months.
Meadowbrook Office Park 4266 I-55N, Suite 102 Jackson, Mississippi 39211 601-981-1773 Fax 601-981-1759
</TABLE>
<PAGE>
<TABLE>
<C> <C>
Two of the Fund's positions - Delta & Pine Land and Mississippi Chemical - are well positioned to take
advantage of the increasing global demand for agricultural products. Delta & Pine Land is the world's
largest provider of cotton seed, and has wholeheartedly pursued the introduction of biotechnology into
agrarian production. Seeing the same market potential which prompted Monsanto to spin off their
mainstay chemicals division to concentrate on agribiotechology, Delta & Pine in conjunction with
Monsanto has introduced cotton and soybean products which feature both insect and herbicide
protection without the need for additional chemical additives. As world populations grow and capitalism
spreads to developing countries, making hardier, more productive plants will be a major strategy in
solving the conflict between expanding consumer demand and limited production acreage. Likewise,
Mississippi Chemical, a leading provider of fertilizers worldwide, stands to benefit from growing need for
agricultural crops. With the purchase of First Mississippi's fertilizer capacity, Mississippi Chemical now
supplies farmers worldwide with all major types of fertilizer, an increasingly needed input as crop
management becomes more advanced. A strong management team and some of the most efficient
production facilities in the world position Mississippi Chemical shareholders to profit from this market.
Finally, in addition to strong individual companies, we feel that the national markets have discounted the
small capitalization stocks to historically disproportionate levels. Many of the stocks in the Fund, like
many small and midcap stocks in general, are trading at substantial discounts to their growth rates.
With the economy continuing to show strength without marked signs of inflation, brightening prospects
of avoiding a government budget impasse, and a strengthening dollar casting a shadow over large
multinational companies, we firmly believe that the value now offered in the well managed small and
midsize firms will soon be realized. We have worked hard to identify quality in the products and
management of Mississippi's businesses, and have invested in those firms in which we have a high
level of confidence in their ability to execute and perform.
We thank you for electing to join us in this investment in Mississippi.
Sincerely,
/s/ Ashby M. Foote
Ashby Foote III
President, Vector Money Management
</TABLE>
<PAGE>
A representation of the graphic material contained in the Mississippi
Opportunity Fund's Annual Report is set forth below:
Comparison of the Change in Value of a $10,000 Investment in the
Mississippi Opportunity Fund*, S&P 500 Index and the Russell 2000 Index
S&P 500 INDEX: (w/ reinvested divds)
QTRLY
DATE RETURN BALANCE
04/04/95 10,000
06/30/95 9.28% 10,928
09/30/95 7.95% 11,796
12/31/95 6.02% 12,506
03/31/96 5.37% 13,177
06/30/96 4.49% 13,769
09/30/96 3.09% 14,195
12/31/96 8.34% 15,378
02/28/97 7.08% 16,466
RUSSELL 2000 INDEX: (w/ reinvested divds)
QTRLY
DATE RETURN BALANCE
04/04/95 10,000
06/30/95 8.75% 10,875
09/30/95 9.81% 11,941
12/31/95 2.20% 12,204
03/31/96 5.09% 12,826
06/30/96 5.14% 13,485
09/30/96 0.34% 13,531
12/31/96 5.12% 14,224
02/28/97 -0.49% 14,154
MISSISSIPPI OPPORTUNITY FUND: CLASS A
QTRLY
DATE RETURN BALANCE
04/04/95 9,650
06/30/95 5.37% 10,168
09/30/95 5.72% 10,750
12/31/95 0.09% 10,760
03/31/96 7.75% 11,594
06/30/96 4.14% 12,074
09/30/96 -2.56% 11,765
12/31/96 -2.71% 11,446
02/28/97 0.34% 11,485
Past performance is not predictive of future performance.
The Mississipppi Opportunity Fund
Average Annual Total Returns
1 Year Since Inception*
Class A 2.22% 7.56%
Class C 5.37% 9.06%
* The chart above represents performance of Class A shares only, which will
vary from the performance of Class C shares based on the differences in loads
and fees paid by shareholders in the different classes. Fund inception was
April 4, 1995.
<PAGE>
KPMG Peat Marwick LLP
1600 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Dayton, OH
Independent Auditors' Report
----------------------------
The Board of Trustees and Shareholders
The Maplewood Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Mississipppi Opportunity Fund
(the "Fund"), a series of the Maplewood Investment Trust, as of
February 28, 1997, and the related statement of operations for the year then
ended, statement of changes in net assets and financial highlights for
the year ended February 28, 1997 and 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 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 28, 1997 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
Mississippi Opportunity Fund as of February 28, 1997, and the results of its
operations for the year then ended, the changes in its net assets and
financial highlights for the year ended February 28, 1997 and for the
period from April 4, 1995 (commencement of operations) to February 29, 1996
in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Cincinnati, Ohio
March 21, 1997
Member Firm of
Klynveld Peat Marwick Goerdeler
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997
<TABLE>
<C> <C>
ASSETS
Investments in securities, at value (cost $2,284,350) (Note 1) $ 2,490,133
Receivable for capital shares sold 347
Dividends and interest receivable 2,622
Organization expenses, net (Note 1) 27,976
Receivable from Adviser (Note 3) 4,474
Other assets 807
TOTAL ASSETS 2,526,359
---------
LIABILITIES
Bank overdraft 4,724
Payable to Administrator (Note 3) 5,000
Other accrued expenses and liabilities 17,647
TOTAL LIABILITIES 27,371
NET ASSETS $ 2,498,988
=========
Net assets consist of:
Capital shares $ 2,279,147
Accumulated net realized gains from security transactions 14,058
Net unrealized appreciation on investments 205,783
Net assets $ 2,498,988
=========
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares $ 1,813,797
=========
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 153,986
=======
Net asset value and redemption price per share (Note 1) $ 11.78
=======
Maximum offering price per share (Note 1) $ 12.21
=======
PRICING OF CLASS C SHARES
Net assets applicable to Class C shares $ 685,191
========
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 58,703
======
Net asset value, offering price and redemption price per share (Note 1) $ 11.67
=======
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF OPERATIONS
For the Year Ended February 28, 1997
<TABLE>
<C> <C>
INVESTMENT INCOME
Dividends $ 29,138
------
EXPENSES
Accounting services fees (Note 3) 23,250
Investment advisory fees (Note 3) 20,989
Distribution expenses, Class A (Note 3) 8,519
Distribution expenses, Class C (Note 3) 6,900
Shareholder services and transfer agent fees (Note 3) 15,295
Professional fees 12,153
Administration fees (Note 3) 9,276
Amortization of organization expenses (Note 1) 9,141
Trustees' fees and expenses 6,982
Postage and supplies 4,958
Printing of shareholder reports 4,037
Insurance expense 3,779
Registration fees 3,698
Other expenses 1,658
TOTAL EXPENSES 130,635
Fees waived and expenses reimbursed by the Adviser (Note 3) (76,352)
NET EXPENSES 54,283
NET INVESTMENT LOSS (25,145)
-------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 39,221
Net change in unrealized appreciation/depreciation on investments 81,579
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 120,800
-------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 95,655
=======
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Periods Ended February 28, 1997 and February 29, 1996
<TABLE>
<C> <C> <C>
Year Period
Ended Ended
Feb. 28, 1997 Feb. 29, 1996(B)
FROM OPERATIONS:
Net investment loss (25,145) (6,517)
Net realized gains from security transactions 39,221 30,359
Net change in unrealized appreciation/depreciation
on investments 81,579 124,204
Net increase in net assets from operations 95,655 148,046
------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains, Class A (14,597) (1,707)
From net realized gains, Class C (7,156) (400)
Decrease in net assets from distributions to shareholders (21,753) (2,107)
-------- -------
FROM CAPITAL SHARES
TRANSACTIONS (A):
CLASS A
Proceeds from shares sold 386,710 1,369,689
Net asset value of shares issued in reinvestment
of distributions to shareholders 14,346 1,707
Payments for shares redeemed (90,783) (33,640)
Net increase in net assets from
Class A share transactions 310,273 1,337,756
------- ----------
CLASS C
Proceeds from shares sold 672,365 490,650
Net asset value of shares issued in reinvestment
of distributions to shareholders 6,416 400
Payments for shares redeemed (526,585) (12,128)
Net increase in net assets from
Class C share transactions 152,196 478,922
Net increase in net assets from capital share transactions 462,469 1,816,678
TOTAL INCREASE IN NET ASSETS 536,371 1,962,617
NET ASSETS:
Beginning of period 1,962,617 --
End of period 2,498,988 1,962,617
========= ==========
(A)Summary of capital share activity:
Class A
Shares sold 31,318 132,050
Shares issued in reinvestment of distributions to
shareholders 1,224 162
Shares redeemed (7,687) (3,081)
Net increase in shares outstanding 24,855 129,131
Shares outstanding, beginning of period 129,131 --
Shares outstanding, end of period 153,986 129,131
======== ========
Class C
Shares sold 55,923 47,103
Shares issued in reinvestment of distributions to
shareholders 552 38
Shares redeemed (43,811) (1,102)
Net increase in shares outstanding 12,664 46,039
Shares outstanding, beginning of period 46,039 --
Shares outstanding, end of period 58,703 46,039
======= ======
(B) Represents the period from the commencement of operations
(April 4, 1995) through February 29, 1996.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
<C> <C> <C> <C> <C>
Class A Class C
Year Period Year Period
Ended Ended Ended Ended
Feb. 28, 1997 Feb. 29, 1996(A) Feb. 28, 1997 Feb. 29, 1996(A)
Net asset value at beginning of period $11.22 $ 10.00 $11.17 $10.00
------ ------- ------ ------
Income from investment operations:
Net investment loss (0.10) (0.03) (0.16) (0.05)
Net realized and unrealized gains
on investments 0.76 1.27 0.76 1.24
----- ---- ---- ----
Total from investment operations 0.66 1.24 0.60 1.19
----- ----- ----- -----
Less distributions from net realized gains (0.10) (0.02) (0.10) (0.02)
------ ------ ------ ------
Net asset value at end of period $ 11.78 $ 11.22 $ 11.67 $ 11.17
===== ===== ====== ======
Total return(B) 5.92% 12.41% 5.37% 11.86%
====== ====== ======= =======
Net assets at end of period 1,813,797 $ 1,448,527 $ 685,191 $ 514,090
========== ========== ======== ========
Ratio of expenses to average net assets
Before expense reimbursement and waived fees 5.29% 6.90%(D) 5.79% 7.40%(D)
After expense reimbursement and waived fees 2.11% 2.12%(D) 2.61% 2.49%(D)
Ratio of net investment loss to average net assets
Before expense reimbursement and waived fees (4.08)% (5.20)%(D) (4.58)% (5.60)% (D)
After expense reimbursement and waived fees (0.89)% (0.42)%(D) (1.40)% (0.69)% (D)
Portfolio turnover rate 15% 7% 15% 7%
Average commission rate per share (C) 0.0877 -- $ 0.0877 --
(A)Represents the period from the commencement of operations (April 4, 1995) through February 29, 1996.
