ANALYSTS INVESTMENT TRUST PROSPECTUS DATED MAY 1, 1999
ANALYSTS INTERNET.FUND
THE ANALYSTS INTERNET.FUND IS A NO-LOAD MUTUAL FUND THAT INVESTS PRIMARILY IN
INTERNET COMPANIES. THE INVESTMENT OBJECTIVE OF THE FUND IS TO PRODUCE LONG TERM
GROWTH THROUGH CAPITAL APPRECIATION.
NO-LOAD MUTUAL FUND
The Analysts internet.fund is a "no-load" investment which means there
are no sales charges or commissions. In addition, shareholders pay no deferred
sales charges. The minimum initial investment for this fund is $1,000 ($25 for
tax sheltered retirement plans).
This Prospectus sets forth concisely the information a prospective investor
should know about the Fund before investing. Please read it carefully before you
invest and keep it for future reference. A Statement of Additional Information
dated May 1, 1999 has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available upon request and without charge by calling or writing
the Fund at the telephone number or the address set forth above. The SEC
maintains a Web Site (www.sec.gov) that contains the Statement of Additional
Information and other information about the Fund.
ANALYSTS INVESTMENT TRUST
9200 MONTGOMERY ROAD
BUILDING D, SUITE 13A
CINCINNATI, OHIO 45242
(513)984-3377
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
TABLE OF CONTENTS PAGE
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FUND EXPENSES 1
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS 1
HOW TO INVEST IN THE FUND 2
EXCHANGE PRIVILEGE 2
REDEMPTION OF SHARES 3
SHARE PRICE CALCULATION 3
DIVIDENDS AND DISTRIBUTIONS 4
TAXES 4
TRUSTEES AND OFFICERS 4
OPERATION OF THE FUND 5
INVESTMENT POLICIES AND TECHNIQUES 5
GENERAL INFORMATION 6
INVESTMENT PERFORMANCE 6
THE ADVERTISED PERFORMANCE DATA OF THE FUND IS BASED ON HISTORICAL
PERFORMANCE AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE. YIELDS AND RATES
OF TOTAL RETURN QUOTED BY THE FUND MAY BE HIGHER OR LOWER THAN PAST QUOTATIONS,
AND THERE CAN BE NO ASSURANCE THAT ANY YIELD RATE OF TOTAL RETURN WILL BE
MAINTAINED. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO
THAT A SHAREHOLDER'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE
SHAREHOLDER'S ORIGINAL INVESTMENT.
INVESTMENT ADVISER LEGAL COUNSEL
Equity Analysts Inc. Brown Cummins & Brown Co., L.P.A.
9200 Montgomery Road 3500 Carew Tower
Building D, Suite 13A 441 Vine Street
Cincinnati, Ohio 45242 Cincinnati, Ohio 45202
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
AUDITORS
Berge & Company LTD
20 West Ninth Street
Cincinnati, Ohio 45202
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
either Fund. This Prospectus does not constitute an offer by either Fund to sell
its shares in any state to any person to whom it is unlawful to make such offer
in such state.
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FUND EXPENSES
The purpose of the table below is to assist shareholders in
understanding the costs and expenses that shareholders in the Fund will bear
directly or indirectly. The expense information is based on estimated amounts
for the current fiscal year. The expenses are expressed as a percentage of
average net assets. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
FUTURE FUND PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY VARY.
Shareholders should be aware that the Fund is a no load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. Unlike most other mutual funds,
the Fund does not directly pay for transfer agency, pricing, custodial, auditing
or legal services, nor does it directly pay general administrative or other
operating expenses. The Adviser pays all of the expenses of the Fund except
brokerage, taxes, borrowing costs and extraordinary expenses.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load NONE
Deferred Sales Load NONE
Redemption Fee NONE
Exchange Fee NONE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(1)
Management Fees 3.00%
12b-1 Fees NONE
Total Fund Operating Expenses 3.00%
(1) The Fund's total operating expenses are equal to the management fee paid to
the Adviser because the Adviser pays all of the Fund's operating expenses
(except as described above).
EXAMPLE
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You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 YEAR 3 YEARS
$30 $94
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
INVESTMENT OBJECTIVE. The investment objective of the Analysts internet.fund
(the "Fund") is long term growth through capital appreciation.
STRATEGIES. The Fund seeks to achieve its objective by investing primarily in
equity securities of internet companies. Under normal circumstances, at least
65% of the Fund will be invested in internet companies. The internet is a global
network of computers that allows users to quickly and easily share information
and conduct business. Users of the internet include commercial and professional
organizations, educational institutions, government agencies, and consumers to
communicate electronically, access and share information, and conduct business.
Internet companies are defined as companies that derive at least 50% of revenues
from the internet, including: internet access providers; companies that develop
software tools to access the internet and facilitate secure internet
transactions; companies that manufacture personal computers and other hardware
used in conjunction with the internet; companies that manufacture software and
other technologies used in conjunction with the internet; companies engaging in
electronic commerce; companies publishing information about the internet;
companies that supply information, such as games, music and video, on the
internet; companies that consult on the design and implementation of internet
strategies; and other internet related businesses and technologies. The types of
companies that are considered "internet companies" will change as technology and
applications change.
In selecting investments for the Fund, the Fund's adviser, Equity
Analysts Inc. (the "Adviser") will focus on internet companies that are young,
innovative, and emerging companies. The Fund may also invest in established
companies that have successfully implemented internet strategies, companies
which have captured a leadership position in a sector using internet
technologies, and companies engaged in older technologies when the Adviser
believes that these companies may successfully integrate existing technology
with new emerging technologies. All securities of internet companies are subject
to the risk factors described below. The Fund will invest primarily in U.S.
equity securities but may invest in other types of securities and use various
investment techniques. For temporary defensive or temporary liquidity purposes,
the Fund may hold all or a portion of its assets in money market instruments,
securities of other no-load registered investment companies or repurchase
agreements. See "Investment Policies and Techniques" for a more detailed
discussion of the Fund's investment practices.
RISK CONSIDERATIONS. Your investment in the Fund is subject to special risks
because the Fund concentrates its investments in internet companies. Internet
companies are subject to a rate of technological change that is generally higher
than other companies, often requiring extensive and sustained investment in
research and development, and exposing such companies to the risk of rapid
product obsolescence. Changes in governmental policies, such as telephone and
cable regulations and anti-trust enforcement, and the need for regulatory
approvals may have a material effect on the products and services of these
companies. In addition, competitive pressures and changing demand may have a
significant effect on the financial condition of internet companies. Because of
its narrow focus, the Fund's performance is closely tied to any factors which
may affect internet companies and, as a result, is more likely to fluctuate than
that of a fund which is invested in a broader range of companies. The Fund is
not a complete investment program.
