PROSPECTUS
December 31, 1996
Mini-Cap Fund
Value + Growth Fund
Balanced Fund
Class K Shares
JURIKA & VOYLES
FUND GROUP
<PAGE>
JURIKA & VOYLES FUND GROUP
Jurika & Voyles Mini-Cap Fund
Jurika & Voyles Value + Growth Fund
Jurika & Voyles Balanced Fund
Class K Shares
- --------------------------------------------------------------------------------
JURIKA & VOYLES FUND GROUP (THE "TRUST") IS AN OPEN-END INVESTMENT COMPANY
CONSISTING OF SEPARATE DIVERSIFIED SERIES (THE "FUNDS"). EACH FUND HAS ITS OWN
OBJECTIVE, ASSETS AND LIABILITIES. JURIKA & VOYLES, L.P. ("JURIKA & VOYLES" OR
THE "ADVISER") SERVES AS INVESTMENT ADVISER TO THE FUNDS. THIS PROSPECTUS
DESCRIBES CLASS K SHARES OF THE FUNDS.
The MINI-CAP FUND seeks to maximize long-term capital appreciation. This
Fund invests primarily in the common stock of quality companies having small
market capitalizations that offer current value and significant future growth
potential.
The VALUE + GROWTH FUND seeks long-term capital appreciation. This Fund
invests primarily in the common stock of quality companies of all market
capitalizations that offer current value and significant future growth
potential.
The BALANCED FUND seeks to provide investors with a balance of long-term
capital appreciation and current income. This Fund invests primarily in a
diversified portfolio that combines stocks, bonds and cash-equivalent
securities.
This prospectus sets forth the basic information that prospective investors
should know before investing in Class K shares of a Fund. Investors should read
this Prospectus carefully and retain it for future reference. A Statement of
Additional Information dated December 31, 1996, as may be amended from time to
time, has been filed with the Securities and Exchange Commission and is
incorporated by reference into this Prospectus. You may obtain this Statement of
Additional Information without charge by writing to the Funds at the address
noted below or by calling (800) JV-INVST.
JURIKA & VOYLES FUND GROUP
1999 HARRISON STREET, SUITE 700
OAKLAND, CALIFORNIA 94612
(800) JV-INVST
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SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS DATED DECEMBER 31, 1996
<PAGE>
TABLE OF CONTENTS
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SUMMARY OF EXPENSES AND EXAMPLE............................. 1
PROSPECTUS SUMMARY.......................................... 2
FINANCIAL HIGHLIGHTS........................................ 3
INVESTMENT OBJECTIVES AND POLICIES.......................... 4
The Mini-Cap Fund......................................... 4
The Value + Growth Fund................................... 4
The Balanced Fund......................................... 5
Additional Investment Considerations...................... 6
RISK CONSIDERATIONS......................................... 6
PORTFOLIO SECURITIES, INVESTMENT TECHNIQUES AND RISKS....... 8
ORGANIZATION AND MANAGEMENT................................. 12
PURCHASING CLASS K SHARES................................... 15
EXCHANGE OF CLASS K SHARES.................................. 17
SELLING CLASS K SHARES (REDEMPTIONS)........................ 18
SHAREHOLDER SERVICES........................................ 19
CLASS K SHARE PRICE CALCULATION............................. 20
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS..................... 20
PERFORMANCE INFORMATION..................................... 21
GENERAL INFORMATION......................................... 22
<PAGE>
SUMMARY OF EXPENSES
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THIS TABLE IS DESIGNED TO HELP YOU UNDERSTAND THE COSTS OF INVESTING IN CLASS K
SHARES OF A FUND. THESE ARE THE ESTIMATED EXPENSES OF CLASS K SHARES OF EACH
FUND FOR THE CURRENT FISCAL YEAR. ALTHOUGH NOT REQUIRED TO DO SO, THE ADVISER
HAS AGREED TO REIMBURSE EACH FUND IN THE CURRENT FISCAL YEAR TO THE EXTENT
NECESSARY SO THAT ITS RATIO OF TOTAL OPERATING EXPENSES TO AVERAGE NET ASSETS
WILL NOT EXCEED THE FOLLOWING LEVELS: MINI-CAP FUND -- 1.75%*; VALUE + GROWTH
FUND -- 1.50%*; AND BALANCED FUND -- 1.50%*.
<TABLE>
<CAPTION>
Mini-Cap Value + Balanced
Fund Growth Fund Fund
----------- ------------- -----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum sales charge on purchases None None None
Sales charge on reinvested dividends None None None
Redemption fee+ None None None
Exchange fee None None None
TOTAL ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees 1.00% 0.85% 0.85%
12b-1 expenses** 0.25% 0.25% 0.25%
Other expenses after expense reimbursement 0.50% 0.40% 0.40%
------- ------ -------
Total operating expenses after expense reimbursement 1.75%* 1.50%* 1.50%*
</TABLE>
* ABSENT REDUCTION AND INCLUDING THE RULE 12B-1 FEE FOR CLASS K SHARES, FOR
THE FISCAL PERIOD ENDED JUNE 30, 1996, THE RATIOS OF TOTAL OPERATING
EXPENSES TO AVERAGE NET ASSETS FOR CLASS K SHARES OF EACH FUND WOULD HAVE
BEEN AS FOLLOWS: MINI-CAP FUND -- 1.99% (0.99% OTHER EXPENSES); VALUE +
GROWTH FUND -- 2.37% (1.52% OTHER EXPENSES); AND BALANCED FUND 1.74% (0.89%
OTHER EXPENSES). THE FOREGOING FIGURES REFLECT THE ACTUAL EXPENSES OF CLASS
J SHARES OF THE FUNDS TO WHICH THE RULE 12B-1 FEES APPLICABLE TO CLASS K
SHARES HAVE BEEN ADDED. CLASS K SHARES WERE NOT OFFERED DURING THE PERIOD
INDICATED. IN SUBSEQUENT YEARS, OVERALL OPERATING EXPENSES FOR EACH FUND MAY
NOT FALL BELOW THE APPLICABLE PERCENTAGE LIMITATION UNTIL THE ADVISER HAS
BEEN FULLY REIMBURSED FOR FEES FOREGONE OR EXPENSES PAID BY IT UNDER THE
MANAGEMENT AGREEMENT. EACH FUND WILL REIMBURSE THE ADVISER IN THE THREE
FOLLOWING YEARS IF OPERATING EXPENSES (BEFORE REIMBURSEMENT) ARE LESS THAN
THE APPLICABLE PERCENTAGE LIMITATION CHARGED TO THE FUND.
** RULE 12B-1 DISTRIBUTION CHARGES ARE ACCOUNTED FOR ON A CLASS-LEVEL BASIS
(AND NOT ON AN INDIVIDUAL SHAREHOLDER-LEVEL BASIS). INDIVIDUAL LONG-TERM
INVESTORS IN THE CLASS K SHARES OF A FUND MAY OVER TIME PAY MORE THAN THE
ECONOMIC EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGE PERMITTED BY THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. ("NASD").
+ SHAREHOLDERS WHO EFFECT REDEMPTIONS VIA WIRE TRANSFER WILL BE CHARGED A
$10.00 FEE AND MAY BE REQUIRED TO PAY A THIRD-PARTY SERVICE PROVIDER CHARGE
THAT WILL BE DIRECTLY DEDUCTED FROM REDEMPTION PROCEEDS.
EXAMPLE
This table illustrates the net transaction and operating expenses that would
be incurred by an investment in Class K Shares of each Fund over different time
periods assuming a $1,000 investment, a 5% annual return, and redemption at the
end of one, three, five and ten years. The Funds charge no redemption fees. The
Example should not be considered a representation of past or future expenses and
actual expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
Mini-Cap Value + Growth Balanced
Fund Fund Fund
----------- --------------- -----------
<S> <C> <C> <C>
One year......................................................................... $ 18 $ 15 $ 15
Three years...................................................................... $ 55 $ 47 $ 47
Five years....................................................................... $ 95 $ 82 $ 82
Ten years........................................................................ $ 206 $ 179 $ 179
</TABLE>
THE EXAMPLE SHOWN ABOVE ASSUMES THAT THE ADVISER WILL LIMIT THE ANNUAL OPERATING
EXPENSES OF CLASS K SHARES OF EACH FUND TO THE TOTALS SHOWN. IN ADDITION,
FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT THE
FUNDS' ACTUAL RETURNS MAY BE HIGHER OR LOWER. SEE "ORGANIZATION AND MANAGEMENT"
ON PAGE 12.
1
<PAGE>
PROSPECTUS SUMMARY
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INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objective. See "Investment Objectives and
Policies" for a full discussion of the objectives of the Mini-Cap Fund, Value +
Growth Fund, and Balanced Fund. The investment objective of each Fund is
fundamental and may not be changed without shareholder approval.
THE INVESTMENT ADVISER
Jurika & Voyles, founded in 1983, in Oakland, California, serves as the
investment adviser to the Trust and the Funds. The Adviser currently manages
over $5 billion of discretionary assets for various clients including
corporations, pension plans, 401(k) plans, profit sharing plans, trusts and
estates, foundations and charitable endowments, and high net worth individuals.
In January, 1997, Jurika & Voyles became part of investment management firms
owned by the New England Investment Companies, L.P., an affiliate of
Metropolitan Life Insurance Company.
MANAGEMENT FEE
For its services, the Adviser receives a fee, accrued daily and paid
monthly, at the following annual percentages of average net assets: Mini-Cap
Fund -- 1.00%; Value + Growth Fund -- 0.85%; and Balanced Fund -- 0.85%. These
fees are higher than those paid by most mutual funds but believed to be typical
of fees charged by funds with similar investment objectives.
RULE 12B-1 FEE
Class K shares of the Funds are subject to a Rule 12b-1 fee at the rate of
0.25% per year. Proceeds from the Rule 12b-1 fee are paid to the Adviser to
reimburse the Adviser for its distribution related expenses incurred in
connection with the distribution of Class K shares of the Funds.
MINIMUM PURCHASE
The minimum initial investment in each Fund is $250,000. Each Fund may waive
the minimum for certain retirement and other employee benefit plans; for the
Adviser's employees, clients and their affiliates; for advisers or financial
institutions offering investors a program of services; or for any other person
or organization deemed appropriate by the Trust.
OFFERING PRICE
Shares are offered at their net asset value without a sales charge and may
be redeemed at their net asset value on any business day. See "Purchasing Class
K Shares" and "Selling Class K Shares (Redemptions)" on pages 15-19.
DIVIDENDS AND DISTRIBUTIONS
The Mini-Cap Fund and the Value + Growth Fund intend to pay dividends and
make capital distributions annually. The Balanced Fund intends to pay dividends
quarterly and to make capital distributions annually.
RISK CONSIDERATIONS
Like all investments, an investment in each Fund involves certain risks. The
equity and fixed income securities held by the Funds and the value of the Funds'
shares will fluctuate with market and other economic conditions, so that
investors' shares, when redeemed, may be worth more or less than their original
cost. The Funds may invest in mortgage-backed securities (including CMOs and
REMICs), asset-backed securities, interest-only and principal-only securities,
foreign securities and junk bonds. See "Risk Considerations" on page 6 for a
further discussion of certain risks.
ORGANIZATION
The Funds are organized as distinct series within a Delaware business trust
(the "Trust"), which is registered as an open-end diversified management
investment company. The Trust currently consists of four separate diversified
series, each of which has its own objective, assets, liabilities and net assets.
The Funds offer another class of shares to investors eligible to purchase
those shares. The other class of shares may pay different fees and expenses than
the class of shares offered in this prospectus, and those different fees and
expenses may affect performance. To obtain information concerning the other
class of shares not offered in this prospectus, call the Funds at (800)
JV-INVST.
Transfer Agent, Custodian
and Fund Accountant:
State Street Bank & Trust Company
Auditor:
McGladrey & Pullen, LLP Distributor:
First Fund Distributors, Inc.
Legal Counsel:
Heller, Ehrman, White & McAuliffe
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
2
<PAGE>
FINANCIAL HIGHLIGHTS
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The following information has been audited by McGladrey & Pullen, LLP,
independent certified public accountants whose unqualified reports covering the
fiscal periods ended June 30, 1995 and 1996 are incorporated by reference herein
and appear in the annual report to shareholders. This information should be read
in conjunction with the financial statements and accompanying notes thereto
which appear in the annual report. The financial information shown relates to
another class of shares of the Funds not subject to the Class K Rule 12b-1 fee
because the Class K shares were not offered during the periods shown. Further
information about the Funds' performance is included in the annual report which
may be obtained without charge by writing or calling the address or telephone
number on the Prospectus cover page.
<TABLE>
<CAPTION>
Value + Growth
Mini-Cap Fund Fund Balanced Fund
----------------------- ----------------------- -----------------------------------------------------------
7/01/95- 9/30/94- 07/01/95- 9/30/94- 07/01/95- 10/01/94- 11/01/93- 11/01/92- 03/09/92-
06/30/96 06/30/95(4) 06/30/96 09/30/95(4) 6/30/96 6/30/95 09/30/94 10/30/93 10/31/94(1)
--------- ----------- --------- ----------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $ 14.12 $ 10.00 $ 12.82 $ 10.00 $ 13.96 $ 12.41 $ 12.82 $ 10.84 $10.00
------- ------- ------- ------- ------- ------- ------- ------- ------
Income from
investment
operations
Net investment
income (0.02) 0.01 0.11 0.05 0.43 0.24 0.16 0.16 0.11
Net realized &
unrealized
gain on
investments 5.25 4.13 1.40 2.79 1.27 1.59 0.05 1.98 0.83
------- ------- ------- ------- ------- ------- ------- ------- ------
Total from
investment
operations 5.23 4.14 1.51 2.84 1.70 1.83 0.21 2.14 0.94
Less
distributions
From net
investment
income -- (0.02) (0.13) (0.02) (0.43) (0.24) (0.18) (0.16) (0.10)
From net
realized
gains (0.96) -- (.051) -- (0.54) (0.04) (0.44) -- --
------- ------- ------- ------- ------- ------- ------- ------- ------
Total
distributions (0.96) (0.02) (0.64) (0.02) (0.97) (0.28) (0.62) (0.16) (0.10)
======= ======= ======= ======= ======= ======= ======= ======= ======
Net asset value,
end of period $ 18.39 $ 14.12 $ 13.69 $ 12.82 $ 14.69 $ 13.96 $ 12.41 $ 12.82 $10.84
======= ======= ======= ======= ======= ======= ======= ======= ======
Total return(3) 38.46% 41.47% 12.11% 28.43% 12.56% 14.98% 3.66% 19.83% 14.67%
======= ======= ======= ======= ======= ======= ======= ======= ======
Net assets at
end of period
(in 000's) $92,697 $10,397 $21,256 $12,989 $46,979 $38,836 $34,659 $20,931 $6,008
======= ======= ======= ======= ======= ======= ======= ======= ======
Ratio of
expenses to
average net
assets(2) 1.50% 1.50%* 1.35% 1.35%* 1.35% 1.33%* 1.63%* 1.47% 1.50%*
======= ======= ======= ======= ======= ======= ======= ======= ======
Ratio of net
investment
income to
average net
assets (0.35)% 0.04%* 0.78% 1.18%* 2.98% 2.51%* 1.77%* 1.51% 1.93%*
======= ======= ======= ======= ======= ======= ======= ======= ======
Portfolio
turnover rate 214.71% 102.85% 101.05% 31.64% 69.11% 54.02% 60.90% 44.12% 20.00%
======= ======= ======= ======= ======= ======= ======= ======= ======
</TABLE>
- ------------------------------
* ANNUALIZED
(1) THE JURIKA & VOYLES BALANCED FUND COMMENCED OPERATIONS ON MARCH 9, 1992.