(B)The total returns shown do not include the effect of applicable sales loads.
(C)For fiscal years beginning in 1997, the Fund is required to disclose its average commission rate paid per share for purchases
and sales of invesment securities.
(D)Annualized.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
COMMON STOCKS - 98.5%
Consumer, Cyclical - 16.5%
10,500 Belmont Homes, Inc. (a) $ 89,250
2,000 Boyd Gaming Corp. (a) 11,500
1,000 Chromcraft Revington, Inc. (a) 31,000
1,000 Cooper Tire and Rubber Company 19,875
8,000 Fred's, Inc. 71,000
1,000 Hancock Fabrics, Inc. 12,625
3,000 National Picture & Frame Co. (a) 29,437
2,000 Proffitt's, Inc. (a) 64,750
1,000 River Oaks Furniture, Inc. (a) 2,750
2,000 Stein Mart, Inc. (a) 47,500
1,000 Sunbeam Corp., Inc. 27,375
2,200 Wireless One, Inc. (a) 5,775
412,837
Basic Materials - 15.6%
1,500 Birmingham Steel Corp. 27,188
6,000 ChemFirst, Inc. (a) 136,500
15,000 Exsorbet Industries, Inc. (a) 27,187
250 Georgia Pacific Corp. 19,500
800 International Paper Co. 33,400
6,004 Mississippi Chemical Corp. 147,098
390,873
Financial Services - 16.5%
1,400 BancorpSouth, Inc. 40,250
1,500 Community Federal Bancorp, Inc. 29,812
1,000 Deposit Guaranty Corp. 30,750
1,000 Eastgroup Properties 28,500
1,150 Hancock Holding Co. 48,444
3,000 Magna Bancorp, Inc. 56,250
13,000 MS Financial, Inc. (a) 21,125
2,250 Parkway Properties, Inc. 57,938
2,000 Trustmark Corp. 53,250
1,000 Union Planters Corp. 44,750
411,069
Industrial - 14.9%
700 Cooper Industries, Inc. 30,975
4,500 Delta & Pine Land Co. 167,063
2,500 Kirby Corp. (a) 46,250
4,500 KLLM Transport Services, Inc. (a) 54,000
1,000 MagneTek, Inc. (a) 16,625
600 Standex International Corp. 16,950
1,250 Trinity Industries, Inc. 40,312
372,175
<PAGE>
Shares Value
Consumer, Non-Cyclical - 13.0%
500 Baxter International Inc. 23,000
7,500 Cal-Maine Foods, Inc. (a) 59,063
4,500 Gulf South Medical Supply, Inc. (a) 95,062
1,650 Isolyser Company, Inc. (a) 9,900
500 National Presto Industries, Inc. 18,813
1,000 PhyCor, Inc. (a) 30,375
2,000 Sanderson Farms. Inc. 33,750
1,400 Sara Lee Corp. 54,250
324,213
Technology - 8.7%
20,000 Mobile Telecommunication Technologies Corp. (a) 155,000
200 Netscape Comunications Corp. (a) 5,825
750 Nichols Research Corp. (a) 18,938
500 Texas Instruments, Inc. 38,562
218,325
Utilities - 8.0%
1,000 InterCel, Inc. (a) 11,500
7,050 WorldCom, Inc. (a) 187,706
199,206
Energy - 5.3%
9,000 Callon Petroleum Co. (a) 133,312
Total Common Stocks (Cost $2,256,227) 2,462,010
Money Market Funds - 1.1%
28,123 Performance Trust Money Market Fund 28,123
(cost $28,123)
Total Investments at Value - 99.6% 2,490,133
(cost $2,284,350)
Other Assets in Excess of Liabilities - .4% 8,855
Net Assets - 100.0% 2,498,988
(a)Non-income producing securities.
See accompanying notes to the financial statements.
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
1. Significant Accounting Policies
The Mississippi Opportunity Fund is a non-diversified, open-end series of the
Maplewood Investment Trust (the Trust), formerly the Nottingham Investment
Trust, a registered management investment company under the Investment Company
Act of 1940 (the 1940 Act). The Trust was organized as a Massachusetts business
trust on August 12, 1992. The Fund began operations on April 4, 1995.
The Fund's investment objective 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.
The Fund offers two classes of shares: Class A shares (sold subject to a
maximum front-end sales load of 3.50% and a distribution fee of up to 0.50% of
average daily net assets) and Class C shares (subject to a distribution fee
of up to 1% of average daily net assets). Each Class A share and Class C share
of the Fund represents identical interests in the Fund's investment portfolio
and has the same rights, except that (i) Class C shares bear the expenses
of higher distribution fees, which is expected to cause Class C shares to have
a higher expense ratio and to pay lower dividends than Class A shares; and
(ii) each class has exclusive voting rights with respect to matters relating
to its own distribution arrangements.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available, otherwise,
at the last quoted bid price. Securities traded on a national stock
exchange are valued based upon the closing price on the principal
exchange where the security is traded.
Share valuation -- The net asset value per share of each class of shares of the
Fund is calculated daily by dividing the total value of the Fund's assets
attributable to that class, less liabilities attributable to that class,
by the number of shares of that class outstanding. The maximum offering price
of Class A shares is equal to net asset value per share plus a sales load equal
to 3.63% of the net asset value (or 3.50% of the offering price). The offering
price of Class C shares is equal to the net asset value per share. The
redemption price per share of Class A shares and Class C shares is equal to the
net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid annually to shareholders of the Fund. Net
realized short-term capital gains, if any, may be distributed throughout the
year and net realized long-term capital gains, if any, are distributed at least
once each year. Income distributions and capital gain distributions are
determined in accordance with income tax regulations.
Organization expenses -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years. 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.
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
Allocation between classes -- Investment income earned by the Fund and realized
and unrealized gains and losses on investments are allocated daily to each class
of shares based upon its proportionate share of total net assets of
the Fund. Distribution expenses are charged directly to the class incurring the
expense. Common expenses which are not attributable to a specific class are
allocated daily to each class of shares based upon its proportionate share
of total net assets of the Fund.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period.
Actual results could differ from those estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from
net investment income or net realized gains, if any, may differ from their
ultimate characterization for federal income tax purposes. On the statement of
assets and liabilities, as a result of permanent book-to-tax differences,
the following reclassification was made: accumulated net investment loss has
been decreased by $25,145, resulting in a reclassification adjustment to
decrease accumulated capital gains by $25,145. This reclassification has no
effect on net assets or net asset value per share.
The following information is based upon the federal income tax cost of portfolio
investments of the Fund as of February 28, 1997:
Gross unrealized appreciation...............................$ 566,169
Gross unrealized depreciation................................( 360,386)
Net unrealized appreciation.................................$ 205,783
As of February 28, 1997, the tax cost basis of investments for the Fund
was $2,284,350.
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
2. Investment Transactions
During the fiscal year ended February 28, 1997, purchases and proceeds from
sales and maturities of investment securities, other than short-term
investments, amounted to $857,639 and $332,431, respectively.
3. Transactions with Affiliates
Certain officers of the Trust are also officers of Vector Money Management, Inc.
(the Adviser), Countrywide Fund Services, Inc. (CFS), the administrator,
transfer agent and accounting services agent for the Fund, or Countrywide
Investments, Inc. (Countrywide), the distributor and principal underwriter for
the Fund. Prior to February 28, 1997, CFS and Countrywide were formerly named
MGF Service Corp. and Midwest Group Financial Services, Inc., respectively.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser under the terms of an
Investment Advisory Agreement. Under the Investment Advisory Agreement, the
Fund pays the Adviser a fee, which is computed and accrued daily and
paid monthly at an annual rate of 0.875% on its average daily net assets.
The Adviser currently intends to waive its advisory fees and reimburse expenses
of the Fund to the extent necessary to limit the total operating expenses
of the Fund to 2.125% and 2.625% of average daily net assets for Class A and
Class C shares, respectively. Accordingly, for the fiscal year ended February
28, 1997, the Adviser waived its entire advisory fee and reimbursed
the Fund $55,363 for other operating expenses.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement in effect since June 1, 1996,
CFS supplies non-investment related administrative and compliance services for
the Fund. CFS supervises the preparation of tax returns, reports to
shareholders, reports to and filings with the Securities and Exchange
Commission and state securities commissions, and materials for meetings of the
Board of Trustees. For these services, CFS receives a monthly fee from the Fund
at an annual rate of 0.15% on its average daily net assets up to $50 million;
0.125% on the next $50 million of such net assets; and 0.10% on such net assets
in excess of $100 million, subject to a $1,000 minimum monthly fee.