Investments in equity securities are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other factors
beyond the control of the Advisor. As a result, the return and net asset value
of a fund with equity securities in its portfolio will fluctuate. Although
securities of large and well-established companies may be held in the Fund's
portfolio, the Fund will primarily invest in smaller and/or newly-public
companies that expose the Fund to additional risks. Companies with small market
capitalization may experience higher growth rates and higher failure rates than
do larger capitalization companies. Small capitalization companies may have
limited product lines, markets or financial resources and may lack management
depth. The trading volume of securities of smaller capitalization companies is
normally less than that of larger capitalization companies and, therefore, may
disproportionately affect their market price, tending to make them rise more in
response to buying demand and fall more in response to selling pressure than is
the case with larger capitalization companies. The Fund's investment in
relatively newly-public companies may carry special risks and may be more
speculative because such companies are relatively unseasoned. Such companies may
also lack sufficient resources, may be unable to generate internally the funds
necessary for growth and may find external financing to be unavailable on
favorable terms or even totally unavailable. Those companies will often be
involved in the development or marketing of a new product with no established
market, which could lead to significant losses. As a result of these factors,
securities in which the Fund will invest are likely to be more volatile than
other securities.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, you should be aware that the Fund has no
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operating history and that the Adviser has not previously managed portfolios
investing primarily in internet companies. Rates of total return quoted by the
Fund may be higher or lower than past quotations, and there can be no assurance
that any rate of total return will be maintained.
HOW TO INVEST IN THE FUND
Subject to a minimum initial investment of $1,000 for the Fund ($25 for
tax sheltered retirement plans) and minimum subsequent investments of $25, you
may invest any amount you choose, as often as you want, in the Fund.
INITIAL PURCHASE
BY MAIL - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, together with a check (subject to the above minimum amounts) made payable to
Analysts Investment Trust, 9200 Montgomery Road, Building D, Suite 13A,
Cincinnati, Ohio 45242.
BY WIRE - You may purchase shares of the Fund by wiring Federal Funds
from your bank, which may charge you a fee. If money is to be wired for an
initial purchase (new account), you must call the Fund at (513) 984-3377, and
provide the following information: the name or names in which your account is to
be registered; your address; your social security or tax identification number;
the amount being wired; the name of the Fund you wish to invest in; the name of
the wiring bank; and the name and telephone number of the person at your bank to
be contacted in connection with the order. Your bank must then wire the
specified account according to the following instructions:
Star Bank, N.A., Cincinnati/Trust
ABA #0420-0001-3
DDA #48036-9362
Account #_________- Analysts internet.fund
YOU MUST MAIL A COMPLETED APPLICATION TO THE TRUST AFTER OPENING AN
ACCOUNT BY WIRE TRANSFER. IF A COMPLETED APPLICATION IS NOT RECEIVED OR YOUR
SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER IS NOT CERTIFIED WITH A FORM W-9
WITHIN 60 DAYS, YOUR ACCOUNT WILL BE SUBJECT TO BACK-UP WITHHOLDING.
Wire orders will be accepted only on a day on which the Fund and Star
Bank are open for business. A wire purchase will not be considered made until
the wired money is received and the purchase order is received by the Fund. Any
delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Fund or Star Bank.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Fund.
ADDITIONAL INVESTMENTS
You may purchase additional shares of the Fund at any time by mail or
by bank wire (minimum of $25). Each additional purchase request must contain
your name, the name of your account(s), your account number(s), and the Fund in
which you wish to invest. Checks should be made payable to Analysts Investment
Trust and should be sent to the Trust's address. A bank wire should be sent as
outlined above.
TAX SHELTERED RETIREMENT PLANS
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRA's); simplified employee pensions
(SEP's); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); 403(b) tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact the Fund for the procedure to open an IRA
or SEP plan, 401(k) plan, qualified pension or profit sharing plan, 403(b) tax
deferred investment plan or non-qualified plan, as well as more specific
information regarding these retirement plan options. Consultation with an
attorney or tax adviser regarding these plans is advisable. Custodial fees for
an IRA or 403(b) plan will be paid by the Adviser directly to the IRA or 403(b)
plan custodian.
OTHER PURCHASE INFORMATION
You may exchange securities that you own for shares of the Fund,
provided the securities meet the Fund's investment criteria and the Adviser
deems them to be a desirable investment for the Fund. Any exchange will be a
taxable event and you may incur certain transaction costs relating to the
exchange. Contact the Funds for additional information.
If an order, together with payment in proper form, is received before
the close of trading on the New York Stock Exchange (currently 4:00 p.m. Eastern
Time), Fund shares will be purchased at the net asset value determined as of the
close of trading on that day. Otherwise, Fund shares will be purchased at the
net asset value determined as of the close of trading on the New York Stock
Exchange on the next business day. You become a shareholder after declaration of
any dividend on the day on which the order is effective. Dividends begin to
accrue after you become a shareholder. The Fund does not issue share
certificates. All shares are held in non-certificate form registered on the
books of the Fund for the account of the shareholder. The rights to limit the
amount of purchases and to refuse to sell to any person are reserved by the
Fund. If your check or wire does not clear, you will be responsible for any loss
incurred. If you are already a shareholder, the Fund can redeem shares from any
identically registered account in the Fund as reimbursement for any loss
incurred. You may be prohibited or restricted from making future purchases in
the Fund.
EXCHANGE PRIVILEGE
As a shareholder in the Fund, you may exchange shares for shares of any
other Fund in the Analysts Mutual Fund Group (which includes all open-end mutual
funds for which the Adviser serves as investment adviser or manager), or for
shares of the Money Market Portfolio, the Government Securities Portfolio or the
Tax-Exempt Portfolio of the Cash Account Trust ("CAT"), a separately managed,
unaffiliated money market fund. Exchanges may be made only if the Fund or CAT
Portfolio into which you wish to exchange your shares is registered in your
state of residence. The exchange privilege with the other Analysts Mutual Funds
and CAT Portfolios does not constitute an offering or recommendation of the
shares of any such Portfolio by the Trust or the Adviser. The CAT Portfolios'
administrator compensates the Adviser for administrative and distribution
services it performs with respect to those Portfolios.