(2) NET OF EXPENSE REIMBURSEMENTS. THE ANNUALIZED RATIO OF TOTAL OPERATING
EXPENSES TO AVERAGE NET ASSETS BEFORE EXPENSE REIMBURSEMENTS WOULD HAVE BEEN
1.74%, 2.12% AND 1.49% FOR THE MINI-CAP FUND, THE VALUE + GROWTH FUND AND
THE BALANCED FUND, RESPECTIVELY, FOR THE PERIODS ENDED JUNE 30, 1996.
(3) NOT ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(4) THE JURIKA & VOYLES MINI-CAP FUND AND VALUE + GROWTH FUND EACH COMMENCED
OPERATIONS ON SEPTEMBER 30, 1994.
NOTE: INFORMATION FOR FISCAL PERIODS OF THE BALANCED FUND ENDING ON SEPTEMBER
30, 1994, OCTOBER 31, 1993 AND OCTOBER 31, 1992 WAS AUDITED BY OTHER INDEPENDENT
ACCOUNTANTS WHOSE REPORT IS NOT INCLUDED HEREIN.
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
The investment objective and policies of each Fund are described below. The
investment objective of each Fund is fundamental and may not be changed without
shareholder approval. In addition, each of the Funds may make use of certain
types of investments and investing techniques that are described under the
caption "Portfolio Securities, Investment Techniques and Risks" on page 8. The
value of the Funds' investments will fluctuate with market and other economic
conditions.
THE MINI-CAP FUND
The Fund seeks to maximize long-term capital appreciation. The Fund invests
primarily in the common stock of quality companies having small market
capitalizations that offer current value and significant future growth
potential.
The Fund will invest at least 65% of its total assets in the common stock of
companies having market capitalizations at the time of purchase of between $50
million and $500 million. The fund typically expects that at least 80% of its
equity holdings will fall within this capitalization range. The average and
median market capitalizations will fluctuate over time as a result of market
valuation levels and the availability of specific investment opportunities.
The Fund invests in quality companies selling at lower price to earnings
("P/E") multiples relative to their growth rates and lower P/E multiples than
the Standard & Poor's 500 Composite Price Index and/or Russell 2000 Small Stock
Index. Quality companies possess some or all of the following characteristics:
significant potential for future growth in earnings; a strong competitive
advantage; a clearly defined business focus; strong financial health; and a
skilled management group.
Jurika & Voyles places heavy emphasis on in-house research, which includes
personal contacts, site visits and meetings with company management.
The securities of smaller-sized companies may present greater opportunities
for capital appreciation, but may also involve greater risks. These securities
have the characteristics and risks described under the caption "Risk
Considerations" on page 6.
The Fund may continue to hold its investment in a company whose
capitalization subsequently grows above $500 million if the company continues to
satisfy the other investment policies of the Fund.
The Fund invests primarily in common stocks, but also may invest in other
equity securities including convertible preferred stocks, convertible debt
securities and warrants. A warrant represents a right to acquire other equity
securities, often for consideration and subject to certain conditions. In
addition, the Fund may invest up to 25% of its total assets in foreign
securities such as U.S. dollar-denominated securities of foreign issuers and
American Depositary Receipts ("ADRs"), but will limit its investments in any one
foreign country to 5% of its total assets. As part of this, the Fund may invest
up to 5% of its net assets in securities denominated in foreign currencies. See
"Risk Considerations" on page 6.
Although the Fund does not anticipate maintaining a large non-equity
position, the Fund may invest up to 35% of its total assets in debt securities,
including up to 25% of its total assets in debt securities (and convertible debt
securities) rated below investment grade, sometimes referred to as
"high-yield/high-risk or "junk" bonds. Debt securities may include bonds, notes,
convertible bonds, mortgage-backed and asset-backed securities (including CMOs
and REMICs) and other types. See "Portfolio Securities, Investment Techniques
and Risks." See "Risk Considerations" for a discussion of the characteristics of
the debt securities.
For a description of cash-equivalent securities in which a Fund may invest,
U.S. Government securities, repurchase agreements, securities lending and other
investments and techniques a Fund may use, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
THE VALUE + GROWTH FUND
The Value + Growth Fund seeks long-term capital appreciation. The Fund
invests primarily in the common stock of quality companies of all market
capitalizations that offer current value and significant future growth
potential.
4
<PAGE>
The fund will invest at least 65% of its total assets in the common stock of
companies having market capitalizations at the time of purchase of $500 million
and over. The fund typically expects that at least 80% of its equity holdings
will fall within this capitalization range. The average and median market
capitalizations will fluctuate over time as a result of market valuation levels
and the availability of specific investment opportunities.
The Fund invests in quality companies offering an attractive combination of
value and growth characteristics. The Adviser will seek companies that will
typically sell at lower P/E multiples and offer higher earnings and growth rates
than the S&P market average. In addition, the Fund emphasizes companies that
possess some or all of the following characteristics: significant potential of
future growth in earnings; a strong competitive advantage; a clearly defined
business focus; strong financial health; and management ownership.
Jurika & Voyles places heavy emphasis on in-house research, which includes
personal contacts, site visits and meetings with company managements.
The Fund may hold equity securities of companies with smaller market
capitalizations. These securities have the characteristics and risks described
under the caption "Risk Considerations" on page 6.
The Fund invests primarily in common stocks, but also may invest in other
equity securities including convertible preferred stocks, convertible debt
securities and warrants. A warrant represents a right to acquire other equity
securities, often for consideration and subject to certain conditions. In
addition, the Fund may invest up to 25% of its total assets in foreign
securities such as U.S. dollar-denominated securities of foreign issuers and
ADRs, but will limit its investments in any one foreign country to 5% of its
total assets. As part of this, the Fund may invest up to 5% of its net assets in
securities denominated in foreign currencies. See "Portfolio Securities,
Investment Techniques and Risks." See "Risk Considerations" on page 6.
Although the Fund does not anticipate maintaining a large non-equity
position, the Fund may invest up to 35% of its total assets in debt securities,
including up to 25% of its total assets in debt securities (and convertible debt
securities) rated below investment grade, sometimes referred to as
"high-yield/high-risk or "junk" bonds. Debt securities may include bonds, notes,
convertible bonds, mortgage-backed and asset-backed securities (including CMOs
and REMICs) and other types. See "Risk Considerations" for a discussion of the
characteristics of the debt securities in which the Fund may invest.
For a description of cash-equivalent securities in which a Fund may invest,
U.S. Government securities, repurchase agreements, securities lending and other
investments and techniques a Fund may use, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
THE BALANCED FUND
The Balanced Fund's objective is to provide investors with a balance of
long-term capital appreciation and current income. The Fund seeks to achieve
this objective with less volatility and risk than that of the broad stock market
by investing primarily in a diversified portfolio that combines stocks, bonds
and cash-equivalent securities.
Equity securities normally will constitute from 40% to 70% of the Fund's
total assets. The Fund will invest at least 25% of its total assets in
fixed-income debt securities. Cash-equivalent securities normally will
constitute from 0% to 35% of the Fund's total assets. The Adviser will shift the
balance between equity, debt and cash-equivalent securities based on economic
conditions, the current interest rate environment and the availability of
specific investment opportunities consistent with the Fund's objective.
The Fund's equity investments will emphasize equity securities of companies
having market capitalizations at the time of purchase of $500 million and over.
The fund typically expects that at least 80% of its equity holdings will fall
within this capitalization range. The average and median market capitalizations
will fluctuate over time as a result of market valuation levels and the
availability of specific investment opportunities.
The Fund invests in quality companies offering an attractive combination of
value and growth characteristics. The Adviser will seek companies that will
typically sell at lower P/E multiples and
5
<PAGE>
offer higher earnings and growth rates than the S&P market average. In addition,
the Fund emphasizes companies that possess some or all of the following
characteristics: significant potential for future growth in earnings; a strong
competitive advantage; a clearly defined business focus; strong financial
health; and management ownership.
Jurika & Voyles places heavy emphasis on in-house research, which includes
personal contacts, site visits, and meetings with company management.
The Fund may hold securities of companies with smaller market
capitalizations. These securities have the characteristics and risks described
under the caption "Risk Considerations" on page 6.
The Fund invests primarily in common stocks and senior debt securities, but
also may invest in convertible preferred stocks, convertible debt securities and
warrants. A warrant represents a right to acquire other equity securities, often
for consideration and subject to certain conditions. In addition, the Fund may
invest up to 25% of its total assets in foreign securities such as U.S.
dollar-denominated securities of foreign issuers and ADRs, but will limit its
investments in any one foreign country to 5% of its net assets. As part of this,
the Fund may invest up to 5% of its total assets in securities denominated in
foreign currencies. See "Risk Considerations" on page 6.
The Fund may invest up to 25% of its total assets in debt securities (and
convertible debt securities) rated below investment grade sometimes referred to
as "high-yield/high-risk" or "junk" bonds. Debt securities may include bonds,
notes, convertible bonds, mortgage-backed and asset-backed securities (including
CMOs and REMICs) and other types. See "Portfolio Securities, Investment
Techniques and Risks." See "Risk Considerations" for a discussion of the
characteristics of the debt securities in which the Fund may invest.
For a description of cash-equivalent securities in which a Fund may invest,
U.S. Government securities, repurchase agreements, securities lending and other
investments and techniques a Fund may use, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
ADDITIONAL INVESTMENT CONSIDERATIONS
The Adviser supports its selection of individual securities through
intensive research and pursues qualitative and quantitative disciplines to
determine when securities should be purchased and sold. In unusual
circumstances, economic, monetary and other factors may cause the Adviser to
assume a temporary, defensive position during which all or a substantial portion
of each Fund's assets may be invested in cash and short-term instruments. The
Funds also may lend securities and use repurchase agreements. For more
information on these investments, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
PRICE FLUCTUATION. Investments in equity securities in general are subject
to market risks that may cause their prices to fluctuate over time. The value of
debt securities changes as interest rates fluctuate. The value of securities,
such as warrants or convertible debt, exercisable for or convertible into equity
securities is also affected by prevailing interest rates, the credit quality of
the issuer and any call provisions. Fluctuations in the value of securities in
which a Fund invests will cause the net asset value of that Fund to fluctuate.
An investment in a Fund therefore may be more suitable for long-term investors
who can bear the risk of short-term principal fluctuations.
SMALL COMPANIES. Smaller companies present greater opportunities for capital
appreciation, but may also involve greater risks than larger companies. Although
smaller companies can benefit from the development of new products and services,
they also may have limited product lines, markets or financial resources, and
their securities may trade less frequently and in more limited volume than the
securities of larger, more mature companies. As a result, the prices of the
securities of such smaller companies may fluctuate to a greater degree than the
prices of the securities of other issuers.
DEBT SECURITIES. Debt securities held by the Funds may be subject to several
types of investment
6
<PAGE>
risk. Market or interest rate risk relates to the change in market value caused
by fluctuations in prevailing interest rates, while credit risk relates to the
ability of the issuer to make timely interest payments and to repay the
principal upon maturity. Call or income risk relates to corporate bonds during
periods of falling interest rates, and involves the possibility that securities
with high interest rates will be prepaid or "called" by the issuer prior to
maturity. Such an event would require a Fund to invest the resulting proceeds
elsewhere, at generally lower interest rates, which could cause fluctuations in
a Fund's net income. A Fund also may be exposed to event risk, which is the
possibility that corporate debt securities held by a Fund may suffer a
substantial decline in credit quality and market value due to a corporate
restructuring.
The value of debt securities will normally increase in periods of falling
interest rates; conversely, the value of these instruments will normally decline
in periods of rising interest rates. Generally, the longer the remaining
maturity of a debt security, the greater the effect of interest rate changes on
its market value. In an effort to maximize income consistent with its investment
objective, the Balanced Fund may, at times, change the average maturity of its
investment portfolio. This can be done by investing a larger portion of assets
in relatively longer term obligations when periods of declining interest rates
are anticipated and, conversely, emphasizing shorter and intermediate term
maturities when a rise in interest rates is indicated. See "Portfolio
Securities, Investment Techniques and Risks."
INVESTMENT GRADE DEBT SECURITIES. Investment grade debt securities include
those rated at least Baa by Moody's Investors Services, Inc. ("Moody's") or BBB
by Standard & Poor's Corporation ("S&P") or, if unrated, deemed to be of
equivalent quality as determined by the Adviser. Debt securities in this lowest
tier of investment grade are generally regarded as having adequate capacity to
pay interest and repay principal, but have speculative characteristics. Changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to make interest and principal payments than is the case with
higher grade bonds.
BELOW INVESTMENT GRADE DEBT SECURITIES. Below investment grade securities
are sometimes referred to as "high-yield/high-risk" or "junk" bonds. The Funds
will invest in debt securities rated at least Ba or B by Moody's or BB or B by
S&P or, if unrated, deemed to be of equivalent quality as determined by the
Adviser. These debt securities have greater speculative characteristics.
Securities rated B are regarded as having a great vulnerability to default
although currently having the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity or willingness to pay interest and repay principal. The ability
to maintain other terms of the contract over any long period of time may be
small. Junk bonds are more subject to default during periods of economic
downturns or increases in interest rates and their yields will fluctuate over
time. It may be more difficult to dispose of or to value junk bonds. Achievement
of a Fund's investment objective may also be more dependent on the Adviser's own
credit analysis to the extent a Fund's portfolio includes junk bonds.
FOREIGN SECURITIES. Foreign securities include both U.S. dollar- and foreign
currency-denominated securities of foreign issuers. In most cases the Adviser
will invest in foreign securities that are listed and traded on a domestic
national securities exchange.
There may be less publicly available information about issuers of foreign
securities than is available about companies in the U.S. and foreign auditing
requirements may not be comparable to those in the U.S. Interest or dividends on
foreign securities may be subject to foreign withholding taxes. Investments in
foreign countries may be subject to the possibility of expropriation or
confiscatory taxation, exchange controls, political or social instability or
diplomatic developments that could adversely affect the value of those
investments. In addition, the value of the foreign securities may be adversely
affected by movements in the exchange rates between foreign currencies and the
U.S. dollar, as well as other political and economic developments.
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PORTFOLIO SECURITIES, INVESTMENT
TECHNIQUES AND RISKS
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SHORT-TERM INVESTMENTS. As noted above, the Funds may invest in short-term
cash equivalent securities either for temporary, defensive purposes or, for the
Balanced Fund, as part of an overall investment strategy. These consist of
high-quality debt obligations eligible to be included in money market
portfolios, such as U.S. Government securities, certificates of deposit,
bankers' acceptances and commercial paper. High-quality means the obligations
have been rated at least A-1 by S&P or Prime-1 by Moody's, have an outstanding
issue of debt securities rated at least A by S&P or Moody's, or are of
comparable quality in the opinion of the Adviser.
REPURCHASE AGREEMENTS. Short-term investments also include repurchase
agreements, reverse repurchase agreements and dollar roll transactions. A
reverse repurchase agreement involves a sale by a Fund of a security that it
holds to a bank, broker-dealer or other financial institution concurrently with
an agreement by that Fund to repurchase the same security at an agreed-upon
price and date. A dollar roll transaction involves a sale by a Fund of a
security to a financial institution, such as a bank or broker-dealer,
concurrently with an agreement by that Fund to repurchase a similar security
from the institution at a later date at an agreed-upon price. In a dollar roll
transaction, the Fund would be compensated by the difference between the current
sales price and the forward price for the future purchase, as well as the
interest earned on the cash proceeds on the initial sale. For financial
reporting and tax purposes, the Funds propose to treat dollar rolls as two
separate transactions: one involving the purchase of a security and a separate
transaction involving the sale of a security. The Funds do not currently intend
to enter into dollar rolls that are accounted for as a financing. All repurchase
agreements, reverse repurchase agreements and dollar roll transactions will be
fully collateralized in a segregated account with liquid high-grade debt
obligations on a daily marked-to-market basis. Because those transactions depend
on the performance of the other party, the Adviser will carefully assess the
creditworthiness of any bank or broker-dealer involved in these transactions
under procedures adopted by the Board of Trustees.