However, CFS reduced the minimum monthly fee to $750 during the first six
months of the Agreement. During the fiscal year ended February 28, 1997, CFS
earned $7,500 of fees under the Agreement.
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
Under the terms of a Transfer Agent and Shareholder Servicing Agreement in
effect since June 1, 1996, CFS 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.
For these services, CFS receives a monthly fee based on the number
of shareholder accounts in the Fund, subject to a $2,000 minimum monthly fee.
However, CFS reduced the minimum monthly fee to $1,500 during the first six
months of the Agreement. In addition, the Fund pays out-of-pocket expenses,
including but not limited to, postage and supplies. For the fiscal year
ended February 28, 1997, CFS earned $15,000 of fees under the Agreement.
<PAGE>
MISSISSIPPI OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement in effect since June 1,
1996, CFS calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these services, CFS receives
a monthly fee of $2,000 from the Fund. However, CFS reduced the monthly fee to
$1,500 during the first six months of the Agreement. During the fiscal year
ended February 28, 1997, CFS earned $15,000 of fees under the Agreement.
DISTRIBUTION PLAN AND UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement with the Trust, Countrywide is the
national distributor for the Fund and may sell Fund shares to or through
qualified securities dealers or others. During the fiscal year ended
February 28, 1997, Countrywide earned $644 from underwriting and broker
commissions on the sale of Fund shares. The Trust has adopted a Distribution
Plan (the Plan) for the Fund pursuant to Rule 12b-1 under the 1940 Act. The
Plan provides that the Fund may incur certain costs related to the distribution
of Fund shares, not to exceed 0.50% and 1.00% of average daily net assets for
Class A shares and Class C shares, respectively. For the fiscal year ended
February 28, 1997, the Fund incurred $8,519 and $6,900 of distribution expenses
on Class A shares and Class C shares, respectively, under the Plan.
PRIOR ADMINISTRATION AGREEMENT
Prior to June 1, 1996, The Nottingham Company (TNC) provided the administrative,
transfer agent, shareholder recordkeeping and accounting services referred to
above. As compensation for its administrative services, TNC received a fee at
an annual rate of 0.20% of the Fund's first $50 million of average net assets,
0.175% on the next $50 million of such assets, and 0.15% of such assets over
$100 million. In addition, TNC received a monthly fee of $2,750 for accounting
and recordkeeping services and a monthly fee for shareholder servicing. Under
the contract with TNC, the Fund was subject to a minimum monthly fee for all
services of $3,000. During the three months ended May 31, 1997, TNC received
$10,320 of fees under the contract. Certain Trustees and officers of
the Fund prior to June 1, 1996, were also officers of TNC.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
REGIONAL OPPORTUNITY FUND:
OHIO INDIANA KENTUCKY
July 1, 1997
A Series of
MAPLEWOOD INVESTMENT TRUST, A SERIES COMPANY
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone - Nationwide, 1-888-289-6465
In Cincinnati, 629-2273
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................................16
SPECIAL SHAREHOLDER SERVICES.......................................18
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.....................20
HOW SHARE PRICE IS DETERMINED......................................21
ADDITIONAL TAX INFORMATION.........................................22
DESCRIPTION OF THE TRUST...........................................24
CALCULATION OF PERFORMANCE DATA....................................26
APPENDIX A - DESCRIPTION OF RATINGS................................30
FINANCIAL STATEMENTS AND REPORTS...................................35
This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Prospectus dated July 1, 1997 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
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<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
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<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:
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<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.
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<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 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
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);
(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. 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.
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<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 28, 1997:
<TABLE>
<C> <C> <C>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ -------------------- --------------
Jack E. Brinson (age 65) President, Brinson Investment Co. $7,000
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina;
Tarboro, North Carolina 27886 Trustee, The Nottingham Investment
Trust II and Gardner Lewis Investment
Trust, Raleigh, North Carolina
David S. Brollier (age 54) President, America's Utility Fund, $3,500
Trustee Inc.; previously Director, Vice
1633 Monument Avenue President and Assistant
Richmond, Virginia 23220 Treasurer of Dominion Capital, Inc.;
and Assistant Treasurer of Dominion
Resources, Inc., Richmond, Virginia
O. James Peterson III (age 61) Chief Financial Officer $7,750
Trustee Colonial Downs,
6201 North Courthouse Road New Kent, Virginia;
New Kent, Virginia 23124 Trustee, The Nottingham Investment
Trust II, Raleigh, North Carolina;
previously, Chief Financial Officer of
Pimlico Race Course, Laurel, Maryland;
previously, Senior Vice Presidentand Chief
Financial Officer of Dominion Resources, Inc.,
Richmond, Virginia
Christopher J. Smith (age 30) President $7,750
Trustee* ObjectTiger Ltd.
867 Thorntree Court Bloomfield Hills, Michigan;
Bloomfield Hills, Michigan 48304 previously Corporate Counsel of
Seligman & Associates and
Director of Amelia Earhart
Capital Management, Inc.,
Southfield, Michigan
Ashby M. Foote III (age 45) President
President Vector Money Management, Inc.
Mississippi Opportunity Fund Jackson, Mississippi
4266 I-55 North, Suite 102
Jackson, Mississippi 39211
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<PAGE>
Jasen M. Snelling (age 33 ) President
President CityFund Advisory, Inc; previously
Regional Opportunity Fund: Registered Representative of
Ohio Indiana Kentucky PNC Securities Corp.
P.O. Box 54944 and of Provident Securities
Cincinnati, Ohio 45254 Investment Co.,
Cincinnati, Ohio
Robert B. Thompson (age 50) Chief Executive Officer
President Morehead Capital Advisors LLC,
The CarolinasFund Charlotte, North Carolina
1712 East Boulevard
Charlotte, North Carolina 28203
Jill H. Travis (age 48) 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
Robert G. Dorsey (age 40) President and Treasurer, Countrywide Fund
Vice President Services, Inc.; Vice President-Finance and
312 Walnut Street, 21st Floor Treasurer, Countrywide Financial Services,
Cincinnati, Ohio 45202 Inc.; Treasurer, Countrywide Investments, Inc.;
Vice President, Countrywide Investment Trust,
Countrywide Tax-Free Trust and Countrywide
Strategic Trust, Cincinnati, Ohio
John F. Splain (age 40) Vice President, Secretary and General
Secretary Counsel, Countrywide Fund Services, Inc;
312 Walnut Street, 21st Floor Secretary and General Counsel, Countrywide
Cincinnati, Ohio 45202 Financial Services, Inc. and Countrywide
Investments, Inc.; Secretary, Countrywide
Investment Trust, Countrywide Tax-Free
Trust and Countrywide Strategic Trust
Cincinnati, Ohio
Mark J. Seger (age 35) Vice President, Countrywide Fund Services, Inc.;
Treasurer Treasurer, Countrywide Investment Trust,
312 Walnut Street, 21st Floor Countrywide Tax-Free Trust and Countrywide
Cincinnati, Ohio 45202 Strategic Trust, Cincinnati, Ohio
- -------------------------------------
* Indicates that Trustee is an "interested person" for purposes of the 1940 Act.
</TABLE>
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<PAGE>
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. 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 13, 1997, 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 32.1% of the then
outstanding Class A shares of the Fund; Dorothy B. Rattermann and Christine L.
Ferris, 722 Miles Lane, Cincinnati, Ohio 45245, owned of record 16.8% of the
then outstanding Class B shares of the Fund; Elaine and Willard Meale, 4750
State Route 133, Williamsburg, Ohio 45176, owned of record 8.5% of the then
outstanding Class B shares of the Fund; Helen G. Jasper and Jean E. Lemon, 2950
W. Park Drive #694, Cincinnati, Ohio 45238, owned of record 8.2% of the then
outstanding Class B shares of the Fund; Leonella Pursell, 3484 Lapland Drive,
Cincinnati, Ohio 45239, owned of record 6.9% of the then outstanding Class B
shares of the Fund; Margie Mills, 4651 Clayton Drive, Cincinnati, Ohio 45244,
owned of record 6.5% of the then outstanding Class B shares of the Fund; and
Mary Buckner, 886 Cincinnati Batavia, Cincinnati, Ohio 45245, owned of record
5.5% of the then outstanding Class B shares of the Fund. Donaldson, Lufkin &
Jenrette Securities Corporation may be deemed to control the Class A shares of
the Fund by virtue of the fact that it owns of record more than 25% of the
outstanding Class A shares.
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.
- 10 -
<PAGE>
Compensation of the Advisor is at the annual rate of 1.25% of the Fund's average
daily net assets. For the fiscal year ended February 28, 1997, the Advisor
voluntarily waived its entire advisory fee of $11,179 and reimbursed the Fund
$73,594 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 $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 is controlled by Jasen M. Snelling and Jerry A. Smith.
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
Countrywide Fund Services, Inc. (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
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<PAGE>
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, provided,
however, that the minimum fee is $1,000 per month.
For the fiscal year ended February 28, 1997, the Administrator received from
the Fund transfer agent fees of $12,750, accounting and pricing fees of $15,000
and administrative fees of $7,500. Prior to June 1, 1996, the administrator to
the Fund was The Nottingham Company, Rocky Mount, North Carolina. For the
fiscal years ended February 28, 1997 and February 29, 1996, The Nottingham
Company received from the Fund fees of $7,450 and $36,000, respectively.
DISTRIBUTOR
Alpha-Omega Capital Corp. (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 April 21, 1997, Countrywide
Investments, Inc. (formerly Midwest Group Financial Services, Inc.) served as
the distributor for the Fund. For the fiscal years ended February 28, 1997,
Countrywide Investments, Inc. earned $3,425 in underwriting and broker
commissions. 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,
- 12 -
<PAGE>
Inc. earned $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 Trustees to perform an independent
audit of the financial statements of the Fund.
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
- 13 -
<PAGE>
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.