It is your responsibility to obtain and read a prospectus of the Fund
or CAT Portfolio into which you are exchanging. By giving exchange instructions,
a shareholder will be deemed to have acknowledged receipt of the prospectus for
the Fund or Portfolio being purchased. You may make an exchange by telephone or
by written request.
<PAGE>
You can make an exchange by calling the Fund at the number listed in
this prospectus. An exchange may also be made by written request signed by all
registered owners of the account mailed to the Funds. Requests for exchanges
received prior to close of trading on the New York Stock Exchange (currently
4:00 p.m. Eastern Time) will be processed at the next determined net asset value
as of the close of business on the same day.
An exchange is made by redeeming shares of the Fund (or CAT Portfolio)
and using the proceeds to buy shares of another Fund (or CAT Portfolio), with
the price for the redemption and the purchase being the next determined net
asset value after the receipt of the order. See "Redemption of Shares". There is
no charge for this service, but the Fund reserve the right to charge a fee in
the future. An exchange results in a sale of shares for federal income tax
purposes. If you make use of the exchange privilege, you may realize either a
long term or short term capital gain or loss on the shares redeemed.
Before making an exchange, you should consider the investment objective
of the Fund (or CAT Portfolio) to be purchased. If your exchange creates a new
account, you must satisfy the requirements of the Fund (or CAT Portfolio) in
which shares are being purchased. You may make an exchange to a new account or
an existing account; however, the account ownerships must be identical. The Fund
reserve the right to terminate or modify the exchange privilege in the future
upon 60 days prior notice to shareholders.
REDEMPTION OF SHARES
You may redeem any part of your account in the Fund by mail or
telephone. The Fund will redeem your shares without charge at the next share
price (net asset value) calculated after receipt of your properly completed
request for withdrawal.
BY MAIL - You may redeem your shares at no charge by mail. All
redemptions will be made at the net asset value determined after the redemption
request has been received by the Fund in proper order. The proceeds of the
redemption may be more or less than the purchase price of your shares, depending
on the market value of the Fund's securities at the time of your redemption.
Your request should be addressed to Analysts Mutual Funds, 9200 Montgomery Road,
Building D, Suite 13A, Cincinnati, Ohio 45242.
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For redemptions in excess of
$25,000, the Fund may require that signatures be guaranteed by a bank or member
firm of a national securities exchange. Signature guarantees are for the
protection of shareholders. At the discretion of the Fund, a shareholder which
is a corporation, trust, estate, partnership, individual retirement account or
other entity, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.
If you are not certain of the requirements for redemption please call
the Fund at the number listed in this Prospectus.
BY TELEPHONE - You may request a redemption of your shares in the Fund
on any business day the New York Stock Exchange is open by calling the Fund
before 4:00 p.m. Eastern Time. It is not necessary for you to first make a
written election to initiate a telephone redemption. Redemption proceeds will be
mailed or wired at the shareholders direction to the predesignated account. The
minimum amount that may be wired is $1,000 (wire charges of $11.00 will be
deducted from redemption proceeds). The Trust and Star Bank, the Fund'
Custodian, will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine.
Such procedures will include requiring a form of personal identification from
the caller.
By using the telephone redemption and exchange privileges, a
shareholder authorizes the Fund and the Custodian to act upon the instruction of
any person by telephone to redeem from the account and transfer the proceeds to
the bank account designated or effect an exchange into another Fund. The Fund
and the Custodian are not liable for following instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. The Fund may change, modify or terminate the telephone redemption
or exchange privilege at any time.
BY SYSTEMATIC WITHDRAWAL PLAN - As another convenience, the Fund offer
a Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholder's account must have Fund shares with a value of at least $10,000
in order to start a Systematic Withdrawal Program, and the minimum amount that
may be withdrawn each month or quarter under the Systematic Withdrawal Program
is $100. This Program may be terminated or modified by a shareholder or the Fund
at any time without charge or penalty and will become effective five business
days following receipt of your instructions. Shares will be sold within 5 to 10
days preceding the end of a month. A withdrawal under the Systematic Withdrawal
Program involves a redemption of shares and may result in a gain or loss for
federal income tax purposes. In addition, if the amount withdrawn exceeds the
dividends credited to the shareholder's account, the account ultimately may be
depleted.
ADDITIONAL INFORMATION - Redemptions specifying a certain date or share
price cannot be accepted and will be returned. If you invest by wire, proceeds
will be held until the first business day following settlement of such purchase.
However, if you invest by a personal, corporate, cashier's or government check,
or through any of our telephone services, the redemption proceeds will not be
paid until the first business day after the 10th calendar day following receipt
of payment by the Fund. Exchanges into any of the other Fund or CAT Portfolios
are, however, permitted without the ten day waiting period.
We will mail or wire you the proceeds on or before the fifth business
day following the redemption. Also, when the New York Stock Exchange is closed
(or when trading is restricted) for any reason other than its customary weekend
or holiday closing or under any emergency circumstances, as determined by the
Securities and Exchange Commission, we may suspend redemptions or postpone
payment dates. If you are unable to accomplish your transaction by telephone
(for example, during times of unusual market activity), consider sending your
order by express mail or facsimile at (513) 984-2411.
Because the Fund can incur certain fixed costs in maintaining
shareholder accounts, the Fund reserves the right to require any shareholder to
redeem all of his shares in the Fund on 30 days written notice if the value of
his shares in the Fund is less than $1,000 due to redemption ($25 for IRA's), or
such other minimum amount as the Fund may determine from time to time. A
shareholder may increase the value of his shares in the Fund to the minimum
amount within the 30 day period. Each share of the Fund is subject to redemption
at any time if the Board of Trustees determines in its sole discretion that
failure to so redeem may have materially adverse consequences to all or any of
the shareholders of the Trust or any Fund of the Trust.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of The Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price of the day.
Lacking a last sale price, a security is generally valued at its last bid price,
except when, in the Adviser's opinion, the last bid price does not accurately
reflect the current value of the security. All other securities for which
<PAGE>
over-the-counter market quotations are readily available are valued at their
last bid price. When market quotations are not readily available, when the
Adviser determines the last bid price does not accurately reflect the current
value, or when restricted securities are being valued, such securities are
valued as determined in good faith by the Adviser, subject to review of the
Board of Trustees of the Trust.
Fixed income securities (including mortgage-related securities and
asset-backed and receivable-backed securities) may be valued on the basis of
prices furnished by a pricing service when the Adviser believes such prices
accurately reflect the fair market value of such securities. A pricing service
utilizes electronic data processing techniques to determine prices for normal
institutional-size trading units of debt securities without regard to sale or
bid prices. When prices are not readily available from a pricing service, or
when restricted or illiquid securities are being valued, securities are valued
at fair value as determined in good faith by the Adviser, subject to review of
the Board of Trustees. Short term investments in fixed income securities with
maturities of less than 60 days when acquired, or which subsequently are within
60 days of maturity, are valued by using the amortized cost method of valuation.