DEBT SECURITIES. The Funds' investments in debt securities include all types
of domestic or U.S. dollar-denominated foreign debt securities in any
proportion, including bonds, notes, convertible bonds, mortgage-backed and
asset-backed securities, including collateralized mortgage obligations and real
estate mortgage investment conduits, U.S. Government and U.S. Government agency
securities, zero coupon bonds, and short-term obligations such as commercial
paper and notes, bank deposits and other financial obligations, and longer-term
repurchase agreements. Under normal circumstances, the Adviser intends, but is
not obligated, to construct the portfolio with a higher proportion of corporate
issues than government or government agency securities. Bonds, notes and other
corporate debt instruments include obligations of varying maturities within the
overall maturity range noted above over a cross section of industries.
In determining whether or not to invest in a particular debt security, the
Adviser considers factors such as the price, coupon and yield to maturity, the
credit quality of the issuer, the issuer's cash flow and related coverage
ratios, the property, if any, securing the obligation and the terms of the debt
instrument, including subordination, default, sinking fund and early redemption
provisions.
Subsequent to purchase, the rating of a debt issue may be reduced below the
minimum rating acceptable for purchase by a Fund. A subsequent downgrade does
not require the sale of the security, but the Adviser will consider such an
event in determining whether to continue to hold the obligation. The Statement
of Additional Information contains a description of Moody's and S&P ratings.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include direct
obligations issued by
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the United States Treasury, such as Treasury bills, certificates of
indebtedness, notes and bonds. U.S. Government agencies and instrumentalities
that issue or guarantee securities include, but are not limited to, the Federal
Home Loan Banks, the Federal National Mortgage Association ("FNMA"), and the
Student Loan Marketing Association. Except for U.S. Treasury securities,
obligations of U.S. Government agencies and instrumentalities may or may not be
supported by the full faith and credit of the United States. Some, such as those
of the Federal Home Loan Banks, are backed by the right of the issuer to borrow
from the Treasury, others by discretionary authority of the U.S. Government to
purchase the agencies' obligations, while still others, such as the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
In the case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality does
not meet its commitment.
ASSET-BACKED SECURITIES. Asset-backed securities represent undivided
fractional interests in a trust with assets consisting of a pool of domestic
loans such as motor vehicle retail installment sales contracts or credit card
receivables. Asset-backed securities generally are issued by governmental,
government-related and private organizations. Payments typically are made
monthly, consisting of both principal and interest payments. Asset-backed
securities may be prepaid prior to maturity and hence the actual life of the
security cannot be accurately predicted. During periods of falling interest
rates, prepayments may accelerate, which would require a Fund to reinvest the
proceeds at a lower interest rate. In addition, like other debt securities, the
value of asset-backed securities will normally decline in periods of rising
interest rates. Although generally rated AAA, it is possible that the securities
could become illiquid or experience losses if guarantors or insurers default.
See "Risk Considerations -- Debt Securities."
MORTGAGE-RELATED SECURITIES. Mortgage-related securities are interests in a
pool of mortgage loans. Most mortgage-related securities are pass-through
securities, which means that investors receive payments consisting of a pro rata
share of both principal and interest (less servicing and other fees), as well as
unscheduled prepayments, as mortgages in the underlying mortgage pool are paid
off by the borrowers. In the case of mortgage-related securities, including real
estate mortgage investment conduits and collateralized mortgage obligations,
prepayments of principal by mortgagors or mortgage foreclosures will affect the
average life of the mortgage-related securities remaining in a Fund's portfolio.
Mortgage prepayments are affected by the level of interest rates and by factors
including general economic conditions, the underlying location and age of the
mortgage and other social and demographic conditions. In periods of rising
interest rates, the rate of prepayments tends to decrease, thereby lengthening
the average life of a pool of mortgage-related securities. Conversely, in
periods of falling interest rates, the rate of prepayments tends to increase,
thereby shortening the average life of a pool of mortgages. Thus,
mortgage-related securities may have less potential for capital appreciation in
periods of falling interest rates than other fixed-income securities of
comparable duration, although these securities may have a comparable risk of
decline in market value in periods of rising interest rates. Unscheduled
prepayments, which are made at par, will result in a loss equal to any
unamortized premium. See also "Risk Considerations -- Debt Securities."
AGENCY MORTGAGE-RELATED SECURITIES. The dominant issuers or guarantors of
mortgage-related securities today are the Government National Mortgage
Association ("GNMA"), FNMA and the Federal Home Loan Mortgage Corporation
("FHLMC"). GNMA creates pass-through securities from pools of U.S. government
guaranteed or insured (Federal Housing Authority or Veterans Administration)
mortgages originated by mortgage bankers, commercial banks and savings
associations. FNMA and FHLMC issue pass-through securities from pools of
conventional and federally insured and/or guaranteed residential mortgages
obtained from various entities, including savings associations, savings banks,
commercial banks, credit unions and mortgage bankers.
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The principal and interest on GNMA pass-through securities are guaranteed by
GNMA and backed by the full faith and credit of the U.S. Government. FNMA
guarantees full and timely payment of all interest and principal, while FHLMC
guarantees timely payment of interest and ultimate collection of principal of
its pass-through securities. Securities from FNMA and FHLMC are not backed by
the full faith and credit of the U.S. Government; however, they are generally
considered to present minimal credit risks. The yields provided by these
mortgage-related securities historically have exceeded the yields on other types
of U.S. Government securities with comparable maturities in large measure due to
the risks associated with prepayment.
Adjustable rate mortgage securities ("ARMs") are a form of pass-through
security representing interests in pools of mortgage loans, the interest rates
of which are adjusted from time to time. The adjustments usually are determined
in accordance with a predetermined interest rate index and may be subject to
certain limits. The adjustment feature of ARMs tends to make their values less
sensitive to interest rate changes.
Collateralized mortgage obligations ("CMOs") are debt obligations issued by
finance subsidiaries or trusts that are secured by mortgage-backed certificates,
including, in many cases, certificates issued by government-related guarantors,
such as GNMA, FNMA and FHLMC, together with certain funds and other collateral.
Although payment of the principal of and interest on the mortgage-backed
certificates pledged to secure the CMOs may be guaranteed by a U.S. Government
agency or instrumentality, such as FHLMC, the CMOs represent obligations solely
of the CMO issuer and are not insured or guaranteed by a U.S. Government agency
or instrumentality. The issuers of CMOs typically have no significant assets
other than those pledged as collateral for the obligations. The Funds will not
invest in any new types of collateralized mortgage obligations without prior
disclosure to the shareholders. Stripped mortgage securities, which are a form
of CMO, are usually structured with classes that receive different proportions
of the interest and principal payments on a pool of mortgages. Sometimes, one
class will receive all of the interest (the interest only or "IO" class) while
the other class will receive all of the principal (the principal only or "PO"
class). The yield to maturity on any IO class or PO class is extremely sensitive
not only to changes in prevailing interest rates but also to the rate of
principal payments and prepayments on the related underlying mortgages and, in
the most extreme cases, an IO class may become worthless.
The liquidity of IOs and POs that are issued by the U.S. Government or its
agencies and instrumentalities and backed by fixed-rate mortgage-related
securities will be determined by the Adviser under the direct supervision of the
Trust's Pricing Committee and approved by the Board of Trustees, and all other
IOs and POs will be deemed illiquid for purposes of the Funds' limitation on
illiquid securities.
PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES. The Funds may invest in
mortgage-related securities offered by private issuers, including pass-through
securities for pools of conventional residential mortgage loans; mortgage
pay-through obligations and mortgage-backed bonds, which are considered to be
obligations of the institution issuing the bonds and are collateralized by
mortgage loans; and bonds and CMOs that are collateralized by mortgage-related
securities issued by GNMA, FNMA, FHLMC or by pools of conventional mortgages.
Mortgage-related securities created by private issuers generally offer a
higher rate of interest (and greater credit and interest rate risk) than U.S.
Government and agency mortgage-related securities because they offer no direct
or indirect governmental guarantees of payments. However, many issuers or
servicers of mortgage-related securities guarantee, or provide insurance for,
timely payment of interest and principal on such securities.
The Funds may purchase some mortgage-related securities through private
placements without right to registration under the Securities Act of 1933, as
amended. See "Illiquid and Restricted Securities" on page 11.
WHEN-ISSUED SECURITIES. The Funds may purchase securities on a when-issued
or delayed-delivery basis, generally in connection with an underwriting or other
offering. When-issued and
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delayed delivery transactions occur when securities are bought with payment for
and delivery of the securities scheduled to take place at a future time, beyond
normal settlement dates, generally from 15 to 45 days after the transaction.
Each Fund will segregate cash, U.S. Government securities or other liquid,
high-quality debt securities in an amount sufficient to meet its payment
obligations with respect to these transactions.
INVESTMENT COMPANIES. Each Fund may invest up to 10% of its total assets in
shares of other investment companies. As a shareholder in another investment
company, a Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. In accordance with
applicable state regulatory provisions, the Adviser has agreed to waive its
management fee with respect to the portion of a Fund's assets invested in shares
of other open-end investment companies. In the case of a closed-end fund,
shareholders would bear the expenses of both a Fund and the fund in which that
Fund invests.
ILLIQUID AND RESTRICTED SECURITIES. No Fund may invest more than 15% of its
net assets in illiquid securities, including (1) securities for which there is
no readily available market; (2) securities which may be subject to legal
restrictions (so-called "restricted securities") other than Rule 144A securities
noted below; (3) repurchase agreements having more than seven days to maturity
and (4) fixed time deposits subject to withdrawal penalties (other than those
with a term of less than seven days). Restricted securities do not include those
which meet the requirements of Rule 144A under the Securities Act of 1933, as
amended, and which the Trustees have determined to be liquid based on the
applicable trading markets and the availability of reliable price information.
These Rule 144A securities could have the effect of increasing a Fund's
illiquidity to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing these securities.
FUND TURNOVER. The Funds do not intend to engage in short-term trading.
Under normal market conditions, the portfolio turnover rate for Value + Growth
Fund and Balanced Fund should be less than 100%. Under normal market conditions,
the portfolio turnover rate for Mini-Cap Fund should be less than 200%. For the
fiscal year ended June 30, 1996, the portfolio turnover for the Mini-Cap fund
was 215% (103% for the 9 months ended June 30, 1995); Value + Growth, 101% (32%
for the 9 months ended June 30, 1995); Balanced Fund, 69% (54% for the 9 months
ended June 30, 1995). Portfolio turnover in excess of 100% is considered high,
increases brokerage costs incurred by a Fund and may cause recognition of gain
by shareholders.
SECURITIES LENDING. Each Fund may lend its securities in an amount not
exceeding 30% of its assets to financial institutions such as banks and brokers
if the loan is collateralized in accordance with applicable regulations. Under
the present regulatory requirements which govern loans of fund securities, the
loan collateral must, on each business day, at least equal the value of the
loaned securities and must consist of cash, letters of credit of domestic banks
or domestic branches of foreign banks, or securities of the U.S. Government or
its agencies.
BORROWING. Each Fund may borrow money from banks in an aggregate amount not
to exceed one-third of the value of the Fund's total assets to meet temporary or
emergency purposes, and each Fund may pledge its assets in connection with such
borrowings. A Fund will not purchase any securities while any such borrowings
exceed 5% of that Fund's total assets (including reverse repurchase agreements
and dollar roll transactions that are accounted for as financings.).
The Fund aggregates reverse repurchase agreements and dollar roll
transactions that are accounted for as financings with its bank borrowings for
purposes of limiting borrowings to one-third of the value of the Fund's total
assets. See the Statement of Additional Information for further information.
LEVERAGE. Leveraging the Funds through various forms of borrowing creates an
opportunity for increased net income but, at the same time, creates special risk
considerations. For example, leveraging may exaggerate changes in the net asset
value of a Fund's shares and in the yield on a Fund's portfolio. Although the
principal of such borrowings will be fixed, a Fund's assets may change in value
during the time the borrowing is outstanding. Leveraging will create interest
expenses for a Fund that can
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exceed the income from the assets retained. To the extent the income derived
from securities purchased with borrowed funds exceeds the interest a Fund will
have to pay, that Fund's net income will be greater than if leveraging were not
used. Conversely, if the income from the assets retained with borrowed funds is
not sufficient to cover the cost of leveraging, the net income of a Fund will be
less than if leveraging were not used, and therefore, the amount available for
distribution to shareholders as dividends will be reduced.
POOLED FUND. The initial shareholders of each Fund have approved a
fundamental policy authorizing each Fund, subject to authorization by the Board
of Trustees, and notwithstanding any other investment restriction, to invest all
of its assets in the securities of a single open-end investment company (a
"pooled fund"). If authorized by the Trustees, a Fund would seek to achieve its
investment objective by investing in a pooled fund which would invest in a
portfolio of securities that complies with the Fund's investment objective,
policies and restrictions. The Board currently does not intend to authorize
investing in pooled funds. Each Fund will notify its shareholders prior to
adopting such an investment structure.
OTHER INVESTMENT RESTRICTIONS AND TECHNIQUES. Each Fund has adopted certain
other investment restrictions and uses various other investment techniques,
which are described in the Statement of Additional Information. Like each Fund's
investment objective, certain of these restrictions are fundamental and may be
changed only by a majority vote of that Fund's outstanding shares.
ORGANIZATION AND MANAGEMENT
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ORGANIZATION. The Trust is registered as an open-end diversified management
investment company and was organized as a Delaware business trust on July 11,
1994. The Trust currently consists of four separate diversified series. The
Trust's Board of Trustees decides on matters of general policy for all series
and reviews the activities of the Adviser, Distributor and Administrator. The
Trust's officers conduct and supervise the daily business operations of the
Trust and each series.
THE ADVISER. The Funds' Adviser, Jurika & Voyles, is a professional
investment management firm founded in 1983 by William K. Jurika and Glenn C.
Voyles. Mr. Jurika and Mr. Voyles control the majority of the Adviser's voting
stock. As of June 30, 1996, the Adviser had discretionary management authority
with respect to approximately $5 billion of assets for various clients including
corporations, pension plans, 401(k) plans, profit sharing plans, trusts and
estates, foundations and charitable endowments, and high net worth individuals.
In January, 1997, Jurika & Voyles became part of the group of investment firms
owned by the New England Investment Companies, L.P., an affiliate of
Metropolitan Life Insurance Company. The principal business address of the
Adviser is 1999 Harrison Street, Suite 700, Oakland, California 94612.
MANAGEMENT FEE. Subject to the direction and control of the Trustees, the
Adviser formulates and implements an investment program for each Fund, including
determining which securities should be bought and sold. In addition to providing
certain administrative services, the Adviser also provides certain of the
officers of the Trust. For its services, the Adviser receives a fee, accrued
daily and paid monthly, at the following annual percentages of average net
assets: Mini-Cap Fund 1.00%; Value + Growth Fund 0.85%; and Balanced Fund 0.85%.
These fees are higher than those paid by most mutual funds, but believed to be
typical of fees charged by funds with similar investment objectives.
RULE 12B-1 FEE. Rule 12b-1, adopted by the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940, as amended,
permits an investment company directly or indirectly to pay expenses associated
with the distribution of its shares ("distribution expenses") in accordance with
a plan adopted by the investment company's Board of Trustees and approved by its
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shareholders. Pursuant to that Rule, the Trust's Board of Trustees and the
initial shareholder of the Class K shares of each Fund have approved, and each
Fund has entered into, a Share Marketing Plan (the "Plan") with the Adviser, as
the distribution coordinator, for the Class K shares. Under the Plan, each Fund
will pay distribution fees to the Adviser at an annual rate of 0.25% of the
Fund's aggregate average daily net assets attributable to its Class K shares, to
reimburse the Adviser for its distribution costs with respect to that Class.
Payments made under the Plan may not represent actual marketing expenses.