Kohn Financial Corporation may be deemed to be an affiliate of the Fund by
virtue of the fact that Jill Travis, the person primarily responsible for
managing the Fund, was a registered representative of Kohn Financial
Corporation. During the fiscal year ended February 28, 1997, the Fund paid Kohn
Financial Corporation $1,539 in brokerage commissions, which represents all of
the total brokerage commissions paid by the Fund for effecting all of the Fund's
portfolio transactions involving the payment of brokerage commissions.
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
- 14 -
<PAGE>
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 28, 1997, February 29, 1996 and February
28, 1995, the total amount of brokerage commissions paid by the Fund were
$1,539, $5,587 and $109, respectively.
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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 B shares (the "Class B 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 may 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
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respect to Class B shares.
During the fiscal year ended February 28, 1997, Class A and Class B shares
incurred $1,131 and $1,335, respectively, in distribution expenses for payments
to broker-dealers and others for the retention of assets.
Jasen M. Snelling and Jerry A. Smith, as controlling shareholders of the
Advisor, may be deemed to have a financial interest in the operation of the
Plans and the Implementation Agreements.
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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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 Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Payments 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.
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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, Nationwide 1-888-289-6465, in Cincinnati 629-2273 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 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 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 transfer of shares upon the occurrence of any of the
foregoing
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<PAGE>
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. Certain expenses attributable to a particular
class of shares
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(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
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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 four 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
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 each series of the Trust.
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
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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.
Prior to June 1, 1996 the Trust was named The Nottingham Investment Trust.
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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 average annual total returns for Class A shares for the one year
period ended February 28, 1997 and for the period since inception (January 3,
1995) to February 28, 1997 are 2.07% and 9.21%, 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 (computed without the
applicable sales load) for the period since inception (January 3, 1995) to
February 28, 1997 is 25.95%. The average annual Nonstandardized Returns of
Class A shares (computed without the applicable sales load) for the one year
period ended February 28, 1997 and for the period since inception
(January 3, 1995) to February 28, 1997 are 6.32% and 11.29%,
respectively. A nonstandardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
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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 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
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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
- 28 -
<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.
- 29 -
<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
- 30 -
<PAGE>
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
- 31 -
<PAGE>
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.
- 32 -
<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,
- 33 -
<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.
- 34 -
<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 28,
1997, together with the report of the independent accountants thereon, are
included on the following pages.
<PAGE>
REGIONAL OPPORTUNITY FUND:
Ohio, Indiana, Kentucky
Annual Report
February 28, 1997
Investment Adviser Administrator
CityFund Advisory, Inc. Countrywide Fund Services, Inc.
P.O. Box 54944 312 Walnut Street
Cincinnati, OH 45254-0944 P.O. Box 5354
1.513.624.5900 Cincinnati, Ohio 45202-5354
1.800.543.8721
Shareholder Services
1.800.580.4820
<PAGE>
Regional
Opportunity
f u n d
- -------------------------------------------------------------------------------
series one: Ohio, Indiana, Kentucky
April 28, 1997
Fellow Shareholder:
The past year has been a very busy and productive time. A lot of changes
occurred during this time. We moved all day to day back office operation of
the Fund to Countywide Fund Services, Inc., a Cincinnati based company. The
name changed from The Greater Cincinnati Fund to the Regional Opportunity Fund:
Ohio, Indiana, Kentucky Series. We felt the change would prevent us from
being confused with the Greater Cincinnati Foundation, one of Cincinnati's
oldest and most respected charitable organizations. The Class B Shares became
available for purchase in July and have already surpassed the Class A shares.
A toll free shareholders and 24-hour account balance system has been added to
better serve shareholder request. Overall we have improved service tremendously
and will continue to attempt to fulfill any shareholder's request for
information.
The Fund's assets have increased just over 51% as more people begin to see the
value of investing close to home. The total return of the Class A shares was
6.32% for the fiscal year ending Feb. 28, 1997. The market overall experienced
a turn around. Sector rotation has occurred with money managers moving to
larger company stocks and cash equivalents while the smaller companies and
technology sectors have had a correction since the beginning of the year.
Our approach to 1997 is to keep cash available to be able to make value
purchases, place an emphasis on earnings as they have become so sensitive to
the industry and continue to be well diversified into different sectors of the
market. We currently invest in 22 different sectors and will continue to keep
the portfolio spread out to reduce undue risk from investing in a single
industry.
I look forward to serving your needs in 1997 and hope that you would feel free
to call me directly should you have any questions at (513) 624-5901.
Sincerely,
/s/ Jasen M. Snelling
Jasen M. Snelling
President
<PAGE>
A representation of the graphic material contained in the Regional Opportunity
Fund: Ohio, Indiana, Kentucky Annual Report is set forth below:
Comparison of the Change in Value of a $10,000 Investment in the Regional
Opportunity Fund: Ohio, Indiana, Kentucky* and the S&P 500 Index
S&P 500 INDEX: (w/ reinvested divds)
QTRLY
DATE RETURN BALANCE
01/03/95 10,000
03/31/95 9.74% 10,974
06/30/95 9.55% 12,021
09/30/95 7.95% 12,977
12/31/95 6.02% 13,758
03/31/96 5.37% 14,496
06/30/96 4.49% 15,147
09/30/96 3.09% 15,615
12/31/96 8.34% 16,917
02/28/97 7.08% 18,115
REGIONAL OPPORTUNITY FUND:
QTRLY
DATE RETURN BALANCE
01/03/95 9,600
03/31/95 2.83% 9,872
06/30/95 5.43% 10,407
09/30/95 3.15% 10,735
12/31/95 5.08% 11,280
03/31/96 4.08% 11,741
06/30/96 3.76% 12,182
09/30/96 0.84% 12,284
12/31/96 -2.52% 11,975
02/28/97 0.98% 12,092
Past performance is not predictive of future performance.
Regional Opportunity Fund: Ohio, Indiana, Kentucky
Average Annual Total Returns
1 Year Since Inception*
Class A 2.07% 9.22%
*The chart above represents performance of Class A shares only, which will
differ from the performance of Class B shares based on differences in loads
and fees paid by shareholders in the different classes. Fund inception was
January 3, 1995, and the initial public offering of Class B shares commenced
on July 24, 1996.
<PAGE>
KPMG Peat Marwick LLP
1600 PNC Center
201 East Fifth Street
Cincinnati, OH 45202
Dayton, OH
Independent Auditors' Report
----------------------------
The Board of Trustees and Shareholders
The Maplewood Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Regional Opportunity Fund: Ohio, Indiana,
Kentucky (the "Fund"), a series of the Maplewood Investment Trust, as of
February 28, 1997, and the related statement of operations for the year then
ended, and the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for the years ended
February 28, 1997 and 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 28, 1997 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
Regional Opportunity Fund: Ohio, Indiana, Kentucky as of February 28, 1997,
the results of its operations for the year then ended, and the changes in its
net assets for each of the two years in the period then ended, and financial
highlights for the years ended February 28, 1997 and 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
Cincinnati, Ohio
March 21, 1997
Member Firm of
Klynveld Peat Marwick Goerdeler
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997
<TABLE>
<C> <C>
ASSETS
Investments in securities, at value (cost $774,032) (Note 1) $ 901,749
Investments in repurchase agreements (Note 1) 213,000
Cash 151
Receivable for capital shares sold 9,367
Dividends and interest receivable 468
Organization expenses, net (Note 1) 27,404
Receivable from Adviser (Note 3) 11,980
Other assets 1,659
TOTAL ASSETS 1,165,778
---------
LIABILITIES
Payable for capital shares redeemed 75
Payable to Administrator (Note 3) 5,000
Other accrued expenses and liabilities 12,520
TOTAL LIABILITIES 17,595
NET ASSETS $ 1,148,183
==========
Net assets consist of:
Capital shares $ 1,071,626
Accumulated net realized losses from security transactions (51,160)
Net unrealized appreciation on investments 127,717
Net assets $ 1,148,183
=========
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares $ 502,116
=======
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 44,111
======
Net asset value and redemption price per share (Note 1) $ 11.38
=====
Maximum offering price per share (Note 1) $ 11.85
=====
PRICING OF CLASS B SHARES
Net assets applicable to Class B shares $ 646,067
=======
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 57,041
======
Net asset value, offering price and redemption price per share (Note 1) $ 11.33
=====
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
STATEMENT OF OPERATIONS
For the Year Ended February 28, 1997
<TABLE>
<C> <C>
INVESTMENT INCOME
Dividends $ 6,168
Interest 8,573
TOTAL INVESTMENT INCOME 14,741
------
EXPENSES
Accounting services fees (Note 3) 21,000
Shareholder services and transfer agent fees (Note 3) 12,979