Over-the-counter markets are normally completed at various times before
the close of business on each day on which the New York Stock Exchange is open.
Trading of these securities may not take place on every New York Stock Exchange
business day. In addition, trading may take place in various foreign markets on
Saturdays or on other days when the New York Stock Exchange is not open and on
which the Fund's share price is not calculated. Therefore, the value of the
portfolio of the Fund holding foreign securities may be significantly affected
on days when shares of the Fund may not be purchased or redeemed.
The calculation of the share price of the Fund holding foreign
securities in its portfolio does not take place contemporaneously with the
determination of the values of many of the foreign portfolio securities used in
such calculation. Events affecting the values of foreign portfolio securities
that occur between the time their prices are determined and the calculation of
the Fund's share price will not be reflected in the calculation unless the
Adviser determines, subject to review by the Board of Trustees, that the
particular event would materially affect net asset value, in which case an
adjustment will be made.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on a quarterly basis. The Fund intends
to distribute its net long term capital gains at least once a year and its net
short term capital gains at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Fund. Shareholders will receive a confirmation
statement reflecting the payment and reinvestment of dividends and summarizing
all other transactions. If cash payment is requested, a check normally will be
mailed within five business days after the payable date. If you withdraw your
entire account, all dividends accrued to the time of withdrawal, including the
day of withdrawal, will be paid at that time. Distributions of less than $10 and
distributions on shares purchased within the last 30 days, however, will not be
paid in cash and will be reinvested. You may elect to have distributions on
shares held in IRA's, 403(b) plans and other tax sheltered retirement plans paid
in cash only if you are 59 1/2 years old or permanently and totally disabled or
if you otherwise qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any net realized
capital gains.
For federal income tax purposes, the Fund is treated as a separate
entity for the purpose of computing taxable net income and net realized capital
gains and losses. Dividends paid by the Fund from ordinary income are taxable to
shareholders as ordinary income, but may be eligible in part for the dividends
received deduction for corporations. Pursuant to the Tax Reform Act of 1986 (the
"Tax Reform Act"), all distributions of net capital gains to individuals are
taxed at the same rate as ordinary income. All distributions of net capital
gains to corporations are taxed at regular corporate rates. Any distributions
designated as being made from net realized long term capital gains are taxable
to shareholders as long term capital gains regardless of the holding period of
the shareholder. The tax consequences described in this section apply whether
distributions are taken in cash or reinvested in additional shares.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes.
Income received by the Fund from foreign securities may be subject to
foreign tax withholding. Tax treaties between certain countries and the U.S. may
reduce or eliminate such taxes. Shareholders may be entitled to claim tax
credits or deductions, subject to provisions and limitations of the Internal
Revenue Code, for foreign income taxes paid by the Fund. The Fund will notify
its shareholders if such credit or deduction is available.
Shareholders are urged to consult their own tax advisers regarding
specific questions as to federal, state or local taxes, applicable foreign tax
credits and deductions, the tax effect of distributions and withdrawals from the
Fund and the use of the Exchange Privilege.
Unless a shareholder of the Fund furnishes his certified taxpayer
identification number (social security number for individuals) and certifies
that he is not subject to backup withholding, the Fund will be required to
withhold and remit to the U.S. Treasury 20% of the dividends, distributions and
redemption proceeds payable to the shareholder. Shareholders should be aware
that, under regulations promulgated by the Internal Revenue Service, the Fund
may be fined $50 annually for each account for which a certified taxpayer
identification number is not provided. In the event that such a fine is imposed
with respect to a specific account in any year, the Fund will make a
corresponding charge against the account.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
NAME POSITION
- ---- --------
*David Lee Manzler, Jr. President, Treasurer and Trustee
*David L. Manzler, Sr. Vice President, Secretary and Trustee
Walter E. Bowles, III Trustee
Robert W. Buechner Trustee
Anthony J. Schement Trustee
The principal occupations of the executive officers and Trustees of the
Trust during the past several years are set forth below:
DAVID L. MANZLER, SR., 9200 Montgomery Road, Bldg. D, Suite 13A,
Cincinnati, Ohio is Vice President and a Director of Equity Analysts Inc. He is
also President of Equity Analysts Agency Inc., an insurance and pension plan
administrator, and a Director of Cincinnati Steel Products Co., a steel
fabrication company. Mr. Manzler is the father of David Lee Manzler, Jr.
<PAGE>
DAVID LEE MANZLER, JR., 9200 Montgomery Road, Bldg. D, Suite 13A,
Cincinnati, Ohio is President and a Director of Equity Analysts Inc. He is also
the President of Manzler Aviation, Inc. Prior to June, 1990, he was a captain in
the U.S. Marine Corps. Mr. Manzler is the son of David L. Manzler, Sr.
WALTER E. BOWLES, III, 6645 Miami Trails Drive, Loveland, Ohio has been
President of Webco Environmental Management, Inc., an environmental consulting
firm, since September, 1993. Prior to April, 1994, Mr. Bowles was a Business
Environmental Engineer for James River Corp., a manufacturer of paper and paper
products.
ROBERT W. BUECHNER, 105 East Fourth Street, Suite 300, Cincinnati, Ohio
is President of the law firm Buechner, Haffer, O'Connell, Meyers & Healey Co.,
L.P.A.
ANTHONY J. SCHEMENT, 8032 Deershadow Lane, Cincinnati, Ohio is a
Director of BMF Federal Savings Bank. Mr. Schement was President of BMF Federal
Savings Bank from July, 1989 until October, 1992.
OPERATION OF THE FUND
The Fund is a diversified series of Analysts Investment Trust, an
open-end management investment company organized as an Ohio business trust on
May 28, 1993. The Board of Trustees supervises the business activities of the
Trust. Like other mutual funds, the Trust retains various organizations to
perform specialized services. It retains Equity Analysts Inc., 9200 Montgomery
Road, Building D, Suite 13A, Cincinnati, Ohio 45242 (the "Adviser") to manage
the Trust's investments and its business affairs. The Adviser is a
Cincinnati-based company of which David L. Manzler, Sr. and David Lee Manzler,
Jr. are the controlling shareholders. The Adviser has managed the Analysts Stock
Fund and the Analysts Fixed Income Fund since their inception, August 23, 1993.