The fee paid under the Plan may be used to pay for any expenses primarily
intended to result in the sale of Class K shares ("distribution services"),
including, but not limited to: (a) costs of payments, including incentive
compensation, made to agents for and consultants to the Adviser, any affiliate
of the Adviser or the Trust, including pension administration firms that provide
distribution and shareholder related services and broker-dealers that engage in
the distribution of Class K shares; (b) payments made to, and expenses of,
persons who provide support services in connection with the distribution of
Class K shares and servicing of Class K shareholders, including, but not limited
to, personnel of the Adviser, office space and equipment, telephone facilities,
answering routine inquiries regarding Class K shares, processing shareholder
transactions and providing any other shareholder services not otherwise provided
by the Trust's transfer agency or other servicing arrangements; (c) all payments
made pursuant to the Distribution Agreement; (d) costs relating to the
formulation and implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (e) costs of printing and
distributing prospectuses, statements of additional information and reports of
the Funds and/or the Trust to prospective shareholders of Class K shares; (f)
costs involved in preparing, printing and distributing sales literature
pertaining to Class K shares; and (g) costs involved in obtaining whatever
information, analyses and reports with respect to marketing and promotional
activities that the Trust may, from time to time, deem advisable. Such expenses
shall be deemed incurred whether paid directly by the Adviser as distribution
coordinator or by a third party to the extent reimbursed therefor by the
Adviser.
In adopting the Plan, the Board of Trustees determined that there was a
reasonable likelihood that the Plan would benefit the Funds and the shareholders
of Class K shares. Information with respect to distribution revenues and
expenses is presented to the Board of Trustees quarterly for their consideration
in connection with their deliberations as to the continuance of the Plan. In
their review of the Plan, the Board of Trustees is asked to take into
consideration expenses incurred in connection with the separate distribution of
the Class K shares.
The Class K shares are not obligated under the Plan to pay any distribution
expenses in excess of the distribution fee. Thus, if the Plan was terminated or
otherwise not continued, no amounts (other than current amounts accrued but not
yet paid) would be owed by the Class to the Adviser.
The distribution fee attributable to the Class K shares is designed to
permit an investor to purchase Class K shares through financial planners,
retirement and pension plan administrators, broker-dealers and other financial
intermediaries without the assessment of a front-end sales charge and at the
same time to permit the Adviser to compensate those persons on an ongoing basis
in connection with the sale of the Class K shares.
The Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Trustees of the Trust, including a
majority of the Trustees who are not "interested persons" of the Trust (as
defined in the Investment Company Act) and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related to the
Plan (the "Independent Trustees"), vote annually to continue the Plan. The Plan
may be terminated at any time by vote of a majority of the Independent Trustees
or of a majority of the outstanding shares (as defined in the Investment Company
Act) of the Class K shares.
COMPENSATION OF OTHER PARTIES. The Adviser may in its discretion and out of
its own funds compensate third parties for the sale and marketing of Classs K
shares of the Funds. The Adviser also
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may use its own funds to sponsor seminars and educational programs on the Funds
for financial intermediaries and shareholders.
MANAGERS OF THE FUNDS. The Portfolio Managers primarily responsible for the
day-to-day management of the Funds are William K. Jurika (for equity
investments), Glenn C. Voyles (for debt investments) and Irene Gorman Hoover
(for small and mini-cap investments). General management of the Funds' equity
and debt portfolio securities is conducted by Mr. Jurika and Mr. Voyles,
respectively. Ms. Hoover assists with the management of the Mini-Cap Fund by
identifying investment opportunities in small and mini-capitalization companies.
Mr. Jurika and Mr. Voyles have been associated with the Adviser since they
co-founded the firm in 1983. Prior to joining the Adviser in September 1991, Ms.
Hoover served as Vice President of Research at Pacific Securities, of San
Francisco, California.
EXPENSE LIMITATION. Class K shares of each Fund are responsible for paying
the pro-rata share of Fund expenses attributable to such shares as well as
class- specific expenses. Fund expenses include legal and auditing fees, fees
and expenses of its custodian, accounting services and third-party shareholder
servicing agents, trustees' fees, the cost of communicating with shareholders
and registration fees, as well as its other operating expenses. Although not
required to do so, the Adviser has agreed to reimburse each Fund to the extent
necessary so that its ratio of operating expenses to average net assets will not
exceed the following levels with respect to Class K shares: Mini-Cap Fund --
1.75%; Value + Growth Fund -- 1.50%; and Balanced Fund -- 1.50%. The Adviser may
terminate these reductions at any time. Any reductions made by the Adviser in
its fees and any payments or reimbursement of expenses made by the Adviser which
are a Fund's obligation are subject to reimbursement within the following three
years by that Fund provided the Fund is able to effect such reimbursement and
remain in compliance with applicable expense limitations described in this
Prospectus and that may be imposed by regulatory authorities. The Trustees
believe that the Funds may be of a sufficient size to permit the reimbursement
of any such reductions or payments. A description of any such reimbursements and
the amounts paid will be set forth in financial statements that are included in
the Funds' annual and semi-annual reports to shareholders.
FUND TRANSACTIONS AND BROKERAGE. The Adviser considers a number of factors
in determining which brokers or dealers to use for a Fund's portfolio
transactions. These factors include, but are not limited to, the reasonableness
of commissions, quality of services and execution, and the availability of
research which the Adviser may lawfully and appropriately use in its investment
management and advisory capacities. Provided a Fund receives prompt execution at
competitive prices, the Adviser also may consider the sale of Fund shares by
brokers as a factor in selecting those broker-dealers for the Fund's portfolio
transactions. For more information, please refer to the Statement of Additional
Information.
THE ADMINISTRATOR. Investment Company Administration Corporation (the
"Administrator"), pursuant to an administration agreement with the Funds,
supervises the overall administration of the Trust and the Funds including,
among other responsibilities, the preparation and filing of all documents
required for compliance by the Trust or the Funds with applicable laws and
regulations, arranging for the maintenance of books and records of the Trust and
the Funds, and supervision of other organizations that provide services to the
Trust and the Funds. Certain officers of the Trust and the Funds may be provided
by the Administrator. The Trust has agreed to pay the Administrator an annual
fee of 0.10% of the value of the total net assets of the Trust.
MULTIPLE CLASSES. Under the Trust's charter documents, the Board of Trustees
has the power to classify or reclassify any unissued shares of a Fund into one
or more additional classes by setting or changing in any one or more respects
their relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board of Trustees of
a Fund may similarly classify or reclassify any class of its shares into one or
more series and, without shareholder approval, may increase the number of
authorized shares of the Fund. The Board of Trustees has designated two classes
of shares for each Fund.
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PURCHASING CLASS K SHARES
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GENERAL. The Funds' Class K shares are offered to the public through
financial planners, retirement and pension plan administrators, broker-dealers
and other financial intermediaries at their respective net asset values next
determined after receipt of an order by the Transfer Agent with complete
information and meeting all the requirements discussed in this Prospectus. There
is no initial sales load in connection with the purchase of Class K shares. The
initial Funds' Class K shares are offered for sale by the Funds' underwriter,
First Fund Distributors, Inc.
The minimum initial investment in Class K shares is $250,000, including
investments for individual investors, individual retirement accounts ("IRAs"),
SEPs, Keoghs, 401(k) and 401(a) plans and other retirement plans. Subsequent
investments must be at least $1,000. Each Fund reserves the right to vary the
initial and additional investment minimums. In addition, the Adviser may waive
the minimum initial investment requirement for any investor. The Funds reserve
the right to reject any purchase order and to suspend the offering of shares of
any Fund.
Purchase orders for Class K shares that are received by the Transfer Agent
in proper form by 4:00 p.m., New York time, on any day that the NYSE is open for
trading, will be purchased at the Fund's next determined net asset value. Orders
for Class K shares received after 4:00 p.m. New York time will be purchased at
the next determined net asset value determined the business day following
receipt of the order.
At the discretion of the Funds, investors may be permitted to purchase Class
K shares by transferring securities to the Fund that meet the Fund's investment
objectives and policies. Securities transferred to a Fund will be valued in
accordance with the same procedures used to determine the Fund's net asset value
at the time of the next determination of net asset value after such acceptance.
Class K shares issued by a Fund in exchange for securities will be issued at net
asset value determined as of the same time. All dividends, interest,
subscription, or other rights pertaining to such securities shall become the
property of the Fund and must be delivered to the Fund by the investor upon
receipt from the issuer. Investors who are permitted to transfer such securities
will be required to recognize a gain or loss on such transfer and pay income tax
thereon, if applicable, measured by the difference between the fair market value
of the securities and the investor's basis therein. Securities will not be
accepted in exchange for Class K shares of a Fund unless: (1) such securities
are, at the time of the exchange, eligible to be included in the Fund's
portfolio and current market quotations are readily available for such
securities; (2) the investor represents and warrants that all securities offered
to be exchanged are not subject to any restrictions upon their sale by the Fund
under the Securities Act of 1933; and (3) the value of any such security (except
U.S. Government securities), being exchanged together with other securities of
the same issuer owned by the Fund, will not exceed 5% of the Fund's net assets
immediately after the transaction.
Each Fund may accept telephone orders from brokers, financial institutions
or service organizations which have been previously approved by that Fund. It is
the responsibility of such brokers, financial institutions or service
organizations to forward promptly purchase orders and payments to the Funds.
Class K shares of a Fund may be purchased through brokers, financial
institutions, service organizations, banks, and bank trust departments, each of
which may charge the investor a transaction fee or other fee for its services at
the time of purchase. Such fees would not otherwise be charged if the Class K
shares were purchased directly from the Funds.
Shares or classes of shares of each Fund may, at some point, be available
through certain brokerage services that do not charge transaction fees to
investors. However, the Adviser, from its own resources, may pay service fees
charged by these brokers for distribution and subaccounting services
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<PAGE>
with respect to Fund shares held by such brokers. Typically these fees are based
on a percentage of the annual average value of these accounts.
Shareholders who invest through sponsored retirement plans should contact
their program administrators responsible for transmitting all orders for the
purchase, redemption or exchange of program-sponsored shares. The availability
of each Fund and the procedures for investing depend on the provisions of the
program and whether the program sponsor has contracted with the Fund or its
transfer agent for special processing services, including sub-accounting.
Shareholders who invest through financial planners, broker-dealers and other
financial intermediaries should contact their financial intermediary to
determine the appropriate procedures for purchasing Class K shares of the Funds.
PURCHASES BY MAIL. Class K shares of each Fund may be purchased initially by
completing the application accompanying this Prospectus and mailing it to the
Transfer Agent, together with a check payable to Class K shares of the
respective Fund, Jurika & Voyles Fund Group, P.O. Box 23845, Oakland, CA
94623-0848, or P.O. Box 9291, Boston, MA 02266-9291.
Subsequent investments in an existing account in the Funds may be made at
any time by sending a check payable to Class K shares of the respective Fund to
Jurika & Voyles Fund Group, P.O. Box 23845, Oakland, CA 94623-0848, or P.O. Box
9291, Boston, MA 02266-9291. Please enclose the stub of the account statement
and include the amount of the investment, the name of the account for which the
investment is to be made and the account number.
PURCHASES BY WIRE. Investors who wish to purchase shares of any of the Funds
by federal funds wire should first call the Transfer Agent at (800) JV-INVST to
advise the Transfer Agent that an initial investment in Class K shares of a Fund
will be made by wire and to receive an account number. Following notification to
the Transfer Agent, investors must request the originating bank to transmit
immediately available funds by wire to the Transfer Agent's affiliated bank as
follows:
Jurika & Voyles Fund Group
State Street Bank & Trust Company
ABA No. 011000028
Acct. No. 99042665
FBO Jurika & Voyles [Name of Fund]
Shareholder Name ______________________
Shareholder Fund Acct. No. __________________
A completed application with signature(s) of the registrant(s) must be
mailed to the Transfer Agent immediately following to the initial wire.
Investors should be aware that banks generally impose a wire service fee. The
Funds will not be responsible for the consequence of delays, including delays in
the banking or Federal Reserve wire systems.
SUBSEQUENT INVESTMENTS. Once an account has been opened, subsequent
purchases may be made by mail, bank wire, exchange, direct deposit or automatic
investing. The minimum for subsequent investments is $1,000 for all Funds.
When making additional investments by mail, simply return the remittance
portion of a previous confirmation with the investment in the envelope provided
with each confirmation statement. Checks should be made payable to the
particular Fund in which an investment is to be made and mailed to Class K
shares of the respective Fund, Jurika & Voyles Fund Group, P.O. Box 9291,
Boston, MA 02266-9291. Orders to purchase shares are effective on the day the
Transfer Agent receives the check or money order.
If an order, together with payment in proper form, is received by the
Transfer Agent or previously approved broker or financial institution by 4:00
p.m. New York time, on any day that the NYSE is open for trading, Class K shares
will be purchased at each Fund's next determined net asset value with respect to
Class K shares. Orders for Class K shares received after 4:00 p.m. New York time
will be purchased at the net asset value determined on the business day
following receipt of the order.
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<PAGE>
All cash purchases must be made in U.S. dollars, and, to avoid fees and
delays, checks must be drawn only on banks located in the U.S. A charge (minimum
of $20) will be imposed if any check used for the purchase of Class K shares is
returned.
The Funds and the Transfer Agent each reserve the right to reject any
purchase order in whole or in part.
EXCHANGE OF CLASS K SHARES
- --------------------------------------------------------------------------------
Class K shares of any of the Funds may be exchanged for Class K shares of
any of the other Funds, provided such other Class K shares may be sold legally
in the state of the investor's residence. You also may exchange your Class K
shares for shares of a Jurika & Voyles sponsored money market fund, if such
shares are offered in your state of residence. Prior to making such exchange you
should obtain and carefully read the prospectus for the Jurika & Voyles
sponsored money market fund. This exchange privilege does not constitute an
offering or recommendation on the part of the Trust or the Adviser of an
investment in the Jurika & Voyles sponsored money market funds.
Class K shares may be exchanged by: (1) written request; or (2) telephone,
if a special authorization form has been completed and is on file with the
Transfer Agent in advance. Requests for telephone exchanges must be received by
the Transfer Agent by the close of regular trading on the NYSE (currently 4:00
p.m. New York time) on any day that the NYSE is open for regular trading.
Exchanges are subject to the minimum initial investment requirement.
The exchange privilege is a convenient way to respond to changes in
investment goals or in market conditions. This privilege is not designed for
frequent trading in response to short-term market fluctuations. The telephone
exchange privilege may be difficult to implement during times of drastic
economic or market changes. The purchase of Class K shares for any Fund through
an exchange transaction is accepted immediately. An exchange is treated as a
redemption for federal and state income tax purposes, which may result in
taxable gain or loss, and a new purchase, each at net asset value of the
appropriate Fund. The Funds and the Transfer Agent reserve the right to limit,
amend, impose charges upon, terminate or otherwise modify the exchange privilege
on 60 days' prior written notice to shareholders.
Class K shares of a Fund may not be exchanged for Class J shares of the same
or another Fund. However, each Class K share of each Fund will convert
automatically to a Class J share of the same Fund upon the Class K share's
having been subject to the cumulative maximum permitted Rule 12b-1 fees under
the applicable limitations of the NASD as determined by procedures the Funds
will implement to monitor the level of such fees. Such conversion shall be
effected on the basis of the net asset values of the Class K and Class J shares
of such Fund without the imposition of a front-end sales load, contingent
deferred sales charge or other charge. In no event will a class of shares
convert automatically into shares of a class with a distribution arrangement
that could be viewed as less favorable to the shareholder as measured by overall
cost. The implementation of this conversion feature is subject to the receipt
and continuing availability of a ruling of the Internal Revenue Service, or of
an opinion of counsel or tax adviser, stating that the conversion of one class
of shares to another does not constitute a taxable event under federal income
tax law. The conversion feature may be suspended if such a ruling or opinion is
not available.