Professional fees 12,231
Investment advisory fees (Note 3) 11,179
Amortization of organization expenses (Note 1) 9,691
Administration fees (Note 3) 8,721
Trustees' fees and expenses 6,982
Postage and supplies 5,175
Printing of shareholder reports 4,360
Custodian fees 3,471
Registration fees 2,557
Distribution expenses, Class A (Note 3) 1,131
Distribution expenses, Class B (Note 3) 1,335
Other expenses 2,899
TOTAL EXPENSES 103,711
Fees waived and expenses reimbursed by the Adviser (Note 3) (84,773)
NET EXPENSES 18,938
------
NET INVESTMENT LOSS (4,197)
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (31,644)
Net change in unrealized appreciation/depreciation on investments 93,881
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 62,237
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 58,040
======
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended February 28, 1997 and February 29, 1996
<TABLE>
<C> <C> <C>
Year Year
Ended Ended
Feb. 28, 1997 Feb. 29, 1996
FROM OPERATIONS:
Net investment income (loss) $ (4,197) $ 5,233
Net realized gains (losses) from security transactions (31,644) 51,230
Net change in unrealized appreciation/depreciation
on investments 93,881 34,016
Net increase in net assets from operations 58,040 90,479
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A (1,329) (4,068)
From net investment income, Class B -- (1)
From net realized gains, Class A -- (36,825)
From net realized gains, Class B -- (6)
In excess of net realized gains, Class A (28,448) --
In excess of net realized gains, Class B (5,508) --
Decrease in net assets from distributions to shareholders (35,285) (40,900)
FROM CAPITAL SHARES TRANSACTIONS (A):
CLASS A
Proceeds from shares sold 265,034 491,234
Net asset value of shares issued in reinvestment
of distributions to shareholders 29,310 27,909
Payments for shares redeemed (571,153) (42,344)
Net increase (decrease) in net assets from
from Class A share transactions (276,809) 476,799
CLASS B
Proceeds from shares sold 637,320 100
Net asset value of shares issued in reinvestment
of distributions to shareholders 5,508 8
Payments for shares redeemed (75) --
Net increase in net assets from
Class B share transactions 642,753 108
Net increase from capital shares transactions 365,944 476,907
TOTAL INCREASE IN NET ASSETS 388,699 526,486
NET ASSETS:
Beginning of year 759,484 232,998
End of year $ 1,148,183 $ 759,484
(A)Summary of capital share activity:
Class A
Shares sold 22,449 45,877
Shares issued in reinvestment of distributions to shareholder 2,617 2,514
Shares redeemed (49,297) (3,351)
Net increase (decrease) in shares outstanding (24,231) 45,040
Shares outstanding, beginning of period 68,342 23,302
Shares outstanding, end of period 44,111 68,342
Class B
Shares sold 56,543 10
Shares issued in reinvestment of distributions to shareholder 494 1
Shares redeemed (7) --
Net increase in shares outstanding 57,030 11
Shares outstanding, beginning of period 11 --
Shares outstanding, end of period 57,041 11
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
FINANCIAL HIGHLIGHTS
<TABLE>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
<C> <C> <C> <C> <C>
CLASS A CLASS B
Year Year Period Period
Ended Ended Ended Ended
Feb. 28, 1997 Feb. 29, 1996 Feb. 28, 1995(A) Feb. 28, 1997(B)
Net asset value at beginning of period $ 11.11 $ 10.00 $ 10.00 $ 10.46
Income from investment operations:
Net investment income (loss) (0.06) 0.10 0.01 (0.02)
Net realized and unrealized gains (losses)
on investments 0.76 1.74 (0.01) 1.30
Total from investment operations 0.70 1.84 0.00 1.28
Less distributions:
Dividends from net investment income (0.02) (0.09) -- --
Distributions from net realized gains (0.41) (0.64) -- (0.41)
Total distributions (0.43) (0.73) -- (0.41)
Net asset value at end of period $ 11.38 $ 11.11 $ 10.00 $ 11.33
Total return (C) 6.32% 18.41% 0.00% 12.25%
Net assets at end of period $ 502,116 $ 759,366 $ 232,998 $ 646,067
Ratio of expenses to average net assets:
Before expense reimbursement and waived fees 11.50% 18.26% 80.88%(E) 12.14%(E)
After expense reimbursement and waived fees 2.02% 2.23% 2.05%(E) 2.66%(E)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and waived fees (9.85)% (15.08)% (77.35)% (E) (10.52)% (E)
After expense reimbursement and waived fees (0.37)% 0.96% 1.54%(E) (1.04)% (E)
Portfolio turnover rate 39% 108% 0% 39%(E)
Average commission rate per share (D) $ 0.0630 -- -- $ 0.0630
(A)Represents the period from the commencement of operations (January 3, 1995)
through February 28, 1995.
(B)Represents the period from the first public offering to shareholders (July
24, 1996) through February 28, 1997. Class B shares were initially purchased
on April 10, 1995 by the Advisor, who subsequently redeemed the initial
shares on March 13, 1996.
(C)The total returns shown do not include the effect of applicable sales loads.
(D)For fiscal years beginning in 1997, the Fund is required to disclose its
average commission rate paid per share for purchases and sales of investment
securities.
(E)Annualized.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
COMMON STOCKS - 78.5%
Airlines - 2.9%
1,237 Comair Holdings, Inc. $ 25,513
100 Delta Air Lines, Inc. 8,050
33,563
Communications - 5.9%
800 Aspect Telecommunications Corp. (a) 19,900
750 Brightpoint, Inc. (a) 20,250
500 U.S Robotics Corp. (a) 27,906
68,056
Computers & Information - 4.5%
500 Compaq Computer Corp. (a) 39,625
500 Pomeroy Computer Resources, Inc. (a) 12,375
52,000
Consumer Services - 2.3%
600 ABR Information Services, Inc. (a) 14,025
500 Romac International, Inc. (a) 12,875
26,900
Electrical Components - 2.7%
750 Diebold, Inc. 31,500
Food - 1.3%
600 Papa John's International, Inc. (a) 14,625
Health Care Providers - 4.3%
600 Genesis Health Ventures, Inc. (a) 20,775
1,500 Res-Care, Inc. (a) 28,875
49,650
Heavy Machinery - 1.9%
1,200 JLG Industries, Inc. 22,200
Home Construction - 1.8%
1,000 Coachmen Industries, Inc. 20,250
Household Products, Nondurable - 2.4%
230 The Proctor & Gamble Co. 27,628
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
Industrial and Commercial Services - 5.5%
280 Cintas Corp. 15,120
600 Omnicare, Inc. 15,900
450 Paychex, Inc. 19,575
500 Primark Corp. (a) 12,438
63,033
Media Publishing - 2.0%
500 Central Newspapers, Inc. - Class A 23,000
Medical Supplies - 3.1%
400 Guidant Corp. 26,800
225 Hillenbrand Industries, Inc. 8,466
35,266
Pharmaceuticals - 12.3%
400 Johnson & Johnson 23,050
900 Jones Medical Industries, Inc. 27,225
300 Eli Lilly & Co. 26,212
400 Merk & Co., Inc. 36,800
300 Pfizer, Inc. 27,488
140,775
Railroads - 1.2%
300 CSX Corp. 13,838
Regional Banks - 6.9%
500 Banc One Corp. 22,062
1,455 Star Banc Corp. 57,109
79,171
Retailers, Drug-Based - 2.4%
450 Cardinal Health, Inc. 27,675
Retailers, Specialty - 2.9%
600 Boise Cascade Office Products Corp. (a) 13,275
1,000 CompUSA, Inc. (a) 20,000
33,275
Semiconductor & Related - 3.3%
1,000 Micron Technology, Inc. 37,500
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
PORTFOLIO OF INVESTMENTS
February 28, 1997
Shares Value
Software & Processing - 3.5%
750 Analytical Surveys, Inc. (a) $ 8,719
500 Compuware Corp. (a) 31,125
39,844
Telephone Systems - 5.4%
1,000 Cincinnati Bell, Inc. 62,000
Total Common Stocks (Cost $774,032) $ 901,749
Face
Value Value
REPURCHASE AGREEMENTS (b) - 18.6%
$ 213,000 Fifth Third Bank, 4.80%, dated 2/28/1997,
due 3/3/1997, repurchase proceeds $213,085
(cost $213,000) $ 213,000
Total Investments and Repurchase Agreements
at Value - 97.1% $ 1,114,749
Other Assets in Excess of Liabilities - 2.9% 33,434
Net Assets - 100.0% $ 1,148,183
(a) Non-income producing securities.
(b) Repurchase agreement is fully collateralized by $218,000 par value FHLMC
Pool #G10452, 7.00%, due 2/1/2011.
See accompanying notes to the financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
<TABLE>
<C> <C>
1. Significant Accounting Policies
The Regional Opportunity Fund: Ohio, Indiana, Kentucky (the Fund), formerly The Greater Cincinnati Fund, is a
non-diversified, open-end series of the Maplewood Investment Trust (the Trust), formerly the Nottingham Investment
Trust, a registered management investment company under the Investment Company Act of 1940 (the 1940 Act).
The Trust was organized as a Massachusetts business trust on August 12, 1992. The Fund began operations on
January 3, 1995.
The Fund's investment objective 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.
The Fund offers two classes of shares: Class A shares (sold subject to a maximum front-end sales load of 4% and
a distribution fee of up to .25% of average daily net assets of the class) and Class B shares (sold subject to a
contingent deferred sales load if redeemed within five years from the date of purchase and a distribution fee of up
to 1% of average daily net assets of the class). Each Class A and Class B share of the Fund represents identical
interests in the Fund's investment portfolio and has the same rights, except that (i) Class B shares bear the expenses
of higher distribution fees, which is expected to cause Class B shares to have a higher expense ratio and to pay
lower dividends than Class A shares; and (ii) each class has exclusive voting rights with respect to matters relating
to its own distribution arrangements.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the close of business of the regular session
of the New York Stock Exchange (currently 4:00 p.m., Eastern time). Securities which are traded over-the-counter
are valued at the last sales price, if available, otherwise, at the last quoted bid price. Securities traded on a national
stock exchange are valued based upon the closing price on the principal exchange where the security is traded.
Repurchase agreements -- The Fund generally invests its cash reserves by entering into repurchase agreements with
its custodian bank. The repurchase agreement, which is collateralized by U.S. Government obligations, is valued
at cost which, together with accrued interest, approximates market. At the time the Fund enters into the repurchase
agreement, the seller agrees that the value of the underlying securities, including accrued interest, will at all times
be equal to or exceed the face amount of the repurchase agreement. In addition, the Fund actively monitors and
seeks additional collateral, as needed.
Share valuation -- The net asset value per share of each class of shares of the Fund is calculated daily by dividing
the total value of the Fund's assets attributable to that class, less liabilities attributable to that class, by the number
of shares of that class outstanding. The maximum offering price of Class A shares of the Fund is equal to net asset
value per share plus a sales load equal to 4.17% of the net asset value (or 4% of the offering price). The offering
price of Class B shares is equal to the net asset value per share.
The redemption price per share of Class A shares is equal to the net asset value per share. Class B shares are
subject to a contingent deferred sales load if redeemed within a five-year period from the date of purchase. The
charge declines from 5% to 0% over a five year period.