The Adviser is an investment advisory firm which has provided investment advice
to individuals, corporations, pension and profit sharing plans and trust
accounts since 1984. David Lee Manzler, Jr., Vice President of Equity Analysts
Inc., is primarily responsible for the day-to-day management of the portfolio of
the Fund. He is also primarily responsible for the day-to-day management of the
portfolio of the Analysts Stock Fund and the Analysts Fixed Income Fund and has
been since the inception of those Funds. Mr. Manzler has been the Vice President
and a Director of the Adviser since May, 1990. Equity Analysts Inc. is also the
exclusive agent for the distribution of shares of the Fund. The Trust acts as
its own transfer agent and dividend paying agent.
The Fund is obligated to pay the Adviser a fee equal to an annual
average rate of 3% of its average daily net assets up to and including $20
million, 2.75% of such assets from $20 million to and including $40 million,
2.5% of such assets from $40 million to and including $100 million and 1.75% of
such assets in excess of $100 million. The Adviser pays all of the expenses of
the Fund except brokerage, taxes, borrowing costs, and extraordinary expenses.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Trust as a factor in the selection of brokers and dealers to execute
portfolio transactions.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
EQUITY SECURITIES
Equity securities consist of common stock and common stock equivalents
(such as convertible preferred stock, convertible debentures, rights and
warrants). Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Convertible preferred stock is preferred
stock that can be converted into common stock pursuant to its terms. Convertible
debentures are debt instruments that can be converted into common stock pursuant
to their terms. Warrants are options to purchase equity securities at a
specified price for a specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer to its
shareholders. Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's financial
condition and on overall market and economic conditions.
The Fund may invest in foreign equity securities through the purchase
of American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 20% of its net assets at the time of purchase
in American Depository Receipts
OPTION TRANSACTIONS
The Fund may engage in option transactions involving equity securities,
debt securities, foreign currencies, futures contracts and stock indexes. To
cover the potential obligations involved in option transactions, the Fund will
own the underlying equity security, debt security, futures contract or foreign
currency or the Fund will segregate with the Custodian (a) liquid assets
sufficient to purchase the underlying equity security, debt security, futures
contract or foreign currency or (b) liquid assets equal to the market value of
the stock index. The Fund will only engage in options on futures contracts for
hedging purposes (see "Hedging Program" below). Option transactions involve the
following principal risks: (a) the loss of a greater percentage of the Fund's
investment than a direct investment in the underlying instrument, (b) the loss
of opportunity to profit from price movements in the underlying instrument, and
(c) the inability to effect a closing transaction on a particular option. There
is no restriction on the percentage of the Fund's total assets which may be
committed to transactions in options (except options on futures contracts as
discussed below). A more complete description of the characteristics, risks and
possible benefits of option transactions is included in the Statement of
Additional Information.
HEDGING PROGRAM
The Fund may hedge all or a portion of its portfolio investments
through the use of options, futures contracts and options on futures contracts.
The objective of the hedging program is to protect a profit or offset a loss in
a portfolio security from future price erosion or to assure a definite price for
a security, stock index, futures contract or currency. There are transactional
costs connected with a hedging program.
The principal risks associated with hedging transactions are: (a)
possible imperfect correlation between the prices of the options and futures
contracts and the market value of the Fund's portfolio securities, (b) possible
lack of a liquid secondary market for closing out an option or futures contract
transaction, (c) the need for additional skills and techniques beyond normal
portfolio management, and (d) losses resulting from market movements not
anticipated by the Adviser.
The Fund may not purchase or sell futures contracts or purchase related
options if, immediately thereafter, more than one-third of its net assets would
be hedged. In addition, the Fund may not enter into transactions involving
futures contracts and related options if such transactions would result in more
than 5% of the fair market value of the Fund's assets being deposited as initial
margin for such transactions. The Fund's ability to engage in the hedging
transactions and strategies described above may be limited by the tax
requirement that the Fund derive less than 30% of its gross income from the sale
or other disposition of stock or securities held for less than three months.
<PAGE>
A more complete description of the characteristics, risks and possible
benefits of hedging transactions is included in the Statement of Additional
Information.
REPURCHASE AGREEMENTS
A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a U.S. Government security
(which may be of any maturity) and the seller agrees to repurchase the
obligation at a future time at a set price, thereby determining the yield during
the purchaser's holding period (usually not more than seven days from the date
of purchase). Any repurchase transaction in which the Fund engages will require
full collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with Star Bank, N.A. (the Trust's Custodian), other banks with
assets of $1 billion or more and registered securities dealers determined by the
Adviser (subject to review by the Board of Trustees) to be creditworthy. The
Adviser monitors the creditworthiness of the banks and securities dealers with
which the Fund engages in repurchase transactions.
OTHER TECHNIQUES
The Fund may engage in short sales in an amount not exceeding 5% of the
Fund's net assets. The Fund may make loans of portfolio securities provided the
aggregate amounts of such loans do not exceed 5% of the Fund's net assets. The
Fund may borrow money only for liquidity purposes in an amount not exceeding 5%
of the Fund's total assets at the time the borrowing is made. Assets of the Fund
may be pledged in connection with borrowings. See "Additional Information About
Fund Investments" and "Investment Limitations" in the Statement of Additional
Information.
GENERAL
The Fund is permitted to invest in other investment companies. Other
investment companies offer diversification that may not be attainable otherwise.
The Fund will not purchase more than 3% of the outstanding voting stock of any
investment company. If the Fund acquires securities of another investment
company, the shareholders of the Fund may be subject to duplicative management
fees. The Fund may not invest more than 15% of its net assets in illiquid
securities. See "Additional Information About Fund Investments" and "Investment
Limitations" in the Statement of Additional Information.
GENERAL INFORMATION
FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. All
investment policies are non-fundamental unless indicated as fundamental in this
Prospectus or in the Statement of Additional Information.
SHAREHOLDER RIGHTS. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights. . Prior to the public offering of the Fund, Equity Analysts Inc.
purchased for investment all of the outstanding shares of the Fund and may be
deemed to control the Fund.
YEAR 2000 ISSUE. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser or service providers to the
Fund do not properly process and calculate date-related information and data
from and after January 1, 2000. This is commonly known as the "Year 2000 Issue."