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<PAGE>
SELLING CLASS K SHARES (REDEMPTIONS)
- --------------------------------------------------------------------------------
Shareholders may redeem Class K shares of any Fund without charge on any
business day that the NYSE is open for business. Redemptions will be effective
at the net asset value per share next determined after the receipt by the
Transfer Agent, broker or financial intermediary of a redemption request meeting
the requirements described below. Each Fund normally sends redemption proceeds
on the next business day, but in any event redemption proceeds are sent within
seven calendar days of receipt of a redemption request in proper form. Payment
for redemption of recently purchased Class K shares will be delayed until the
Transfer Agent has been advised that the purchase check has been honored, up to
12 calendar days from the time of receipt by the Transfer Agent. Payment may
also be made by wire directly to any bank previously designated by the
shareholder on a shareholder account application. There is a $10 charge for
redemptions made by wire. Please note that the shareholder's bank may also
impose a fee for wire service. There may be fees for redemptions made through
brokers, financial institutions and service organizations.
The Funds will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Board of
Trustees, require a Fund to sell assets under disadvantageous conditions or to
the detriment of the remaining shareholders of the Fund.
The Funds may suspend the right of redemption or postpone the date of
payment for more than seven days during any period when (1) trading on the NYSE
is restricted or the NYSE is closed, other than customary weekend and holiday
closings; (2) the SEC has by order permitted such suspension; or (3) an
emergency, as defined by rules of the SEC, exists making disposal of portfolio
investments or determination of the value of the net assets of the Funds not
reasonably practicable.
MINIMUM BALANCES. Due to the relatively high cost of maintaining smaller
accounts, each Fund reserves the right to make involuntary redemptions of all
shares in any account (other than the account of a shareholder who is a
participant in a qualified plan) for their then-current net asset value if at
any time the total investment does not have a value of at least $10,000 because
of redemptions. The shareholder will be notified that the value of the account
is less than the required minimum and will be allowed at least 60 days to bring
the value of the account up to at least $10,000 before the redemption is
processed.
REDEMPTION BY MAIL. Class K shares may be redeemed by submitting a written
request for redemption to Jurika & Voyles Fund Group, P.O. Box 23845, Oakland,
CA 94623-0848, or P.O. Box 9291, Boston, MA 02266-9291.
A written request must be in good order, which means that it must: (1)
identify the shareholder's account name; (2) state the number of shares or
dollar amount to be redeemed; and (3) be signed by each registered owner exactly
as the shares are registered.
SIGNATURE GUARANTEE. To prevent fraudulent redemptions, a signature
guarantee for the signature of each person in whose name the account is
registered is required on all written redemption requests over $50,000. A
guarantee may be obtained from any commercial bank, trust company, savings and
loan association, federal savings bank, broker-dealer, or member firm of a
national securities exchange or other eligible financial institution. Credit
unions must be authorized to issue signature guarantees. Broker-dealers
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Notary public endorsements will not be
accepted as a substitute for a signature guarantee. The Transfer Agent may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians and retirement plans.
REDEMPTION BY TELEPHONE. Shareholders who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem Class
K shares by instructing the Transfer
AGENT BY TELEPHONE. Shareholders may redeem shares by calling the Transfer
Agent at (800) JV-INVST between the hours of 8:30 a.m. and 5:00 p.m. (Eastern
time) on a day when the NYSE is open for trading. Redemptions by telephone must
be at least $1,000.
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<PAGE>
In order to arrange for redemption by wire or telephone after an account has
been opened, or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent with a signature
guarantee at the address listed under "Redemption by Mail," above.
SPECIAL FACTORS REGARDING TELEPHONE REDEMPTIONS. Neither the Funds nor any
of their service contractors will be liable for any loss or expense in acting on
telephone instructions that are reasonably believed to be genuine. In attempting
to confirm that telephone instructions are genuine, the Funds will use
procedures that are considered reasonable, including requesting a shareholder to
correctly state the Fund account number, the name in which the account is
registered, the social security number, banking institution, bank account number
and the name in which the bank account is registered. To the extent that the
Funds fail to use reasonable procedures to verify the genuineness of telephone
instructions, they and/or their service contractors may be liable for any such
instructions that prove to be fraudulent or unauthorized.
The Funds reserve the right to refuse a wire or telephone redemption if it
is believed advisable to do so. Procedures for redeeming Fund shares by wire or
telephone may be modified or terminated at any time by any of the Funds after at
least 30 days' prior written notice to shareholders.
Class K shares of the Funds may be redeemed through certain brokers,
financial institutions or service organizations who may charge the investor a
transaction fee or other fee for their services at the time of redemption. Such
fees would not otherwise be charged if the Class K shares were redeemed directly
from the Funds.
REDEMPTION BY AUTOMATED CLEARING HOUSE ("ACH"). A shareholder may elect to
have redemption proceeds, cash distributions or systematic cash withdrawal
payments transferred to a bank, savings and loan association or credit union
that is an on-line member of the ACH system. There are no fees associated with
the use of the ACH service.
ACH redemption requests must be received by the Funds' Transfer Agent before
4:00 p.m. New York time to receive that day's closing net asset value. ACH
redemptions will be sent by the Transfer Agent on the day following the
shareholder's request. The funds from the ACH redemption will be available to
the shareholder two days after the redemption has been processed.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
The following special account options are available to individual shareholders
but not to participants in employer-sponsored retirement plans. There are no
charges for the programs noted below, and an investor may change or stop these
plans at any time by written notice to the Funds.
SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Program is an option
that may be utilized by an investor who wishes to withdraw funds from an account
on a regular basis. To participate in this option, an investor must either own
or purchase Class K shares having a value of $250,000 or more. Automatic
payments by check will be mailed to the investor on either a monthly, quarterly,
semi-annual or annual basis in amounts of $1,000 or more. All withdrawals are
processed on the last business day of the month or, if such day is not a
business day, on the next business day and paid promptly thereafter. Please
complete the appropriate section on the New Account Application indicating the
amount of the distribution and the desired frequency.
AUTOMATIC INVESTING. This service allows a shareholder to make regular
investments once an account is established. A shareholder simply authorizes the
automatic withdrawal of funds from a bank account into the specified Fund. The
minimum initial and subsequent investment pursuant to this plan is $1,000 per
month. An initial Fund account must be opened first with the $250,000 minimum
prior to participating in this plan. Please complete the appropriate section on
the New Account Application indicating the amount of the automatic investment.
RETIREMENT PLANS. The Funds are available for investment by pension and
profit sharing plans,
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<PAGE>
including IRAs, SEPs, Keoghs and Defined Contribution Plans through which
investors may purchase Class K Fund shares. The Funds, however, do not sponsor
Defined Contribution Plans. For details concerning any of the retirement plans,
please call the Funds at (800) JV-INVST.
CLASS K SHARE PRICE CALCULATION
- --------------------------------------------------------------------------------
CLASS K SHARE PRICE. Class K shares of a Fund are purchased at the net asset
value after an order in proper form is received by the Transfer Agent. An order
in proper form must include all correct and complete information, documents and
signatures required to process your purchase, as well as a check or bank wire
payment properly drawn and collectable. The net asset value per share is
determined as of the close of trading of the NYSE on each day the Exchange is
open for normal trading. Orders received before 4:00 p.m. (Eastern time) on a
day when the Exchange is open for normal trading will be processed as of the
close of trading on that day. Otherwise, processing will occur on the next
business day. The Distributor reserves the right to reject any purchase order.
NET ASSET VALUE. The net asset value of each Fund is determined as of the
close of trading (currently 4:00 p.m., New York time) on each day that the NYSE
is open for trading. The net asset value per Class K share of each Fund is the
value of the Fund's assets attributable to Class K shares, less its liabilities
attributable to Class K shares, divided by the number of outstanding Class K
shares of the Fund. Each Fund values its investments on the basis of the market
value of its securities. Portfolio securities that are listed or admitted to
trading on a U.S. exchange are valued at the last sale price on the principal
exchange on which the security is traded or, if there has been no sale that day,
at the mean between the closing bid and asked prices. Securities admitted to
trading on the NASDAQ National Market System and securities traded only in the
U.S. over-the-counter market are valued at the last sale price or, if there has
been no sale that day, at the mean between the closing bid and asked prices.
Securities and other assets for which market prices are not readily available
are valued at fair value as determined in good faith by the Board of Trustees.
Debt securities with remaining maturities of 60 days or less are normally valued
at amortized cost, unless the Board of Trustees determines that amortized cost
does not represent fair value. Cash and receivables will be valued at their face
amounts. Interest will be recorded as accrued, and dividends will be recorded on
their ex-dividend date.
SHARE CERTIFICATES. Shares are credited to your account and certificates are
not issued. This eliminates the costly problem of lost or destroyed
certificates.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Mini-Cap and Value + Growth Funds pay
dividends annually. The Balanced Fund pays dividends quarterly. Each Fund makes
distributions of its net capital gains, if any, at least annually. The Board of
Trustees may determine to declare dividends and make distributions more
frequently.
Dividends and capital gain distributions are automatically reinvested in
additional Class K shares of the Fund at the net asset value per share on the
reinvestment date unless the shareholder has previously requested in writing to
the Transfer Agent that payment be made in cash.
Any dividend or distribution paid by a Fund reduces its net asset value per
share on the reinvestment date by the per share amount of the dividend or
distribution. Investors should note that a dividend or distribution paid on
shares purchased shortly before such dividend or distribution was declared will
be subject to income taxes as discussed
20
<PAGE>
below even though the dividend or distribution represents, in substance, a
partial return of capital to the shareholder.
TAX STATUS. Each Fund has elected and intends to continue to qualify to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code"). As long as the Fund continues to qualify, and
as long as the Fund distributes all of its income each year to the shareholders,
the Fund will not be subject to any federal income or excise taxes based on net
income. The distributions made by the Fund will be taxable to shareholders
whether received in shares (through dividend reinvestment) or in cash.
Distributions derived from net investment income, including net short-term
capital gains, are taxable to shareholders (other than tax-exempt shareholders
who have not borrowed to purchase or carry their shares) as ordinary income. A
portion of these distributions may qualify for the intercorporate
dividends-received deduction. Distributions designated as capital gains
dividends are taxable as long-term capital gains regardless of the length of
time shares of the Fund have been held. Although distributions are generally
taxable when received, certain distributions made in January are taxable as if
received the prior December. Shareholders will be informed annually of the
amount and nature of the Fund's distributions. A Fund may be required to impose
backup withholding at a current rate of 31% from income dividends and capital
gain distributions and upon payment of redemption proceeds if provisions of the
Code relating to the furnishing and certification of taxpayer identification
numbers and reporting of dividends are not complied with by a shareholder. Any
such accounts without a tax identification number may be liquidated and
distributed to a shareholder, net of withholding, after the 60th day of
investment.
Additional information about taxes is set forth in the Statement of
Additional Information. Shareholders should consult their own advisers
concerning federal, state and local taxation of distributions from the Funds.
Heller, Ehrman White & McAuliffe, counsel to the Trust, has expressed no opinion
in respect thereof.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
TOTAL RETURN. From time to time, each Fund may publish its total return in
advertisements and communications to investors. Performance data may be quoted
separately for Class K shares as for other classes of shares of the Funds. Total
return information will include the Fund's average annual compounded rate of
return over the four most recent calendar quarters and over the period from the
Fund's inception of operations. Each Fund may also advertise aggregate and
average total return information over different periods of time. Each Fund's
total return will be based upon the value of the shares acquired through a
hypothetical $1,000 investment (at beginning of the specified period and the net
asset value of such shares at the end of the period, assuming reinvestment of
all the distributions) at the maximum public offering price. Total return
figures will reflect all recurring charges against Fund income. Investors should
note that the investment results of each Fund will fluctuate over time, and any
presentation of a Fund's total return for any prior period should not be
considered as a representation of what an investor's total return may be in any
future period.
YIELD. The Balanced Fund may also refer in its advertising and promotional
materials to its yield. This Fund's yield shows the rate of income that it earns
on its investments, expressed as a percentage of the net asset value of Fund
shares. The Fund calculates yield by determining the interest income it earned
from its portfolio investments for a specified 30-period (net of expenses),
dividing such income by the average number of Fund shares outstanding, and
expressing the result as an annualized percentage based on the net asset value
at the end of that 30-day period. Yield accounting methods differ from the
methods used for other accounting purposes; accordingly, this
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<PAGE>
Fund's yield may not equal the dividend income actually paid to investors or the
income reported in this Fund's financial statements.
In addition to standardized return, performance advertisements and sales
literature may also include other total return performance data
("nonstandardized return"). Non-standardized return may be quoted for the same
or different periods as those for which standardized return is quoted and may
consist of aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof.
All data included in performance advertisements will reflect past
performance and will not necessarily be indicative of future results. The Funds
may also advertise their relative rankings by mutual fund ranking services such
as Lipper Analytical Services ("Lipper") or Morningstar, Inc. ("Morningstar")
Provided the Funds are eligible for reporting by rating services such as Lipper
or Morningstar, such ranking services would include the Funds in the following
categories: Mini-Cap Fund -- Small Company; Value + Growth Fund -- Growth; and
Balanced Fund -- Balanced. The investment return and principal value of an
investment in a Fund will fluctuate and an investor's proceeds upon redeeming
Class K Fund shares may be more or less than the original cost of the Class K
Fund shares.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS. Shareholders are entitled to one vote for each dollar of net
asset value per Class K share of each series (and fractional votes for
fractional dollar amounts) and may vote in the election of Trustees and on other
matters submitted to meetings of shareholders. It is not contemplated that
regular annual meetings of shareholders will be held. Rule 18f-2 under the
Investment Company Act of 1940, as amended, provides that matters submitted to
shareholders be approved by a majority of the outstanding securities of each
series, unless it is clear that the interests of each series in the matter are
identical or the matter does not affect a series. However, the rule exempts the
selection of accountants and the election of Trustees from the separate voting
requirements.
Except as set forth herein, all classes of shares issued by a Fund shall
have identical voting, dividend, liquidation and other rights, preferences, and
terms and conditions. The only differences among the classes of shares relate
solely to the following: (a) each class may be subject to different class
expenses; (b) each class may bear a different identifying designation; (c) each
class may have exclusive voting rights with respect to matters solely affecting
such class; (d) each class may have different exchange privileges; and (e) each
class may provide for the automatic conversion of that class into another class.
SHAREHOLDER MEETINGS. The Trustees have undertaken to the SEC that they will
promptly call a meeting for the purpose of voting on the question of removal of
any Trustee when requested to do so by not less than 10% of the dollar-weighted
total votes of the respective Fund. In addition, subject to certain conditions,
shareholders of each Fund may apply to the Fund to communicate with other
shareholders to request a shareholders' meeting to vote on the removal of a
Trustee or Trustees.
SHAREHOLDER REPORTS AND INQUIRES. Shareholders will receive annual financial
statements which are examined by the Funds' independent auditors, as well as
unaudited semi-annual financial statements. Unless otherwise requested, only one
copy of each shareholder report or other material sent to shareholders will be
sent to each household or address regardless of the number of shareholders or
accounts at that household or address. Shareholder inquiries should be addressed
to the Funds c/o Jurika & Voyles Fund Group, 1999 Harrison Street, Suite 700,
Oakland, California 94612, (800) JV-INVST.
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<PAGE>
JURIKA & VOYLES
Fund Group
A Commonsense Approach to Investing
1999 Harrison Street
Suite 700
Oakland, California 94612-3517
800 JV-INVST
800 58-46878
<PAGE>
PROSPECTUS
August 31, 1996
Mini-Cap Fund
Value + Growth Fund
Balanced Fund
Class J Shares
JURIKA & VOYLES
FUND GROUP
<PAGE>
JURIKA & VOYLES FUND GROUP
Supplement dated October 1, 1996 to
Prospectus dated August 31, 1996
To All Investors
Jurika & Voyles, Inc. ("Jurika & Voyles"), The investment advisor to the
Mini-Cap Fund, the Value + Growth Fund and the Balanced Fund (the"Funds"), has
signed an agreement with the New England Investment Companies to acquire the
assets of Jurika & Voyles. Consummation of the acquisition is subject to a
number of conditions and is scheduled for late 1996.