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
<TABLE>
<C> <C>
Investment income -- Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date.
Distributions to shareholders -- Dividends arising from net investment income, if any, are declared and paid annually
to shareholders of the Fund. Net realized short-term capital gains, if any, may be distributed throughout the year
and net realized long-term capital gains, if any, are distributed at least once each year. Income distributions and
capital gain distributions are determined in accordance with income tax regulations.
Organization expenses -- Expenses of organization have been capitalized and are being amortized on a straight-line
basis over five years. 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.
Security transactions -- Security transactions are accounted for on trade date. Securities sold are valued on a specific
identification basis.
Allocation between classes -- Investment income earned by the Fund and realized and unrealized gains and losses
on investments are allocated daily to each class of shares based upon its proportionate share of total net assets of
the Fund. Distribution expenses are charged directly to the class incurring the expense. Common expenses which
are not attributable to a specific class are allocated daily to each class of shares based upon its proportionate share
of total net assets of the Fund.
Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Federal income tax -- It is the Fund's policy to comply with the special provisions of the Internal Revenue Code
applicable to regulated investment companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the shareholders) will be relieved of federal
income tax on the income distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also the Fund's
intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the twelve months ended October 31) plus
undistributed amounts from prior years.
Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes
primarily due to wash sales and net operating losses. The character of distributions made during the period from
net investment income or net realized gains, if any, may differ from their ultimate characterization for federal
income tax purposes. On the statement of assets and liabilities, as a result of permanent book-to-tax differences,
the following reclassification was made: accumulated net investment loss has been decreased by $4,112,
accumulated capital loss has been decreased by $41, resulting in a reclassification adjustment to decrease paid-in
capital by $4,153. This reclassification has no effect on net assets or net asset value per share.
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
<TABLE>
<C> <C>
The following information is based upon the federal income tax cost of portfolio investments of the Fund as of
February 28, 1997:
Gross unrealized appreciation....................................................$ 174,187
Gross unrealized depreciation...................................................( 46,470)
Net unrealized appreciation......................................................$ 127,717
As of February 28, 1997, the tax cost basis of investments for the Fund was $774,032 and the Fund had $51,160
of capital loss carryforwards for federal income tax purposes, none of which expire prior to February 28, 2006.
These capital loss carryforwards may be utilized in future years to offset net realized capital gains prior to
distributing such gains to shareholders.
2. Investment Transactions
During the fiscal year ended February 28, 1997, purchases and proceeds from sales and maturities of investment
securities, other than short-term investments, amounted to $522,422 and $291,462, respectively.
3. Transactions with Affiliates
Certain officers of the Trust are also officers of CityFund Advisory, Inc. (the Adviser), Countrywide Fund Services,
Inc. (CFS), the administrator, transfer agent and accounting services agent for the Fund, or Countrywide
Investments, Inc. (Countrywide), the distributor and principal underwriter for the Fund. Prior to February 28, 1997,
CFS and Countrywide were formerly named MGF Service Corp. and Midwest Group Financial Services, Inc.,
respectively.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser under the terms of an Investment Advisory Agreement. Under
the Investment Advisory Agreement, the Fund pays the Adviser a fee, which is computed and accrued daily and
paid monthly at an annual rate of 1.25% on its average daily net assets. The Adviser currently intends to waive
its advisory fees and reimburse expenses of the Fund to the extent necessary to limit the total operating expenses
of the Fund to 1.95% and 2.70% of average daily net assets for Class A shares and Class B shares, respectively.
Prior to June 1, 1996, expenses of Class A shares were limited to 2.25% of average daily net assets. Accordingly,
for the fiscal year ended February 28, 1997, the Adviser waived its entire advisory fee and reimbursed the Fund
$73,594 for other operating expenses.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement in effect since June 1, 1996, CFS supplies non-investment related
administrative and compliance services for the Fund. CFS supervises the preparation of tax returns, reports to
shareholders, reports to and filings with the Securities and Exchange Commission and state securities commissions,
and materials for meetings of the Board of Trustees. For these services, CFS receives a monthly fee from the Fund
at an annual rate of 0.15% on its average daily net assets up to $50 million; 0.125% on the next $50 million of such
net assets; and 0.10% on such net assets in excess of $100 million, subject to a $1,000 minimum monthly fee.
However, CFS reduced the minimum monthly fee to $750 during the first six months of the Agreement. During
the fiscal year ended February 28, 1997, CFS earned $7,500 of fees under the Agreement.
<PAGE>
</TABLE>
REGIONAL OPPORTUNITY FUND: Ohio, Indiana, Kentucky
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
<TABLE>
<C> <C>
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
Under the terms of a Transfer Agent and Shareholder Servicing Agreement in effect since June 1, 1996, CFS
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. For these services, CFS receives a monthly fee based on the number
of shareholder accounts in the Fund, subject to a $1,000 minimum monthly fee. However, CFS reduced the
minimum monthly fee to $750 during the first six months of the Agreement. In addition, the Fund pays out-of-
pocket expenses, including but not limited to, postage and supplies. During the fiscal year ended February 28, 1997,
CFS earned $12,750 of fees under the Agreement.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement in effect since June 1, 1996, CFS calculates the daily net
asset value per share and maintains the financial books and records of the Fund. For these services, CFS receives
a monthly fee of $2,000 from the Fund. However, CFS reduced the monthly fee to $1,500 during the first six
months of the Agreement. During the fiscal year ended February 28, 1997, CFS earned $15,000 of fees under the
Agreement.
DISTRIBUTION PLAN AND UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement with the Trust, Countrywide is the national distributor for the Fund
and may sell Fund shares to or through qualified securities dealers or others. During the fiscal year ended
February 28, 1997, Countrywide earned $3,425 from underwriting and broker commissions on the sale of Fund
shares. The Trust has adopted a Distribution Plan (the Plan) for the Fund pursuant to Rule 12b-1 under the 1940
Act. The Plan provides that the Fund may incur certain costs related to the distribution of Fund shares, not to
exceed 0.25% and 1.00% of average daily net assets for Class A shares and Class B shares, respectively. For the
fiscal year ended February 28, 1997, the Fund incurred $1,131 and $1,335 of distribution expenses for Class A
shares and Class B shares, respectively, under the Plan.
PRIOR ADMINISTRATION AGREEMENT
Prior to June 1, 1996, The Nottingham Company (TNC) provided the administrative, transfer agent, shareholder
recordkeeping and accounting services referred to above. As compensation for its administrative services, TNC
received a fee at an annual rate of 0.20% of the Fund's first $50 million of average net assets, 0.175% on the next
$50 million of such assets, and 0.15% of such assets over $100 million. In addition, TNC received a monthly fee
of $2,000 for accounting and recordkeeping services and a monthly fee for shareholder servicing. Under the
contract with TNC, the Fund was subject to a minimum monthly fee for all services of $3,000. During the three
months ended May 31, 1996, TNC received $9,000 of fees under the contract. Certain Trustees and officers of the
Fund prior to June 1, 1996, were also officers of TNC.
</TABLE>
<PAGE>
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 28, 1997,
Statements of Operations, Statements of Changes in Net Assets,
Financial Highlights, Notes to Financial Statements - February
28, 1997, Portfolios of Investments - February 28, 1997,
Independent Auditors' Reports
(b) Exhibits:
1. Amended and Restated Declaration of Trust*
2. Amended and Restated Bylaws*
3. Not Applicable
4. Not Applicable
5. Investment Advisory Agreements*
6.(i) 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
13. Purchase Agreement*
14. Not Applicable
<PAGE>
15. (i) Distribution Plans for The CarolinasFund
and the Mississippi Opportunity Fund*
(ii) 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. Power 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 May 31, 1997:
Number of Record
Title of Class Holders
-------------- ----------------
Amelia Earhart: Eagle Equity Fund
Class A Shares 78
Class B Shares 0
The CarolinasFund
Investor Shares 194
Institutional Shares 30
Mississippi Opportunity Fund
Class A Shares 124
Class C Shares 45
Regional Opportunity Fund
Class A Shares 65
Class B Shares 55
- 2 -
<PAGE>
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 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.
- 3 -
<PAGE>
(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.
(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
- 4 -
<PAGE>
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
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
Mississippi Opportunity Fund and the Regional Opportunity Fund
provides for indemnification of the Advisors 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
- 5 -
<PAGE>
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
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
- 6 -
<PAGE>
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.
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
- 7 -
<PAGE>
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
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
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
- 8 -
<PAGE>
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.
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.
- 9 -
<PAGE>
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 officers of
Morehead.
(1) Robert B. Thompson - Manager of Morehead.
(a) President of Morehead Investment Advisors,
Charlotte, North Carolina, an investment
advisor and broker-dealer, until June 1995.
(2) Benjamin Richter - Manager of Morehead.
(a) President of Richter and Company, Inc.
Charlotte, North Carolina, a produce
brokerage firm.
(3) Lloyd Richter - Manager of Morehead.
(a) Vice President, Secretary and Treasurer of
Richter and Company, Inc.
(4) J.C. Ehringhaus - Manager of Morehead.
(5) Richard Bryant - Manager of Morehead.
(a) President of Capital Investment Brokerage,
Inc., a securities brokerage firm.
(b) Vice President of Capital Advisers, Inc., an
investment adviser.
(c) Managing Director of Capital Investment
Partners, an investment banking firm.
(d) President and Trustee of Nottingham
Investment Trust II, a registered investment
company.
(e) Vice President of Capital Investment
Counsel, Inc., an investment firm.
(f) President of Capital Investment Group, Inc.,
a securities firm.
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.
- 10 -
<PAGE>
(1) Jasen M. Snelling - President of CityFund.
(2) Jerry A. Smith - Secretary and Treasurer 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) Not Applicable.