The Adviser has taken steps that it believes are reasonably designed to address
the Year 2000 Issue with respect to computer systems that are used and to obtain
reasonable assurances that comparable steps are being taken by the Fund's major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund. In addition,
the Adviser cannot make any assurances that the Year 2000 Issue will not affect
the companies in which the Fund invests or worldwide markets and economies.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return." The
"total return" of the Fund refers to the dividends and distributions generated
by an investment in the Fund plus the change in the value of the investment from
the beginning of the period to the end of the period. The "average annual total
return" of the Fund refers to the rate of total return for each year of the
period which would be equivalent to the cumulative total return for the period.
All dividends and distributions earned on the investment are assumed to be
reinvested.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
The Fund may include in advertisements data comparing performance with
other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services or Morningstar). Performance information may
be quoted numerically or may be presented in a table, graph or other
illustration. In addition, Fund performance may be compared to well-known
indices of market performance including the Standard & Poor's (S&P) 500 Index or
the Dow Jones Industrial Average as well as internet Indices such as the Dow
Jones Composite Internet Index. The Trust's annual report contains additional
performance information that will be made available upon request and without
charge.
<PAGE>
ANALYSTS INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
*ANALYSTS INTERNET.FUND
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of the Analysts internet.fund dated
May 1, 1999. A copy of the Prospectus can be obtained by writing the Trust at
9200 Montgomery Road, Building D, Suite 13A, Cincinnati, Ohio 45242, or by
calling the Trust at (513) 792-5400.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ANALYSTS INVESTEMENT TRUST
ANALYSTS INTERNET.FUND
9200 MONTGOMERY ROAD
BUILDING D, SUITE 13A
CINCINNATI, OHIO 45242
TABLE OF CONTENTS
-----------------
PAGE
----
DESCRIPTION OF THE TRUST 2
TRUSTEE COMPENSATION 4
ADDITIONAL INFORMATION ABOUT FUND INVESTEMENTS 4
INVESTMENT LIMITATIONS 10
STATE RESTRICTIONS 12
THE INVESTMENT ADVISER 12
PORTFOLIO TRANSACTIONS AND BROKERAGE 13
DETERMINATION OF SHARE PRICE 14
INVESTMENT PERFORMANCE 15
CUSTODIAN AND TRANSFER AGENT 17
ACCOUNTANTS 17
<PAGE>
DESCRIPTION OF THE TRUST
The Analysts Investment Trust ("the Trust"), is an open-end investment
company established under the laws of Ohio by an Agreement and Declaration of
Trust dated May 28, 1993 (the "Trust Agreement"). Analysts internet.fund ("the
Fund") is a diversified series of the Trust established on March 25, 1999. The
Trust Agreement permits the Trustees to issue an unlimited number of shares of
beneficial interest of the Fund without par value.
Each share of the Fund represents an equal proportionate interest in
the assets and liabilities belonging to that series which each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
the Fund into a greater or lesser number of shares of the Fund so long as the
proportionate beneficial interest in the assets belonging to the Fund and the
rights of shares of the Fund are in no way affected. In case of any liquidation
of the Fund, the holders of shares of the Fund being liquidated will be entitled
to receive as a class a distribution out of the assets, net of the liabilities,
belonging to the Fund. Expenses attributable to the Fund are borne by the Fund.
Any general expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. No shareholder
is liable to further calls or to assessment by the Trust without his express
consent.
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. Each
share of each Fund is subject to redemption at any time if the Board of Trustees
determines in its sole discretion that failure to so redeem may have materially
adverse consequences to all or any of the shareholders of the Trust or the Fund.
For example, if the Trustees determine that failure to redeem might have
materially adverse tax consequences to all or any of the shareholders due to
changes in tax laws, the Trustees may exercise their discretion to redeem
shares. For other information concerning the purchase and redemption of shares
of the Fund, see "How to Invest in the Fund," "Redemption of Shares" and
"Exchange Privilege" in the Prospectus. For a description of the methods used to
determine the share price and value of the Fund's assets, see "Share Price
Calculation" in the Prospectus.
TRUSTEE COMPENSATION
The compensation paid to the Trustees of the Trust for the year ended July
31,1998 is set forth in the following table:
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM TRUST
AGGREGATE COMPENSATION (THE TRUST IS NOT
FROM TRUST (1) IN A FUND COMPLEX) (1)
NAME
- --------------------------------------------------------------------------------
<S> <C> <C>
David Lee Manzler, Jr. $0 $0
David L. Manzler, Sr. $0 $0
Walter E. Bowles, III $400 $400
Robert W. Buechner $400 $400
David J. Orth $400 $400
Anthony J. Schement $400 $400
<FN>
(1) Trustee fees are Trust expenses. However, because the management agreement
obligates the Adviser to pay all of the operating expenses of the Trust (with
limited exceptions), the Adviser makes the actual payment.
</FN>
</TABLE>
<PAGE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques").
A. ILLIQUID SECURITIES. The portfolio of the Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements and time deposits maturing in
more than seven days, options traded in the over-the-counter market, nonpublicly
offered securities, stripped CMOs, CMOs for which there is no established
market, restricted securities, and mortgage-related securities which cannot be
disposed of within seven days in the usual course of business without taking a
reduced price. The Adviser and the Trustees will continually monitor the
secondary markets for mortgage-related securities and are responsible for making
the determination of which securities are considered to be illiquid. The Fund
will not invest more then 5% of its net assets in illiquid securities.
B. RESTRICTED SECURITIES. Restricted securities are securities the
resale of which is subject to legal or contractual restrictions. Restricted
securities may be sold only in privately negotiated transactions, in a public
offering with respect to which a registration statement is in effect under the
Securities Act of 1933 or pursuant to Rule 144 or Rule 144A promulgated under
such Act. 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 of the decision to sell and the time such security may be sold
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 the price it could have obtained when it decided to sell.
C. OPTION TRANSACTIONS. The Fund may engage in option transactions
involving equity securities, futures contracts, and stock indexes. An option
involves either (a) the right or the obligation to buy or sell a specific
instrument or currency at a specific price until the expiration date of the
option, or (b) the right to receive payments or the obligation to make payments
representing the difference between the closing price of a market index and the
exercise price of the option expressed in dollars times a specified multiple
until the expiration date of the option. Options are sold (written) on equity
securities futures contracts, and stock indexes. The purchaser of the option
pays the seller (the writer) a premium for the right granted but is not
obligated to buy or sell the underlying security. The purchaser of an option on
a stock index pays the seller a premium for the right granted, and in return the
seller of such an option is obligated to make the payment. A writer of an option
may terminate the obligation prior to expiration of the option by making an
offsetting purchase of an identical option. Options are traded on organized
exchanges and in the over-the-counter market. Options which the Fund sells
(writes) will be covered or secured, which means that it will own the underlying
security, in the case of a call option and that the Fund will segregate with the
Trust's Custodian liquid assets sufficient to purchase the underlying security,
in the case of a put option. The Fund will also segregate and maintain with the
Custodian liquid assets equal to the market value of each put option sold
(written) by the Fund on a stock index. In addition, when the Fund writes
options, it may be required to maintain a margin account, to pledge the
underlying securities or U.S. Government obligations or to deposit assets in
escrow with the Custodian.