While there are no changes expected for the Jurika & Voyles management team, the
investment process or the services offered, the acquisition would result in an
assignment of the advisory agreement between the Funds and Jurika & Voyles.
Therefore, under the Investment Company Act of 1940, shareholders of the Funds
will need to approve a new advisory agreement. The Funds will send proxy
materials to shareholders in connection with the proposal to approve a new
agreement.
<PAGE>
JURIKA & VOYLES FUND GROUP
Jurika & Voyles Mini-Cap Fund
Jurika & Voyles Value + Growth Fund
Jurika & Voyles Balanced Fund
Class J Shares
- --------------------------------------------------------------------------------
JURIKA & VOYLES FUND GROUP (THE "TRUST") IS AN OPEN-END INVESTMENT COMPANY
CONSISTING OF SEPARATE DIVERSIFIED SERIES, THREE OF WHICH ARE OFFERED THROUGH
THIS PROSPECTUS (THE "FUNDS"). EACH FUND HAS ITS OWN OBJECTIVE, ASSETS AND
LIABILITIES. JURIKA & VOYLES, INC. ("JURIKA & VOYLES" OR THE "ADVISER") SERVES
AS INVESTMENT ADVISER TO THE FUNDS. THIS PROSPECTUS DESCRIBES CLASS J SHARES OF
THE FUNDS.
The MINI-CAP FUND seeks to maximize long-term capital appreciation. This
Fund invests primarily in the common stock of quality companies having small
market capitalizations that offer current value and significant future growth
potential.
The VALUE + GROWTH FUND seeks long-term capital appreciation. This Fund
invests primarily in the common stock of quality companies of all market
capitalizations that offer current value and significant future growth
potential.
The BALANCED FUND seeks to provide investors with a balance of long-term
capital appreciation and current income. This Fund invests primarily in a
diversified portfolio that combines stocks, bonds and cash-equivalent
securities.
This prospectus sets forth the basic information that prospective investors
should know before investing in Class J shares of a Fund. Investors should read
this Prospectus carefully and retain it for future reference. A Statement of
Additional Information dated August 31, 1996, as may be amended from time to
time, has been filed with the Securities and Exchange Commission and is
incorporated by reference into this Prospectus. You may obtain this Statement of
Additional Information without charge by writing to the Funds at the address
noted below or by calling (800) JV-INVST.
JURIKA & VOYLES FUND GROUP
1999 HARRISON STREET, SUITE 700
OAKLAND, CALIFORNIA 94612
(800) JV-INVST
- --------------------------------------------------------------------------------
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS DATED AUGUST 31, 1996
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF EXPENSES AND EXAMPLE ........................................... 1
PROSPECTUS SUMMARY ........................................................ 2
FINANCIAL HIGHLIGHTS ...................................................... 3
INVESTMENT OBJECTIVES AND POLICIES ........................................ 4
The Mini-Cap Fund ....................................................... 4
The Value + Growth Fund ................................................. 4
The Balanced Fund ....................................................... 5
Additional Investment Considerations .................................... 6
RISK CONSIDERATIONS ....................................................... 6
PORTFOLIO SECURITIES, INVESTMENT TECHNIQUES AND RISKS ..................... 8
ORGANIZATION AND MANAGEMENT ............................................... 12
PURCHASING CLASS J SHARES ................................................. 14
EXCHANGE OF CLASS J SHARES ................................................ 16
SELLING CLASS J SHARES (REDEMPTIONS) ...................................... 16
SHAREHOLDER SERVICES ...................................................... 18
CLASS J SHARE PRICE CALCULATION ........................................... 18
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS ................................... 19
PERFORMANCE INFORMATION ................................................... 20
GENERAL INFORMATION ....................................................... 21
<PAGE>
SUMMARY OF EXPENSES
- --------------------------------------------------------------------------------
THIS TABLE IS DESIGNED TO HELP YOU UNDERSTAND THE COSTS OF INVESTING IN CLASS J
SHARES OF A FUND. THESE ARE THE ESTIMATED EXPENSES OF EACH FUND FOR THE CURRENT
FISCAL YEAR. ALTHOUGH NOT REQUIRED TO DO SO, THE ADVISER HAS AGREED TO REIMBURSE
EACH FUND IN THE CURRENT FISCAL YEAR TO THE EXTENT NECESSARY SO THAT ITS RATIO
OF TOTAL OPERATING EXPENSES TO AVERAGE NET ASSETS WILL NOT EXCEED THE FOLLOWING
LEVELS: MINI-CAP FUND -- 1.50%*; VALUE + GROWTH FUND -- 1.25%*; AND BALANCED
FUND -- 1.25%*.
Mini-Cap Value + Balanced
Fund Growth Fund Fund
----------- ------------- -----------
SHAREHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Maximum sales charge on purchases None None None
Sales charge on reinvested dividends None None None
Redemption fee+ None None None
Exchange fee None None None
TOTAL ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees 1.00% 0.85% 0.85%
12b-1 expenses None None None
Other expenses after expense
reimbursement 0.50% 0.40% 0.40%
----- ------ -----
Total operating expenses after
expense reimbursement 1.50%* 1.25% 1.25%*
* FOR THE FISCAL PERIOD ENDED JUNE 30, 1996, THE RATIOS OF TOTAL OPERATING
EXPENSES TO AVERAGE NET ASSETS FOR EACH FUND BEFORE THE ADVISER'S VOLUNTARY
REIMBURSEMENT WERE AS FOLLOWS: MINI-CAP FUND -- 1.74% (0.74% OTHER
EXPENSES); VALUE + GROWTH FUND -- 2.12% (1.27% OTHER EXPENSES); AND
BALANCED FUND 1.49% (0.64% OTHER EXPENSES). IN SUBSEQUENT YEARS, OVERALL
OPERATING EXPENSES FOR CLASS J SHARES OF EACH FUND MAY NOT FALL BELOW THE
APPLICABLE PERCENTAGE LIMITATION UNTIL THE ADVISER HAS BEEN FULLY
REIMBURSED FOR FEES FOREGONE OR EXPENSES PAID BY IT UNDER THE MANAGEMENT
AGREEMENT. EACH FUND WILL REIMBURSE THE ADVISER IN THE THREE FOLLOWING
YEARS IF OPERATING EXPENSES (BEFORE REIMBURSEMENT) ARE LESS THAN THE
APPLICABLE PERCENTAGE LIMITATION CHARGED TO THE FUND.
+ SHAREHOLDERS WHO EFFECT REDEMPTIONS VIA WIRE TRANSFER WILL BE CHARGED A
$10.00 FEE AND MAY BE REQUIRED TO PAY A THIRD-PARTY SERVICE PROVIDER CHARGE
THAT WILL BE DIRECTLY DEDUCTED FROM REDEMPTION PROCEEDS.
EXAMPLE OF FUND EXPENSES
This table illustrates the net transaction and operating expenses that would
be incurred by an investment in Class J Shares of each Fund over different time
periods assuming a $1,000 investment, a 5% annual return, and redemption at the
end of one, three, five and ten years. The Funds charge no redemption fees. The
Example should not be considered a representation of past or future expenses and
actual expenses may be greater or less than those shown.
Mini-Cap Value + Growth Balanced
Fund Fund Fund
----------- --------------- -----------
One year............................... $ 15 $ 13 $ 13
Three years............................ $ 47 $ 40 $ 40
Five years............................. $ 82 $ 69 $ 69
Ten years.............................. $ 179 $ 151 $ 151
THE EXAMPLE SHOWN ABOVE ASSUMES THAT THE ADVISER WILL LIMIT THE ANNUAL OPERATING
EXPENSES OF CLASS J SHARES OF EACH FUND TO THE TOTALS SHOWN. IN ADDITION,
FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN, BUT THE
FUNDS' ACTUAL RETURNS MAY BE HIGHER OR LOWER. SEE "ORGANIZATION AND MANAGEMENT"
ON PAGE 12.
1
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objective. See "Investment Objectives and
Policies" for a full discussion of the objectives of the Mini-Cap Fund, Value +
Growth Fund, and Balanced Fund. The investment objective of each Fund is
fundamental and may not be changed without shareholder approval.
THE INVESTMENT ADVISER
Jurika and Voyles, founded in 1983, in Oakland, California, serves as the
investment adviser to the Trust and the Funds. The Adviser currently manages
over $5 billion of discretionary assets for various clients including
corporations, pension plans, 401(k) plans, profit sharing plans, trusts and
estates, foundations and charitable endowments, and high net worth individuals.
The Adviser has previously managed a registered investment company.
MANAGEMENT FEE
For its services, the Adviser receives a fee, accrued daily and paid
monthly, at the following annual percentages of average net assets: Mini-Cap
Fund -- 1.00%; Value + Growth Fund -- 0.85%; and Balanced Fund -- 0.85%. These
fees are higher than those paid by most mutual funds.
MINIMUM PURCHASE
The minimum initial investment in each Fund is $250,000. Each Fund may waive
the minimum for certain retirement and other employee benefit plans; for the
Adviser's employees, clients and their affiliates; for advisers or financial
institutions offering investors a program of services; or for any other person
or organization deemed appropriate by the Trust.
OFFERING PRICE
Shares are offered at their net asset value without a sales charge and may
be redeemed at their net asset value on any business day. See "Purchasing
Shares" and "Selling Shares (Redemptions)" on pages 14-18.
DIVIDENDS AND DISTRIBUTIONS
The Mini-Cap Fund and the Value + Growth Fund intend to pay dividends and
make capital distributions annually. The Balanced Fund intends to pay dividends
quarterly and to make capital distributions annually.
RISK CONSIDERATIONS
Like all investments, an investment in each Fund involves certain risks. The
equity and fixed income securities held by the Funds and the value of the Funds'
shares will fluctuate with market and other economic conditions, so that
investors' shares, when redeemed, may be worth more or less than their original
cost. The Funds may invest in mortgage-backed securities (including CMOs and
REMICs), asset-backed securities, interest-only and principal-only securities,
foreign securities and junk bonds. See "Risk Considerations" on page 6 for a
further discussion of certain risks.
ORGANIZATION
The Funds are organized as distinct series within a Delaware business trust
(the "Trust"), which is registered as an open-end diversified management
investment company. The Trust currently consists of four separate diversified
series, each of which has its own objective, assets, liabilities and net assets.
The Funds offer another class of shares to investors eligible to purchase those
shares. The other class of shares may pay different fees and expenses than the
class of shares offered in this prospectus, and those different fees and
expenses may affect performance. To obtain information concerning the other
class of shares not offered in this prospectus, call the Funds at (800)
JV-INVST.
Transfer Agent, Custodian
and Fund Accountant:
State Street Bank & Trust Company
Auditor:
McGladrey & Pullen, LLP
Distributor:
First Fund Distributors, Inc.
Legal Counsel:
Heller, Ehrman, White & McAuliffe
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
2
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information has been audited by McGladrey & Pullen, LLP,
independent certified public accountants whose unqualified reports covering the
fiscal periods ended June 30, 1995 and 1996 are incorporated by reference herein
and appear in the annual report to shareholders. This information should be read
in conjunction with the financial statements and accompanying notes thereto
which appear in the annual report. Further information about the Funds'
performance is included in the annual report which may be obtained without
charge by writing or calling the address or telephone number on the Prospectus
cover page.
<TABLE>
<CAPTION>
Value + Growth
Mini-Cap Fund Fund Balanced Fund
-------------------- -------------------- ------------------------------------------------------
07/01/95- 9/30/94- 07/01/95- 9/30/94- 07/01/95- 10/01/94- 11/01/93- 11/01/92- 03/09/92-
06/30/96 06/30/95(4) 06/30/96 06/30/95(4)06/30/96 06/30/95 09/30/94 10/31/93 10/31/92(1)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 14.12 $ 10.00 $ 12.82 $ 10.00 $ 13.96 $ 12.41 $ 12.82 $ 10.84 $10.00
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Income from investment
operations
Net investment income (0.02) 0.01 0.11 0.05 0.43 0.24 0.16 0.16 0.11
Net realized & unrealized
gain on investments 5.25 4.13 1.40 2.79 1.27 1.59 0.05 1.98 0.83
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 5.23 4.14 1.51 2.84 1.70 1.83 0.21 2.14 0.94
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Less distributions
From net investment income -- (0.02) (0.13) (0.02) (0.43) (0.24) (0.18) (0.16) (0.10)
From net realized gains (0.96) -- (0.51) -- (0.54) (0.04) (0.44) -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.96) (0.02) (0.64) (0.02) (0.97) (0.28) (0.62) (0.16) (0.10)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period $ 18.39 $ 14.12 $ 13.69 $ 12.82 $ 14.69 $ 13.96 $ 12.41 $ 12.82 $10.84
========= ========= ========= ========= ========= ========= ========= ========= =========
Total return(3) 38.46% 41.47% 12.11% 28.43% 12.56% 14.98% 3.66% 19.83% 14.67%
========= ========= ========= ========= ========= ========= ========= ========= =========
Net assets at end of
period (in 000's) $92,697 $10,397 $21,256 $12,989 $46,979 $38,836 $34,659 $20,931 $6,008
========= ========= ========= ========= ========= ========= ========= ========= =========
Ratio of expenses to average
net assets(2) 1.50% 1.50%* 1.35% 1.35%* 1.35% 1.33%* 1.63%* 1.47% 1.50%*
========= ========= ========= ========= ========= ========= ========= ========= =========
Ratio of net investment
income to average net
assets (0.35)% 0.04%* 0.78% 1.18%* 2.98% 2.51%* 1.77%* 1.51% 1.93%*
========= ========= ========= ========= ========= ========= ========= ========= =========
Portfolio turnover rate 214.71% 102.85% 101.05% 31.64% 69.11% 54.02% 60.90% 44.12% 20.00%
========= ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
- -----------------------------
* ANNUALIZED
(1) THE JURIKA & VOYLES BALANCED FUND COMMENCED OPERATIONS ON MARCH 9, 1992.
(2) NET OF EXPENSE REIMBURSEMENTS. THE ANNUALIZED RATIO OF TOTAL OPERATING
EXPENSES TO AVERAGE NET ASSETS BEFORE EXPENSE REIMBURSEMENTS WOULD HAVE
BEEN 1.74%, 2.12% AND 1.41% FOR THE MINI-CAP FUND, THE VALUE + GROWTH FUND
AND THE BALANCED FUND, RESPECTIVELY, FOR THE PERIOD ENDED JUNE 30, 1996.
(3) NOT ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(4) THE JURIKA & VOYLES MINI-CAP FUND AND VALUE + GROWTH FUND EACH COMMENCED
OPERATIONS ON SEPTEMBER 30, 1994.
NOTE: INFORMATION FOR FISCAL PERIODS OF THE BALANCED FUND ENDING ON SEPTEMBER
30, 1994, OCTOBER 31, 1993 AND OCTOBER 31, 1992 WAS AUDITED BY OTHER INDEPENDENT
ACCOUNTANTS WHOSE REPORT IS NOT INCLUDED HEREIN.
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
The investment objective and policies of each Fund are described below. The
investment objective of each Fund is fundamental and may not be changed without
shareholder approval. In addition, each of the Funds may make use of certain
types of investments and investing techniques that are described under the
caption "Portfolio Securities, Investment Techniques and Risks" on page 8. The
value of the Funds' investments will fluctuate with market and other economic
conditions.
THE MINI-CAP FUND
The Fund seeks to maximize long-term capital appreciation. The Fund invests
primarily in the common stock of quality companies having small market
capitalizations that offer current value and significant future growth
potential.
The Fund will invest at least 65% of its total assets in the common stock of
companies having market capitalizations at the time of purchase of between $50
million and $500 million. The fund typically expects that at least 80% of its
equity holdings will fall within this capitalization range. The average and
median market capitalizations will fluctuate over time as a result of market
valuation levels and the availability of specific investment opportunities.