(b) The following list sets forth the directors and
officers of Alpha-Omega Capital Corp., the Trust's
underwriter.
Position With Position With
Name Underwriter Registrant
---- ------------- -------------
Bryan E. Pifer President and None
6318 Paxton Woods Director
Loveland, Ohio 45140
William C. Riffle Director None
700 W. Pete Rose Way
Cincinnati, Ohio 45203
Jerry Fedasch Vice President None
700 W. Pete Rose Way
Cincinnati, Ohio 45203
(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
- 11 -
<PAGE>
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 30th day of June, 1997.
MAPLEWOOD INVESTMENT TRUST,
A SERIES COMPANY
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 30, 1997
- ----------------------
Mark J. Seger
Jack E. Brinson* Trustee By: /s/ John F. Splain
John F. Splain*
David S. Brollier* Trustee Attorney-in-Fact
June 30, 1997
Christopher J. Smith* Trustee
EXHIBIT INDEX
1. Underwriting Agreement
2. Form of Dealer Agreement
3. Custody Agreement with The Fifth Third Bank
4. Administration Agreement
5. Accounting Services Agreement
6. Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement
7. Consent of KPMG Peat Marwick LLP
8. Financial Data Schedules
9. Power of Attorney for David S. Brollier
UNDERWRITING AGREEMENT
This Agreement made as of April 21, 1997 by and between Maplewood
Investment Trust, a series company (the "Trust"), and Alpha-Omega Capital Corp.,
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 regulations of the Securities and
Exchange Commission promulgated thereunder.
- 2 -
<PAGE>
(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 will qualify as dealer or broker, or
otherwise, under all applicable State or federal laws required in
- 5 -
<PAGE>
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 "Advisors") 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 agrees to indemnify and hold harmless the Trust,
the Advisors 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 Advisors, 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 Advisors. Underwriter likewise agrees
to indemnify and hold harmless the Trust, the Advisors and each such person in
connection with any claim or in connection with any
- 7 -
<PAGE>
action, suit or proceeding which arises out of or is alleged to arise out of
Underwriter's negligence 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 Advisors or each such
person may be entitled as a matter of law.
9. LIABILITY 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 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. 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.
- 8 -
<PAGE>
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) 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
- 9 -
<PAGE>
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 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 as provided in its Agreement and Declaration of Trust.
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
- 10 -
<PAGE>
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 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.
- 11 -
<PAGE>
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 c/o O. James Peterson III, Colonial Downs, P.O. Box
228, New Kent, Virginia 23124 and that the address of Underwriter for this
purpose shall be 700 Pete Rose Way #127, Cincinnati, Ohio 45203.
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: MAPLEWOOD INVESTMENT TRUST, A
SERIES COMPANY
_____________________________ By: /s/ O. James Peterson
---------------------
Its: Chairman
ATTEST: ALPHA-OMEGA CAPITAL CORP.
_____________________________ By: /s/ Bryan E. Pifer
------------------------
Its: President
- 12 -
<PAGE>
ALPHA-OMEGA CAPITAL CORP.
700 WEST PETE ROSE WAY, #127
CINCINNATI, OHIO 45203
Dealer's Agreement
Alpha-Omega Capital Corp. ("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. The Underwriter reserves the right, in its 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 three (3) 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.
<PAGE>
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 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 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 schedules, 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 as to when particular
classes 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 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 pursuant to Rule 12b-1 under the Investment Company Act of 1940 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 Alpha-Omega
Capital Corp., 700 West Pete Rose Way, #127, Cincinnati, Ohio 45203, 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.
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 all copies of this Agreement to the
Underwriter.
ACCEPTED BY DEALER
By:__________________________________________
Authorized Signature
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Type or Print Name, Position
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Dealer Name
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Address
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Address
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Phone
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Date
ALPHA-OMEGA CAPITAL CORP.
By: ____________________________________________
DATE: APRIL 21, 1997
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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%
$250,000 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.
Brokers may invest for their own account at NAV.
*As a percentage of offering price.
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:
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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.
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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.
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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.
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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.
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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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<PAGE>
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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<PAGE>
(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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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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/ Linda E. Lanman By: /s/ Robert G. Dorsey
--------------------------
Its: Vice President
ATTEST: THE FIFTH THIRD BANK
/s/ Elizabeth G. Bernard By: /s/ Tracie D. Hoffman
---------------------------
Tracie Hoffman
Vice President
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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>
THE CAROLINASFUND
REGIONAL OPPORTUNITY FUND
AMELIA EARHART: EAGLE EQUITY FUND
LEGACY EQUITY FUND
Name Signature
Robert G. Dorsey /s/ Robert G. Dorsey
---------------------
John F. Splain /s/ John F. Splain
----------------------
M. Kathleen Leugers /s/ M. Kathleen Leugers
-------------------------
Mark J. Seger /s/ Mark J. Seger
---------------------------
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<PAGE>
EXHIBIT B
FIFTH THIRD BANK
FEE SCHEDULE
WALNUT INVESTMENT TRUST
PER UNIT FEE
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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ADMINISTRATION AGREEMENT
AGREEMENT dated as of February 28, 1997 between Maplewood Investment
Trust, a series company (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), 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 Countrywide to
serve as its administrative agent; and
WHEREAS, Countrywide 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 Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
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
Countrywide;
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
Countrywide 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 Countrywide is
to act as plan agent.
3. TRUST ADMINISTRATION.
Subject to the direction and control of the Trustees of the
Trust, Countrywide 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, Countrywide shall
supply (i) office facilities, (ii) internal auditing and regulatory services,
and (iii) executive and administrative services. Countrywide 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. Countrywide 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 Countrywide 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.
Countrywide 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 Countrywide 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. Countrywide shall
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<PAGE>
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.
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 Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, 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. Countrywide 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 Countrywide to perform any
services for the Trust which services could cause Countrywide 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 Countrywide, 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 COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
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<PAGE>
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
9. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide 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 Countrywide 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
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, 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 Countrywide 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 Countrywide, 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 Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide 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 Countrywide 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
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<PAGE>
of Countrywide 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.
10. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two 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 Countrywide, (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 Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide'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 Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide 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.
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<PAGE>
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 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: Maplewood Investment Trust, a series company
c/o Colonial Downs
P.O. Box 228
New Kent, Virginia 23124
Attention: O. James Peterson III
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<PAGE>
To Countrywide: Countrywide Fund Services, Inc.
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
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 Countrywide 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.
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<PAGE>
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MAPLEWOOD INVESTMENT TRUST,
A SERIES COMPANY
By: /s/ O. James Peterson
---------------------
Its: Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
-----------------------
Its: President
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<PAGE>
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of February 28, 1997 between Maplewood Investment
Trust, a series company (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), 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 Countrywide to
provide the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide 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 Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
Countrywide 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. Countrywide 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, Countrywide may contract with, and rely upon
market quotations provided by, outside services.
3. BOOKS AND RECORDS.
Countrywide 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. Countrywide will maintain such
further books and records
<PAGE>
as are necessary 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. Countrywide 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 Countrywide 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 Countrywide shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
Countrywide 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, Countrywide shall prepare checks in the appropriate amounts which shall
be signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
Countrywide 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.
Countrywide 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 Countrywide a monthly fee in accordance with the
schedule attached hereto as Schedule A. The fees with respect to any month shall
be paid to Countrywide on the last business day of such month. The Trust shall
also promptly reimburse Countrywide for the cost of external pricing services
utilized by Countrywide. Countrywide 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 Countrywide to perform any
services for the Trust which services could cause Countrywide 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 Countrywide, 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 COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
11. EQUIPMENT FAILURES.
Countrywide 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. Countrywide
shall have no liability with respect to equipment failures beyond its control.
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<PAGE>
12. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide 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 Countrywide 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
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, 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 Countrywide 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 Countrywide, 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 Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide 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 Countrywide 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 Countrywide 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>
13. TERMINATION.
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two 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 Countrywide, (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 Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide'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 Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide 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
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<PAGE>
any liability on any of them personally, but shall bind only the trust property
of the Trust.
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: Maplewood Investment Trust, a series company
c/o Colonial Downs
P.O. Box 228
New Kent, Virginia 23124
Attention: O. James Peterson III
To Countrywide: Countrywide Fund Services, Inc.
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
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<PAGE>
is refused or the notice is designated by the postal authorities as not
deliverable, as the case may be, if mailed.
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 Countrywide 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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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MAPLEWOOD INVESTMENT TRUST,
A SERIES COMPANY
By: /s/ O. James Peterson III
---------------------------
Its: Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
------------------------
Its: President
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<PAGE>
Schedule A
COMPENSATION
Each series of the Trust will pay Countrywide 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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<PAGE>
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of February 28, 1997 between Maplewood Investment
Trust, a series company (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), 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 Countrywide to
serve as its transfer, dividend disbursing, shareholder service and plan agent;
and
WHEREAS, Countrywide 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 Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
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
Countrywide;
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
Countrywide 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 Countrywide is
to act as plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
Countrywide 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. Countrywide 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. COUNTRYWIDE TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to Countrywide of certificates, if any, in proper form for transfer,
Countrywide 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, Countrywide shall notify the Trust in writing of each such
transaction and shall make appropriate entries on the shareholder records
maintained by Countrywide.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates and
an investor requests a share certificate, Countrywide 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
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<PAGE>
been collected and credited to the account of the Trust maintained by the
Custodian. The Trust shall supply Countrywide with a sufficient supply of blank
share certificates and from time to time shall renew such supply upon request of
Countrywide. 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, Countrywide 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 Countrywide and the Trust, and
issued by a surety company satisfactory to Countrywide 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 the principal underwriter of the Trust (the "Underwriter"), Countrywide
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, Countrywide 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 Countrywide to establish
a shareholder account, Countrywide 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 Countrywide is notified by the Trust's
Custodian that any check or other order for the payment of money is returned
unpaid for any reason, Countrywide 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 Countrywide pursuant to this Agreement.