The purchase and writing of options involves certain risks. The
purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable
movements in the price of an underlying security or instrument to a greater
extent than if transactions were effected in the security or instrument
directly. However, the purchase of an option could result in the Fund losing a
greater percentage of its investment than if the transaction were effected
directly. When the Fund writes a covered call option, it will receive a premium,
but it will give up the opportunity to profit from a price increase in the
underlying security or instrument above the exercise price as long as its
obligation as a writer continues, and it will retain the risk of loss should the
<PAGE>
price of the security or instrument decline. When the Fund writes a secured put
option, it will assume the risk that the price of the underlying security or
instrument will fall below the exercise price, in which case the Fund may be
required to purchase the security or instrument at a higher price than the
market price of the security or instrument. In addition, there can be no
assurance that a Fund can effect a closing transaction on a particular option it
has written or that a liquid secondary market will exist for any particular
option at a specific time. Further, the total premium paid for any option may be
lost if the Fund does not exercise the option or, in the case of
over-the-counter options, the writer does not perform its obligations.
D. HEDGING TRANSACTIONS. The Fund may hedge all or a portion of its
portfolio investments through the use of options, futures contracts and options
on futures contracts. The objective of the hedging program is to protect a
profit or offset a loss in a portfolio security from future price erosion or to
assure a definite price for a security by acquiring the right or option to
purchase or to sell a fixed amount of the security for a future date.
There is no assurance that the objective of the hedging program will be
achieved, since the success of the program will depend on the Adviser's ability
to predict the future direction of the relevant stock index, futures contract or
interest rates and incorrect predictions by the Adviser may have adverse effect
on the Funds. In this regard, it should be noted that the skills and techniques
necessary to arrive at such predictions are different from those needed to
predict price changes in individual stocks.
The hedging strategy involves the use of one or more techniques,
including buying and selling options (described above), futures contracts and
options on such futures contracts. A futures contract is a binding contractual
commitment which involves either (a) the delivery and payment for a specified
amount of securities at a price agreed upon at the time the contract is entered
into but with actual delivery made during a specified period in the future, or
(b) the payment or receipt of payments representing, respectively, the loss or
gain of a specified group of stocks or market index. The securities underlying
the contract may be a group of stocks such as a popular market index (a stock
index futures contract). As new futures contracts are developed and offered to
investors, the Advisor will, consistent with the Fund's investment objectives
and policies, consider making investments in such new futures contracts.
Futures contracts are traded on exchanges licensed and regulated by the
Commodity Futures Trading Commission. The Fund will be subject to any
limitations imposed by the exchanges with respect to futures contracts trading
and positions. A clearing corporation associated with the particular exchange
assumes responsibility for all purchases and sales and guarantees delivery and
payment on the contracts. Although most futures contracts call for actual
delivery or acceptance of the underlying securities or currency, in most cases
the contracts are closed out before settlement date without the making or taking
of delivery. Closing out is accomplished by entering into an offsetting
transaction, which may result in a profit or a loss. There is no assurance that
the Fund will be able to close out a particular futures contract.
A hedging strategy involving options and futures contracts entails some
risks. For example, the total premium paid for an option on a futures contract
may be lost if a Fund does not exercise the option or the writer does not
perform his obligations. It is also possible that the futures contracts selected
by a Fund will not follow the price movement of the underlying securities or
stock index. If this occurs, the hedging strategy may not be successful.
Further, if a Fund sells a stock index futures contract and is required to pay
an amount measured by any increase in the market index, it will be exposed to an
indeterminate liability. In addition, a liquid secondary market may not exist
for any particular option or futures contract at any specific time.
The Fund will incur transactional costs in connection with the hedging
program. When a Fund purchases or sells a futures contract, an amount of cash
and liquid assets will be deposited in a segregated account with the Trust's
Custodian to guarantee performance of the futures contract. The amount of such
deposits will depend upon the requirements of each exchange and broker and will
vary with each futures contract. Because open futures contract positions are
<PAGE>
marked to market and gains and losses are settled on a daily basis, a Fund may
be required to deposit additional funds in such a segregated account if it had
incurred a net loss on its open futures positions on any day.
The Trust has filed a supplemental notice of eligibility with the
Commodity Futures Trading Commission ("CFTC") to claim relief from regulation as
a commodity "pool" within the meaning of the CFTC's regulations. In its filing,
the Trust has represented that each Fund's transactions in futures and options
on futures contracts will constitute bona fide hedging transactions within the
meaning of such regulations and that each Fund will enter into commitments which
require as deposits for initial margin for futures contracts or premiums for
options no futures contracts no more than 5% of the fair market value of its
assets.
E. LOANS OF PORTFOLIO SECURITIES. The Fund may make short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Advisor in response to requests of
broker-dealers or institutional investors which the Advisor deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be important. With respect
to loans of securities, there is the risk that the borrower may fail to return
the loaned securities or that the borrower may not be able to provide additional
collateral. No loan of securities will be made if, as a result, the aggregate
amount of such loans would exceed 5% of the value of the Fund's total assets.
F. SHORT SALES. The Fund may sell a security short in anticipation of a
decline in the market value of the security. When a Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
In connection with its short sales, the Fund will be required to
maintain a segregated account with its Custodian of cash or high grade liquid
assets equal to the market value of the securities sold less any collateral
deposited with its broker. The Fund will limit its short sales so that no more
than 5% of its net assets (less all its liabilities other than obligations under
short sales) will be deposited as collateral and allocated to the segregated
account. However, the segregated account and deposits will not necessarily limit
the Fund's potential loss on a short sale, which is limited.
INVESTMENT LIMITATIONS
FUNDAMENTAL. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e. they may not be changes without the affirmative vote of a
majority of the outstanding shares of the Trust. As used in the Prospectus and
the Statement of Additional Information, the terms"majority" of the outstanding
shares of the Trust (or of any series) means the lesser of (1) 67% or more of
the outstanding shares of the Trust (or applicable series) present at the
meeting, if the holders of more than 50% of the outstanding shares of the Trust
(or applicable series) are present or represented at such meeting; or (2) more
than 50% of the outstanding shares of the Trust (or the applicable series).