The Fund seeks value in quality companies selling at lower price to earnings
("P/E") multiples relative to their growth rates and lower P/E multiples than
the Standard & Poor's 500 Composite Price Index and/or Russell 2000 Small Stock
Index. Quality companies possess some or all of the following characteristics:
significant potential for future growth in earnings; a strong competitive
advantage; a clearly defined business focus; strong financial health; and
management ownership.
Jurika & Voyles places heavy emphasis on in-house research, which includes
personal contacts, site visits and meetings with company management.
The securities of smaller-sized companies may present greater opportunities for
capital appreciation, but may also involve greater risks. These securities have
the characteristics and risks described under the caption "Risk Considerations"
on page 6.
The Fund may continue to hold its investment in a company whose
capitalization subsequently grows above $500 million if the company continues to
satisfy the other investment policies of the Fund.
The Fund invests primarily in common stocks, but also may invest in other
equity securities including convertible preferred stocks, convertible debt
securities and warrants. A warrant represents a right to acquire other equity
securities, often for consideration and subject to certain conditions. In
addition, the Fund may invest up to 25% of its total assets in foreign
securities such as U.S. dollar-denominated securities of foreign issuers and
American Depositary Receipts ("ADRs"), but will limit its investments in any one
foreign country to 5% of its total assets. As part of this, the Fund may invest
up to 5% of its net assets in securities denominated in foreign currencies. See
"Risk Considerations" on page 6.
Although the Fund does not anticipate maintaining a large non-equity
position, the Fund may invest up to 35% of its total assets in debt securities,
including up to 25% of its total assets in debt securities (and convertible debt
securities) rated below investment grade sometimes referred to as "high
yield/high risk" or "junk bonds." Debt securities may include bonds, notes,
convertible bonds, mortgage-backed and asset-backed securities (including CMOs
and REMICs) and other types. See "Portfolio Securities, Investment Techniques
and Risks." See "Risk Considerations" for a discussion of the characteristics of
the debt securities.
For a description of cash-equivalent securities in which a Fund may invest,
U.S. Government securities, repurchase agreements, securities lending and other
investments and techniques a Fund may use, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
THE VALUE + GROWTH FUND
The Value + Growth Fund seeks long-term capital appreciation. The Fund
invests primarily in the common stock of quality companies of all market
capitalizations that offer current value total and significant future growth
potential.
The Fund will invest at least 65% of its total assets in the common stock of
companies having
4
<PAGE>
market capitalizations at the time of purchase of $500 million and over. The
Fund typically expects that at least 80% of its equity holdings will fall within
this capitalization range. The average and median market capitalizations will
fluctuate over time as a result of market valuation levels and the availability
of specific investment opportunities.
The Fund seeks value in quality companies selling at lower P/E multiples
relative to their growth rates and lower P/E multiples than the S&P 500. Quality
companies possess some or all of the following characteristics: significant
potential of future growth in earnings; a strong competitive advantage; a
clearly defined business focus; strong financial health; and management
ownership.
Jurika & Voyles places heavy emphasis on in-house research, which includes
personal contacts, site visits and meetings with company managements.
The Fund may hold equity securities of companies with smaller market
capitalizations. These securities have the characteristics and risks described
under the caption "Risk Considerations" on page 6.
The Fund invests primarily in common stocks, but also may invest in other
equity securities including convertible preferred stocks, convertible debt
securities and warrants. A warrant represents a right to acquire other equity
securities, often for consideration and subject to certain conditions. In
addition, the Fund may invest up to 25% of its total assets in foreign
securities such as U.S. dollar-denominated securities of foreign issuers and
ADRs, but will limit its investments in any one foreign country to 5% of its
total assets. As part of this, the Fund may invest up to 5% of its net assets in
securities denominated in foreign currencies. See "Portfolio Securities,
Investment Techniques and Risks." See "Risk Considerations" on page 6.
Although the Fund does not anticipate maintaining a large non-equity
position, the Fund may invest up to 35% of its total assets in debt securities,
including up to 25% of its total assets in debt securities (and convertible debt
securities) rated below investment grade sometimes referred to as "high
yield/high risk" or "junk bonds." Debt securities may include bonds, notes,
convertible bonds, mortgage-backed and asset-backed securities (including CMOs
and REMICs) and other types. See "Risk Considerations" for a discussion of the
characteristics of the debt securities in which the Fund may invest.
For a description of cash-equivalent securities in which a Fund may invest,
U.S. Government securities, repurchase agreements, securities lending and other
investments and techniques a Fund may use, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
THE BALANCED FUND
The Balanced Fund's objective is to provide investors with a balance of
long-term capital appreciation and current income. The Fund seeks to achieve
this objective with less volatility and risk than that of the broad stock market
by investing primarily in a diversified portfolio that combines stocks, bonds
and cash-equivalent securities.
Equity securities normally will constitute from 40% to 70% of the Fund's
total assets. The Fund will invest at least 25% of its total assets in fixed-
income debt securities. Cash-equivalent securities normally will constitute from
0% to 35% of the Fund's total assets. The Adviser will shift the balance between
equity, debt and cash-equivalent securities based on economic conditions, the
current interest rate environment and the availability of specific investment
opportunities consistent with the Fund's objective.
The Fund's equity investments will emphasize equity securities of companies
having market capitalizations at the time of purchase of $500 million and over.
The fund typically expects that at least 80% of its equity holdings will fall
within this capitalization range. The average and median market capitalizations
will fluctuate over time as a result of market valuation levels and the
availability of specific investment opportunities.
The Fund seeks quality companies selling at lower P/E multiples relative to
their growth rates and P/E multiples than the S&P 500. Quality companies which
possess some or all of the following characteristics: significant potential for
future growth in earnings; a strong competitive advantage; a clearly defined
business focus; strong financial health; and management ownership.
Jurika & Voyles places heavy emphasis on in-house research, which includes
personal contacts, site visits, and meetings with company management.
5
<PAGE>
The Fund may hold securities of companies with smaller market
capitalizations. These securities have the characteristics and risks described
under the caption "Risk Considerations" on page 6.
The Fund invests primarily in common stocks and senior debt securities, but
also may invest in convertible preferred stocks, convertible debt securities and
warrants. A warrant represents a right to acquire other equity securities, often
for consideration and subject to certain conditions. In addition, the Fund may
invest up to 25% of its total assets in foreign securities such as U.S.
dollar-denominated securities of foreign issuers and ADRs, but will limit its
investments in any one foreign country to 5% of its net assets. As part of this,
the Fund may invest up to 5% of its total assets in securities denominated in
foreign currencies. See "Risk Considerations" on page 6.
The Fund may invest up to 25% of its total assets in debt securities (and
convertible debt securities) rated below investment grade, sometimes referred to
as "high-yield/high-risk" or "junk" bonds. Debt securities may include bonds,
notes, convertible bonds, mortgage-backed and asset-backed securities (including
CMOs and REMICs) and other types. See "Portfolio Securities, Investment
Techniques and Risks." See "Risk Considerations" for a discussion of the
characteristics of the debt securities in which the Fund may invest.
For a description of cash-equivalent securities in which a Fund may invest,
U.S. Government securities, repurchase agreements, securities lending and other
investments and techniques a Fund may use, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
ADDITIONAL INVESTMENT CONSIDERATIONS
The Adviser supports its selection of individual securities through
intensive research and pursues qualitative and quantitative disciplines to
determine when securities should be purchased and sold. In unusual
circumstances, economic, monetary and other factors may cause the Adviser to
assume a temporary, defensive position during which all or a substantial portion
of each Fund's assets may be invested in cash and short-term instruments. The
Funds also may lend securities and use repurchase agreements. For more
information on these investments, see "Portfolio Securities, Investment
Techniques and Risks" on page 8.
RISK CONSIDERATIONS
- --------------------------------------------------------------------------------
PRICE FLUCTUATION. Investments in equity securities in general are subject
to market risks that may cause their prices to fluctuate over time. The value of
debt securities changes as interest rates fluctuate. The value of securities,
such as warrants or convertible debt, exercisable for or convertible into equity
securities is also affected by prevailing interest rates, the credit quality of
the issuer and any call provisions. Fluctuations in the value of securities in
which a Fund invests will cause the net asset value of that Fund to fluctuate.
An investment in a Fund, therefore, may be more suitable for long-term investors
who can bear the risk of short-term principal fluctuations.
SMALL COMPANIES. Smaller companies present greater opportunities for capital
appreciation, but may also involve greater risks than larger companies. Although
smaller companies can benefit from the development of new products and services,
they also may have limited product lines, markets or financial resources, and
their securities may trade less frequently and in more limited volume than the
securities of larger, more mature companies. As a result, the prices of the
securities of such smaller companies may fluctuate to a greater degree than the
prices of the securities of other issuers.
DEBT SECURITIES. Debt securities held by the Funds may be subject to several
types of investment risk. Market or interest rate risk relates to the change in
market value caused by fluctuations in prevailing interest rates, while credit
risk relates to the ability of the issuer to make timely interest payments and
to repay the principal upon maturity. Call or income risk relates to corporate
bonds during periods of falling interest rates, and involves the possibility
that securities with high interest rates will be prepaid or "called" by the
issuer prior to maturity. Such an event would require a Fund to invest the
resulting proceeds elsewhere, at generally lower interest rates, which could
cause fluctuations
6
<PAGE>
in a Fund's net income. A Fund also may be exposed to event risk, which is the
possibility that corporate debt securities held by a Fund may suffer a
substantial decline in credit quality and market value due to a corporate
restructuring.
The value of debt securities will normally increase in periods of falling
interest rates; conversely, the value of these instruments will normally decline
in periods of rising interest rates. Generally, the longer the remaining
maturity of a debt security, the greater the effect of interest rate changes on
its market value. In an effort to maximize income consistent with its investment
objective, the Balanced Fund may, at times, change the average maturity of its
investment portfolio. This can be done by investing a larger portion of assets
in relatively longer term obligations when periods of declining interest rates
are anticipated and, conversely, emphasizing shorter and intermediate term
maturities when a rise in interest rates is indicated. See "Portfolio
Securities, Investment Techniques and Risks."
INVESTMENT GRADE DEBT SECURITIES. Investment grade debt securities include
those rated at least Baa by Moody's Investors Services, Inc. ("Moody's") or BBB
by Standard & Poor's Corporation ("S&P") or, if unrated, deemed to be of
equivalent quality as determined by the Adviser. Debt securities in this lowest
tier of investment grade are generally regarded as having adequate capacity to
pay interest and repay principal, but have speculative characteristics. Changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to make interest and principal payments than is the case with
higher grade bonds.
BELOW INVESTMENT GRADE DEBT SECURITIES. Below investment grade securities
are sometimes referred to as "high-yield/high-risk" or "junk" bonds. The Funds
will invest in debt securities rated at least Ba or B by Moody's or BB or B by
S&P or, if unrated, deemed to be of equivalent quality as determined by the
Adviser. These debt securities have greater speculative characteristics.
Securities rated B are regarded as having a great vulnerability to default
although currently having the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity or willingness to pay interest and repay principal. The ability
to maintain other terms of the contract over any long period of time may be
small. Junk bonds are more subject to default during periods of economic
downturns or increases in interest rates and their yields will fluctuate over
time. It may be more difficult to dispose of or to value junk bonds. Achievement
of a Fund's investment objective may also be more dependent on the Adviser's own
credit analysis to the extent a Fund's portfolio includes junk bonds.
FOREIGN SECURITIES. Foreign securities include both U.S. dollar- and foreign
currency-denominated securities of foreign issuers. In most cases the Adviser
will invest in foreign securities that are listed and traded on a domestic
national securities exchange.
There may be less publicly available information about issuers of foreign
securities than is available about companies in the U.S. and foreign auditing
requirements may not be comparable to those in the U.S. Interest or dividends on
foreign securities may be subject to foreign withholding taxes. Investments in
foreign countries may be subject to the possibility of expropriation or
confiscatory taxation, exchange controls, political or social instability or
diplomatic developments that could adversely affect the value of those
investments. In addition, the value of the foreign securities may be adversely
affected by movements in the exchange rates between foreign currencies and the
U.S. dollar, as well as other political and economic developments.
7
<PAGE>
PORTFOLIO SECURITIES, INVESTMENT
TECHNIQUES AND RISKS
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS. As noted above, the Funds may invest in short-term
cash equivalent securities either for temporary, defensive purposes or, for the
Balanced Fund, as part of an overall investment strategy. These consist of
high-quality debt obligations eligible to be included in money market
portfolios, such as U.S. Government securities, certificates of deposit,
bankers' acceptances and commercial paper. High-quality means the obligations
have been rated at least A-1 by S&P or Prime-1 by Moody's, have an outstanding
issue of debt securities rated at least A by S&P or Moody's, or are of
comparable quality in the opinion of the Adviser.
REPURCHASE AGREEMENTS. Short-term investments also include repurchase
agreements, reverse repurchase agreements and dollar roll transactions. A
reverse repurchase agreement involves a sale by a Fund of a security that it
holds to a bank, broker-dealer or other financial institution concurrently with
an agreement by that Fund to repurchase the same security at an agreed-upon
price and date. A dollar roll transaction involves a sale by a Fund of a
security to a financial institution, such as a bank or broker-dealer,
concurrently with an agreement by that Fund to repurchase a similar security
from the institution at a later date at an agreed-upon price. In a dollar roll
transaction, the Fund would be compensated by the difference between the current
sales price and the forward price for the future purchase, as well as the
interest earned on the cash proceeds on the initial sale. For financial
reporting and tax purposes, the Funds propose to treat dollar rolls as two
separate transactions: one involving the purchase of a security and a separate
transaction involving the sale of a security. The Funds do not currently intend
to enter into dollar rolls that are accounted for as a financing. All repurchase
agreements, reverse repurchase agreements and dollar roll transactions will be
fully collateralized in a segregated account with liquid high-grade debt
obligations on a daily marked-to-market basis. Because those transactions depend
on the performance of the other party, the Adviser will carefully assess the
creditworthiness of any bank or broker-dealer involved in these transactions
under procedures adopted by the Board of Trustees.
DEBT SECURITIES. The Funds' investments in debt securities include all types
of domestic or U.S. dollar-denominated foreign debt securities in any
proportion, including bonds, notes, convertible bonds, mortgage-backed and
asset-backed securities, including collateralized mortgage obligations and real
estate mortgage investment conduits, U.S. Government and U.S. Government agency
securities, zero coupon bonds, and short-term obligations such as commercial
paper and notes, bank deposits and other financial obligations, and longer-term
repurchase agreements. Under normal circumstances, the Adviser intends, but is
not obligated, to construct the portfolio with a higher proportion of corporate
issues than government or government agency securities. Bonds, notes and other
corporate debt instruments include obligations of varying maturities within the
overall maturity range noted above over a cross section of industries.
In determining whether or not to invest in a particular debt security, the
Adviser considers factors such as the price, coupon and yield to maturity, the
credit quality of the issuer, the issuer's cash flow and related coverage
ratios, the property, if any, securing the obligation and the terms of the debt
instrument, including subordination, default, sinking fund and early redemption
provisions.
Subsequent to purchase, the rating of a debt issue may be reduced below the
minimum rating acceptable for purchase by a Fund. A subsequent downgrade does
not require the sale of the security, but the Adviser will consider such an
event in determining whether to continue to hold the obligation. The Statement
of Additional Information contains a description of Moody's and S&P ratings.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include direct
obligations issued by
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the United States Treasury, such as Treasury bills, certificates of
indebtedness, notes and bonds. U.S. Government agencies and instrumentalities
that issue or guarantee securities include, but are not limited to, the Federal
Home Loan Banks, the Federal National Mortgage Association ("FNMA"), and the
Student Loan Marketing Association. Except for U.S. Treasury securities,
obligations of U.S. Government agencies and instrumentalities may or may not be
supported by the full faith and credit of the United States. Some, such as those
of the Federal Home Loan Banks, are backed by the right of the issuer to borrow
from the Treasury, others by discretionary authority of the U.S. Government to
purchase the agencies' obligations, while still others, such as the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
In the case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality does
not meet its commitment.