9. SALES CHARGE.
In computing the number of shares to credit to the account of
a shareholder, Countrywide 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.
Countrywide 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
Countrywide; provided, however, Countrywide shall have no liability hereunder
arising from the incorrect selection by Countrywide 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 Countrywide fails to select the
rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish Countrywide with appropriate evidence
of trustee action authorizing the declaration of dividends and other
distributions. Countrywide 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, Countrywide shall, as agent for each
shareholder who so requests, invest the dividends and other distributions in
full
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<PAGE>
and fractional shares in accordance with the Trust's then current prospectus and
statement of additional information. If a shareholder has elected to receive
dividends or other distributions in cash, then Countrywide shall disburse
dividends to shareholders of record in accordance with the Trust's then current
prospectus and statement of additional information. Countrywide 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. Countrywide 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, Countrywide 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.
Countrywide shall, at least annually, furnish in writing to
the Trust the names and addresses, as shown in the shareholder accounts
maintained by Countrywide, 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. Countrywide 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. Countrywide 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 Countrywide. Upon its approval of such
redemption transactions, Countrywide, 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, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide 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
- 5 -
<PAGE>
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 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 Countrywide. If Countrywide or the Trust
determines that a request for redemption does not comply with the requirements
for redemptions, Countrywide 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, Countrywide, 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. Countrywide 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 Countrywide and the Trust consistent with the Trust's then current
prospectus and statement of additional information.
D. The authority of Countrywide 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.
Countrywide 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 Countrywide 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
Countrywide 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.
- 6 -
<PAGE>
14. LETTERS OF INTENT.
Countrywide 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. Countrywide 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.
Countrywide 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 Countrywide or the Underwriter, with copies to the Underwriter. Upon
receipt of any check drawn or endorsed to the Trust (or Countrywide, as agent)
or otherwise identified as being payment of an outstanding wire-order,
Countrywide will stamp said check with the date of its receipt and deposit the
amount represented by such check to Countrywide's deposit accounts maintained
with the Custodian. Countrywide 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
Countrywide 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.
Countrywide 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.
Countrywide 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
- 7 -
<PAGE>
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 Countrywide 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. Countrywide 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.
Countrywide 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
- 8 -
<PAGE>
K. Any information required in order for Countrywide to
perform the calculations contemplated under this
Agreement.
19. TAX RETURNS AND REPORTS.
Countrywide 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,
Countrywide 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, Countrywide shall arrange for the Trust's
investment advisers to have direct access to shareholder information contained
in Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
22. COOPERATION WITH ACCOUNTANTS.
Countrywide 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.
Countrywide 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. Countrywide will answer
written correspondence from shareholders relating to their share
- 9 -
<PAGE>
accounts and such other written or oral inquiries as may from time to time be
mutually agreed upon, and Countrywide will notify the Trust of any
correspondence or inquiries which may require an answer from the Trust.
24. PROXIES.
Countrywide 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 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 Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee in accordance with the
schedule attached hereto as Schedule A. Countrywide 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 Countrywide for any out-of-pocket expenses and advances which
are to be paid by the Trust in accordance with Paragraph 27.
27. EXPENSES.
Countrywide 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
Countrywide under this Paragraph 27 shall be paid by the Trust, including, but
not limited to, costs and expenses of officers and employees of Countrywide 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,
- 10 -
<PAGE>
taxes or levies assessed on Countrywide for services provided under this
Agreement. Postage for mailings of dividends, proxies, reports and other
mailings to all shareholders shall be advanced to Countrywide 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 Countrywide to perform any
services for the Trust which services could cause Countrywide 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 Countrywide, 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 COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
30. EQUIPMENT FAILURES.
Countrywide 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. Countrywide
shall have no liability with respect to equipment failures beyond its control.
31. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide 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 Countrywide 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
- 11 -
<PAGE>
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, 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 Countrywide or any of its
affiliates, even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Countrywide, 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 Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide 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 Countrywide 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 Countrywide 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 two 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 Countrywide, (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.
- 12 -
<PAGE>
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 Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide'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 Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide 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.
- 13 -
<PAGE>
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.
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: Maplewood Investment Trust, a series company
c/o Colonial Downs
P.O. Box 228
New Kent, Virginia 23124
Attention: O. James Peterson III
To Countrywide: Countrywide Fund Services, Inc.
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.
- 14 -
<PAGE>
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.
41. FORCE MAJEURE.
If Countrywide 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.
- 15 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MAPLEWOOD INVESTMENT TRUST,
A SERIES COMPANY
By: /s/ O. James Peterson
Its: Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
Its: President
- 16 -
<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
Each class of shares of each Fund will be subject to a minimum charge of $1,000
per month.
- 17 -
<PAGE>
Independent Auditors' Consent
-----------------------------
The Shareholders and Trustees
of the Maplewood Investment Trust:
We consent to the inclusion of our report included herein and to the references
to our firm under the headings "Financial Highlights" in the Prospectus and
"Auditors" in the Statement of Additionald Information.
KPMG Peat Marwick LLP
Cincinnati, Ohio
June 30, 1997
<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-28-1997
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 1,847,620
<INVESTMENTS-AT-VALUE> 2,586,563
<RECEIVABLES> 4,659
<ASSETS-OTHER> 10,023
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,601,245
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,613
<TOTAL-LIABILITIES> 7,613
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,919,897
<SHARES-COMMON-STOCK> 133,287
<SHARES-COMMON-PRIOR> 104,238
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (65,208)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 738,943
<NET-ASSETS> 2,593,632
<DIVIDEND-INCOME> 8,748
<INTEREST-INCOME> 13,212
<OTHER-INCOME> 0
<EXPENSES-NET> 39,028
<NET-INVESTMENT-INCOME> (17,068)
<REALIZED-GAINS-CURRENT> (65,208)
<APPREC-INCREASE-CURRENT> 387,956
<NET-CHANGE-FROM-OPS> 305,680
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 33,674
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36,481
<NUMBER-OF-SHARES-REDEEMED> 9,228
<SHARES-REINVESTED> 1,796
<NET-CHANGE-IN-ASSETS> 811,898
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 33,751
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20,680
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 117,171
<AVERAGE-NET-ASSETS> 2,067,974
<PER-SHARE-NAV-BEGIN> 17.09
<PER-SHARE-NII> (.13)
<PER-SHARE-GAIN-APPREC> 2.78
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .28
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.46
<EXPENSE-RATIO> 1.89
<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-28-1997
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 2,895,356
<INVESTMENTS-AT-VALUE> 3,352,831
<RECEIVABLES> 113,821
<ASSETS-OTHER> 28,970
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,495,622
<PAYABLE-FOR-SECURITIES> 41,521
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,800
<TOTAL-LIABILITIES> 54,321
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,036,958
<SHARES-COMMON-STOCK> 202,553
<SHARES-COMMON-PRIOR> 152,513
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (53,132)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 457,475
<NET-ASSETS> 3,441,301
<DIVIDEND-INCOME> 53,558
<INTEREST-INCOME> 2,217
<OTHER-INCOME> 0
<EXPENSES-NET> 59,993
<NET-INVESTMENT-INCOME> (4,218)
<REALIZED-GAINS-CURRENT> (53,045)
<APPREC-INCREASE-CURRENT> 256,182
<NET-CHANGE-FROM-OPS> 198,919
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 279
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 107,377
<NUMBER-OF-SHARES-REDEEMED> 57,358
<SHARES-REINVESTED> 21
<NET-CHANGE-IN-ASSETS> 1,518,911
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 265
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 27,685
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 146,137
<AVERAGE-NET-ASSETS> 2,546,663
<PER-SHARE-NAV-BEGIN> 12.44
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> .94
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.36
<EXPENSE-RATIO> 2.22
<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-28-1997
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 2,895,356
<INVESTMENTS-AT-VALUE> 3,352,831
<RECEIVABLES> 113,821
<ASSETS-OTHER> 28,970
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,495,622
<PAYABLE-FOR-SECURITIES> 41,521
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,800
<TOTAL-LIABILITIES> 54,321
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,036,958
<SHARES-COMMON-STOCK> 54,234
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<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
<NUMBER> 51
<NAME> MISSISSIPPI OPPORTUNITY FUND CLASS A
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<NAME> MAPLEWOOD INVESTMENT TRUST
<SERIES>
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<NAME> MISSISSIPPI OPPORTUNITY FUND CLASS C
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<SERIES>
<NUMBER> 31
<NAME> REGIONAL OPPORTUNITY FUND: OHIO INDIANA KENTUCKY CLASS A
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<NET-INVESTMENT-INCOME> (4,197)
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<SERIES>
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<NAME> REGIONAL OPPORTUNITY FUND:OHIO INDIANA KENTUCKY CLASS B
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<SHARES-COMMON-PRIOR> 11
<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 6,168
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<EXPENSES-NET> 18,938
<NET-INVESTMENT-INCOME> (4,197)
<REALIZED-GAINS-CURRENT> (31,644)
<APPREC-INCREASE-CURRENT> 93,881
<NET-CHANGE-FROM-OPS> 58,040
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 5,508
<NUMBER-OF-SHARES-SOLD> 56,543
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<SHARES-REINVESTED> 494
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<ACCUMULATED-NII-PRIOR> 1,414
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<GROSS-EXPENSE> 103,711
<AVERAGE-NET-ASSETS> 136,674
<PER-SHARE-NAV-BEGIN> 10.46
<PER-SHARE-NII> (.02)
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</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, MAPLEWOOD INVESTMENT TRUST, A SERIES COMPANY, 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 June, 1997.
/s/ David S. Brollier
---------------------------
David S. Brollier, Trustee
STATE OF VIRGINIA )
) ss:
CITY OF RICHMOND )
On the 23rd day of June, 1997, personally appeared before me, DAVID S.
BROLLIER, 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 June, 1997.
/s/ Charlotte S. Wilson
-----------------------------
Notary Public