Other investment practices which may be changed by the Board of Trustees without
the approval of shareholders to the extent permitted by applicable law,
regulation or regulatory policy are considered non-fundamental
("Non-Fundamental").
1. BORROWING MONEY. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
<PAGE>
amount not exceeding 5% of the Fund's total assets at the time when borrowing is
made. The limitation does not preclude the Fund from entering into reverse
repurchase transactions, provided that the Fund has an asset coverage of 300%
for all borrowings and repurchase commitments of the Fund pursuant to reverse
repurchase transactions.
2. SENIOR SECURITIES. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder, or interpretations of the Securities and Exchange Commission or its
staff.
3. UNDERWRITING. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. REAL ESTATE. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in securities which are secured by
or represent interests in real estate. This limitation does not preclude the
Fund from investing in mortgage-related securities, or investing in companies
which are engaged in the real estate business or have a significant portion of
their assets in real estate (including real estate investment trusts).
5. COMMODITIES. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. LOANS. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. CONCENTRATION. The Fund will not invest 25% or more of its assets in
a particular industry, except that the Fund will invest more than 25% of its
assets in internet companies. This limitation is not applicable to investments
in obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such a merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
NON-FUNDAMENTAL. The following limitations have been adopted by the
Trust with respect to each Fund and are Non-Fundamental.
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I. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
II. MARGIN PURCHASES. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
III. OPTIONS. The Fund will not purchase or sell puts, calls, options
or straddles except as described in the Prospectus and the Statement of
Additional Information.
IV. ILLIQUID INVESTMENTS. The Fund will not invest more than 15% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISER
The Trust's investment adviser is Equity Analyst Inc., 9200 Montgomery
Road, Building D, Suite 13A, Cincinnati, Ohio 45242. David Lee Manzler, Jr. and
David L. Manzler, Sr. may be deemed to be controlling persons and affiliates of
the Adviser due to their ownership of its shares and their positions,
respectively, as officers and directors of the Adviser. The Manzlers, because of
their affiliation, may receive benefits from the management fees paid to the
Adviser.
Under the terms of the management (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Funds except brokerage, taxes, borrowing costs
and extraordinary expenses. As compensation for the Adviser's management
services and agreement to pay the Fund's expenses, the Fund is obligated to pay
the Adviser's fee computed and accrued daily and paid monthly at an annual rate
of 3.00% of the average daily net assets of the Fund up to and including
$20,000,000, 2.75% of such assets from $20,000,000 to and including $40,000,000,
2.5% of such assets from $40,000,000 to and including $100,000,000 and 2.25% of
such assets in excess of $100,000,000.
The Adviser retains the right to use the name "Analysts" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated, the Trust's right to use the name "Analysts"
automatically ceases thirty days after termination of the Agreement and may be
withdrawn by the Adviser on thirty days notice.
Equity Analysts Inc. is also the exclusive underwriter for the
distribution of shares of the Fund. Equity Analysts Inc. is obligated to sell
shares of each Fund on a best efforts basis for no compensation. Shares of each
Fund are offered to the public on a continuous basis.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Trust's portfolio decisions and the placing
of the Trust's portfolio transactions. In placing portfolio transactions, the
Adviser seeks to the best qualitative execution for the Trust, taking into
account such factors as price (including the applicable brokerage commission or
dealer spread), the execution capability, financial responsibility and
responsiveness of the broker or dealer and the brokerage and research services
provided by the broker or dealer. The Advisor generally seeks favorable prices
and commissions rates that are reasonable in relation to the benefits received.
<PAGE>
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Trust and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analysis, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Trust effects securities
transactions may also be used by the Adviser in servicing all of its accounts
and all such services may not be used by the Advisor in connection with the
Trust. Similarly, research and information provided by brokers or dealers
serving other clients may be useful to the Adviser in connection with its
services to the Trust. Although research services and other information are
useful to the Trust and the Adviser, it possible to place a dollar value on the
research and other information received. It is opinion of the Board of Trustees
and the Adviser that the review and study of the research and other information
will not reduce the overall cost to the Adviser of performing its duties to the
Trust under the Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to market makers may include the spread between the bid and
asked prices.
To the extent that the Trust and another of the Adviser's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Trust. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be made random
client selection.
DETERMINATION OF SHARE PRICE
The prices (net asset values) of the shares of the Fund is determined
as of the close of trading of the New York Stock Exchange (4:00P.M., Eastern
time) on each day the Trust is open for business. The Trust is open for business
every day except Saturdays, Sundays, and the following holidays: New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. For a description of
the methods used to determine the net asset value (share price), see "Share
Price Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of a return (over the one and five year periods and the period from initial
public offering through the end of a Fund's most recent fiscal year) that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1+T)n=ERV
<PAGE>
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the applicable
period of the hypothetical $1,000 investment made at the
beginning of the applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from average
annual total return. A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for average annual total return. In addition, a non-standardized
quotation may be an indication of the value of a $10,000 investment (made on the
date of the initial public offering of the Fund's shares) as of the end of a
specified period. A non-standardized quotation of total return will always be
accompanied by the Fund's average annual total return as described above.
The Fund's investment performance will vary depending upon the market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time period
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Funds
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the appropriate
Fund or considered to be representative of the stock market in general. Analysts
internet.fund will use the Dow Jones Composite Internet Index or other internet
indices. The investment performance figures for the Fund and the indices will
include reinvestment of dividends and capital gains distributions.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the applicable Fund. Performance rankings and
ratings reported periodically in national financial publications such as
Barron's may also be used.
CUSTODIAN AND TRANSFER AGENT
Star Bank, N.A., 432 Walnut Street, Cincinnati, Ohio is Custodian of
the Funds' investments. The Custodian acts as the Fund's depository, safekeeps
its portfolio securities, collects all income and other payments with respect
thereto, disburses funds at the Fund's request and maintains records in
connection with its duties. The Trust acts as the Fund's transfer agent and, in
such capacity, 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 distribution disbursing agent
and performs other accounting and shareholder service functions.
<PAGE>
ACCOUNTANTS
The firm of Berge and Company LTD, 20 West Ninth Street, Cincinnati,
Ohio 45202, has been selected as independent public accountants for the Trust
for the fiscal year ending July 31, 1999.
FINANCIAL STATEMENTS
The first set of financial statements and independent auditor's report
for the Fund will be completed for the fiscal year ending July 31, 1999. There
are no financial statements included with this statement of additional
information.