ASSET-BACKED SECURITIES. Asset-backed securities represent undivided
fractional interests in a trust with assets consisting of a pool of domestic
loans such as motor vehicle retail installment sales contracts or credit card
receivables. Asset-backed securities generally are issued by governmental,
government-related and private organizations. Payments typically are made
monthly, consisting of both principal and interest payments. Asset-backed
securities may be prepaid prior to maturity and hence the actual life of the
security cannot be accurately predicted. During periods of falling interest
rates, prepayments may accelerate, which would require a Fund to reinvest the
proceeds at a lower interest rate. In addition, like other debt securities, the
value of asset-backed securities will normally decline in periods of rising
interest rates. Although generally rated AAA, it is possible that the securities
could become illiquid or experience losses if guarantors or insurers default.
See "Risk Considerations -- Debt Securities."
MORTGAGE-RELATED SECURITIES. Mortgage-related securities are interests in a
pool of mortgage loans. Most mortgage-related securities are pass-through
securities, which means that investors receive payments consisting of a pro rata
share of both principal and interest (less servicing and other fees), as well as
unscheduled prepayments, as mortgages in the underlying mortgage pool are paid
off by the borrowers. In the case of mortgage-related securities, including real
estate mortgage investment conduits and collateralized mortgage obligations,
prepayments of principal by mortgagors or mortgage foreclosures will affect the
average life of the mortgage-related securities remaining in a Fund's portfolio.
Mortgage prepayments are affected by the level of interest rates and by factors
including general economic conditions, the underlying location and age of the
mortgage and other social and demographic conditions. In periods of rising
interest rates, the rate of prepayments tends to decrease, thereby lengthening
the average life of a pool of mortgage-related securities. Conversely, in
periods of falling interest rates, the rate of prepayments tends to increase,
thereby shortening the average life of a pool of mortgages. Thus,
mortgage-related securities may have less potential for capital appreciation in
periods of falling interest rates than other fixed-income securities of
comparable duration, although these securities may have a comparable risk of
decline in market value in periods of rising interest rates. Unscheduled
prepayments, which are made at par, will result in a loss equal to any
unamortized premium. See also "Risk Considerations -- Debt Securities."
AGENCY MORTGAGE-RELATED SECURITIES. The dominant issuers or guarantors of
mortgage-related securities today are the Government National Mortgage
Association ("GNMA"), FNMA and the Federal Home Loan Mortgage Corporation
("FHLMC"). GNMA creates pass-through securities from pools of U.S. government
guaranteed or insured (Federal Housing Authority or Veterans Administration)
mortgages originated by mortgage bankers, commercial banks and savings
associations. FNMA and FHLMC issue pass-through securities from pools of
conventional and federally insured and/or guaranteed residential mortgages
obtained from various entities, including savings associations, savings banks,
commercial banks, credit unions and mortgage bankers.
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The principal and interest on GNMA pass-through securities are guaranteed by
GNMA and backed by the full faith and credit of the U.S. Government. FNMA
guarantees full and timely payment of all interest and principal, while FHLMC
guarantees timely payment of interest and ultimate collection of principal of
its pass-through securities. Securities from FNMA and FHLMC are not backed by
the full faith and credit of the U.S. Government; however, they are generally
considered to present minimal credit risks. The yields provided by these
mortgage-related securities historically have exceeded the yields on other types
of U.S. Government securities with comparable maturities in large measure due to
the risks associated with prepayment.
Adjustable rate mortgage securities ("ARMs") are a form of pass-through
security representing interests in pools of mortgage loans, the interest rates
of which are adjusted from time to time. The adjustments usually are determined
in accordance with a predetermined interest rate index and may be subject to
certain limits. The adjustment feature of ARMs tends to make their values less
sensitive to interest rate changes.
Collateralized mortgage obligations ("CMOs") are debt obligations issued by
finance subsidiaries or trusts that are secured by mortgage-backed certificates,
including, in many cases, certificates issued by government-related guarantors,
such as GNMA, FNMA and FHLMC, together with certain funds and other collateral.
Although payment of the principal of and interest on the mortgage-backed
certificates pledged to secure the CMOs may be guaranteed by a U.S. Government
agency or instrumentality, such as FHLMC, the CMOs represent obligations solely
of the CMO issuer and are not insured or guaranteed by a U.S. Government agency
or instrumentality. The issuers of CMOs typically have no significant assets
other than those pledged as collateral for the obligations. The Funds will not
invest in any new types of collateralized mortgage obligations without prior
disclosure to the shareholders. Stripped mortgage securities, which are a form
of CMO, are usually structured with classes that receive different proportions
of the interest and principal payments on a pool of mortgages. Sometimes, one
class will receive all of the interest (the interest only or "IO" class) while
the other class will receive all of the principal (the principal only or "PO"
class). The yield to maturity on any IO class or PO class is extremely sensitive
not only to changes in prevailing interest rates but also to the rate of
principal payments and prepayments on the related underlying mortgages and, in
the most extreme cases, an IO class may become worthless.
The liquidity of IOs and POs that are issued by the U.S. Government or its
agencies and instrumentalities and backed by fixed-rate mortgage-related
securities will be determined by the Adviser under the direct supervision of the
Trust's Pricing Committee and approved by the Board of Trustees, and all other
IOs and POs will be deemed illiquid for purposes of the Funds' limitation on
illiquid securities.
PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES. The Funds may invest in
mortgage-related securities offered by private issuers, including pass-through
securities for pools of conventional residential mortgage loans; mortgage
pay-through obligations and mortgage-backed bonds, which are considered to be
obligations of the institution issuing the bonds and are collateralized by
mortgage loans; and bonds and CMOs that are collateralized by mortgage-related
securities issued by GNMA, FNMA, FHLMC or by pools of conventional mortgages.
Mortgage-related securities created by private issuers generally offer a
higher rate of interest (and greater credit and interest rate risk) than U.S.
Government and agency mortgage-related securities because they offer no direct
or indirect governmental guarantees of payments. However, many issuers or
servicers of mortgage-related securities guarantee, or provide insurance for,
timely payment of interest and principal on such securities.
The Funds may purchase some mortgage-related securities through private
placements without right to registration under the Securities Act of 1933, as
amended. See "Illiquid and Restricted Securities" on page 11.
WHEN-ISSUED SECURITIES. The Funds may purchase securities on a when-issued
or delayed-delivery basis, generally in connection with an underwriting or other
offering. When-issued and
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delayed delivery transactions occur when securities are bought with payment for
and delivery of the securities scheduled to take place at a future time, beyond
normal settlement dates, generally from 15 to 45 days after the transaction.
Each Fund will segregate cash, U.S. Government securities or other liquid,
high-quality debt securities in an amount sufficient to meet its payment
obligations with respect to these transactions.
INVESTMENT COMPANIES. Each Fund may invest up to 10% of its total assets in
shares of other investment companies. As a shareholder in another investment
company, a Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. In accordance with
applicable state regulatory provisions, the Adviser has agreed to waive its
management fee with respect to the portion of a Fund's assets invested in shares
of other open-end investment companies. In the case of a closed-end fund,
shareholders would bear the expenses of both a Fund and the fund in which that
Fund invests.
ILLIQUID AND RESTRICTED SECURITIES. No Fund may invest more than 15% of its
net assets in illiquid securities, including (1) securities for which there is
no readily available market; (2) securities which may be subject to legal
restrictions (so-called "restricted securities") other than Rule 144A securities
noted below; (3) repurchase agreements having more than seven days to maturity
and (4) fixed time deposits subject to withdrawal penalties (other than those
with a term of less than seven days). Restricted securities do not include those
which meet the requirements of Rule 144A under the Securities Act of 1933, as
amended, and which the Trustees have determined to be liquid based on the
applicable trading markets and the availability of reliable price information.
These Rule 144A securities could have the effect of increasing a Fund's
illiquidity to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing these securities.
FUND TURNOVER. The Funds do not intend to engage in short-term trading.
Under normal market conditions, the portfolio turnover rate for Value & Growth
Fund and Balanced Fund should be less than 100%. Under normal market conditions,
the portfolio turnover rate for Mini-Cap Fund should be less than 200%. For the
fiscal year ended June 30, 1996, the portfolio turnover for the Mini-Cap Fund
was 215% (103% for the 9 months ended June 30, 1995); Value & Growth Fund, 101%
(32% for the 9 months ended June 30, 1995); and Balanced Fund, 69% (54% for the
9 months ended June 30, 1995). Portfolio turnover in excess of 100% is
considered high, increases brokerage costs incurred by a Fund and may cause
recognition of gain by shareholder. Portfolio turnover in excess of 100% is
considered high, increases brokerage costs incurred by a Fund and may cause
recognition of gain by shareholders.
SECURITIES LENDING. Each Fund may lend its securities in an amount not
exceeding 30% of its assets to financial institutions such as banks and brokers
if the loan is collateralized in accordance with applicable regulations. Under
the present regulatory requirements which govern loans of fund securities, the
loan collateral must, on each business day, at least equal the value of the
loaned securities and must consist of cash, letters of credit of domestic banks
or domestic branches of foreign banks, or securities of the U.S. Government or
its agencies.
BORROWING. Each Fund may borrow money from banks in an aggregate amount not
to exceed one-third of the value of the Fund's total assets to meet temporary or
emergency purposes, and each Fund may pledge its assets in connection with such
borrowings. A Fund will not purchase any securities while any such borrowings
exceed 5% of that Fund's total assets (including reverse repurchase agreements
and dollar roll transactions that are accounted for as financings.).
The Fund aggregates reverse repurchase agreements and dollar roll
transactions that are accounted for as financings with its bank borrowings for
purposes of limiting borrowings to one-third of the value of the Fund's total
assets. See the Statement of Additional Information for further information.
LEVERAGE. Leveraging the Funds through various forms of borrowing creates an
opportunity for increased net income but, at the same time, creates special risk
considerations. For example, leveraging may exaggerate changes in the net asset
value of a Fund's shares and in the yield on a Fund's portfolio.
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Although the principal of such borrowings will be fixed, a Fund's assets may
change in value during the time the borrowing is outstanding. Leveraging will
create interest expenses for a Fund that can exceed the income from the assets
retained. To the extent the income derived from securities purchased with
borrowed funds exceeds the interest a Fund will have to pay, that Fund's net
income will be greater than if leveraging were not used. Conversely, if the
income from the assets retained with borrowed funds is not sufficient to cover
the cost of leveraging, the net income of a Fund will be less than if leveraging
were not used, and therefore the amount available for distribution to
shareholders as dividends will be reduced.
POOLED FUND. The initial shareholders of each Fund have approved a
fundamental policy authorizing each Fund, subject to authorization by the Board
of Trustees, and notwithstanding any other investment restriction, to invest all
of its assets in the securities of a single open-end investment company (a
"pooled fund"). If authorized by the Trustees, a Fund would seek to achieve its
investment objective by investing in a pooled fund which would invest in a
portfolio of securities that complies with the Fund's investment objective,
policies and restrictions. The Board currently does not intend to authorize
investing in pooled funds. Each fund will notify its shareholders prior to
adopting such an investment structure.
OTHER INVESTMENT RESTRICTIONS AND TECHNIQUES. Each Fund has adopted certain
other investment restrictions and uses various other investment techniques,
which are described in the Statement of Additional Information. Like each Fund's
investment objective, certain of these restrictions are fundamental and may be
changed only by a majority vote of that Fund's outstanding shares.
ORGANIZATION AND MANAGEMENT
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ORGANIZATION. The Trust is registered as an open-end diversified management
investment company and was organized as a Delaware business trust on July 11,
1994. The Trust currently consists of four separate diversified series. The
Trust's Board of Trustees decides on matters of general policy for all series
and reviews the activities of the Adviser, Distributor and Administrator. The
Trust's officers conduct and supervise the daily business operations of the
Trust and each series.
THE ADVISER. The Funds' Adviser, Jurika & Voyles, is a professional
investment management firm founded in 1983 by William K. Jurika and Glenn C.
Voyles. Mr. Jurika and Mr. Voyles control the majority of the Adviser's voting
stock. As of June 30, 1996, the Adviser had discretionary management authority
with respect to approximately $5 billion of assets for various clients including
corporations, pension plans, 401(k) plans, profit sharing plans, trusts and
estates, foundations and charitable endowments, and high net worth individuals.
The principal business address of the Adviser is 1999 Harrison Street, Suite
700, Oakland, California 94612.
MANAGEMENT FEE. Subject to the direction and control of the Trustees, the
Adviser formulates and implements an investment program for each Fund, including
determining which securities should be bought and sold. In addition to providing
certain administrative services, the Adviser also provides certain of the
officers of the Trust. For its services, the Adviser receives a fee, accrued
daily and paid monthly, at the following annual percentages of average net
assets: Mini-Cap Fund 1.00%; Value + Growth Fund 0.85%; and Balanced Fund 0.85%.
These fees are higher than those paid by most mutual funds.
COMPENSATION OF OTHER PARTIES. The Adviser may in its discretion and out of
its own funds compensate third parties for the sale and marketing of Class J
shares of the Funds. The Adviser also may use its own funds to sponsor seminars
and educational programs on the Funds for financial intermediaries and
shareholders.
MANAGERS OF THE FUNDS. The Portfolio Managers primarily responsible for the
day-to-day management of the Funds are William K. Jurika (for equity
investments), Glenn C. Voyles (for debt
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investments) and Irene Gorman Hoover (for small and mini-cap investments).
General management of the Funds' equity and debt portfolio securities is
conducted by Mr. Jurika and Mr. Voyles, respectively. Ms. Hoover assists with
the management of the Mini-Cap Fund by identifying investment opportunities in
small and mini-capitalization companies. Mr. Jurika and Mr. Voyles have been
associated with the Adviser since they co-founded the firm in 1983. Prior to
joining the Adviser in September 1991, Ms. Hoover served as Vice President of
Research at Pacific Securities, of San Francisco, California.
EXPENSE LIMITATION. Class J shares of each Fund are responsible for paying
the pro-rata share of Fund expenses attributable to such shares as well as
class- specific expenses. Fund expenses include legal and auditing fees, fees
and expenses of its custodian, accounting services and third-party shareholder
servicing agents, trustees' fees, the cost of communicating with shareholders
and registration fees, as well as its other operating expenses. Although not
required to do so, the Adviser has agreed to reimburse each Fund to the extent
necessary so that its ratio of operating expenses to average net assets will not
exceed the following levels with respect to Class J shares: Mini-Cap Fund --
1.50%; Value + Growth Fund -- 1.25%; and Balanced Fund -- 1.25%. The Adviser may
terminate these reductions at any time. Any reductions made by the Adviser in
its fees and any payments or reimbursement of expenses made by the Adviser which
are a Fund's obligation are subject to reimbursement within the following three
years by that Fund provided the Fund is able to effect such reimbursement and
remain in compliance with applicable expense limitations described in this
Prospectus and that may be imposed by regulatory authorities. The Trustees
believe that the Funds may be of a sufficient size to permit the reimbursement
of any such reductions or payments. A description of any such reimbursements and
the amounts paid will be set forth in financial statements that are included in
the Funds' annual and semi-annual reports to shareholders.
FUND TRANSACTIONS AND BROKERAGE. The Adviser considers a number of factors
in determining which brokers or dealers to use for a Fund's portfolio
transactions. These factors include, but are not limited to, the reasonableness
of commissions, quality of services and execution, and the availability of
research which the Adviser may lawfully and appropriately use in its investment
management and advisory capacities. Provided a Fund receives prompt execution at
competitive prices, the Adviser also may consider the sale of Fund shares by
brokers as a factor in selecting those broker-dealers for the Fund's portfolio
transactions. For more information, please refer to the Statement of Additional
Information.
THE ADMINISTRATOR. Investment Company Administration Corporation (the
"Administrator"), pursuant to an administration agreement with the Funds,
supervises the overall administration of the Trust and the Funds including,
among other responsibilities, the preparation and filing of all documents
required for compliance by the Trust or the Funds with applicable laws and
regulations, arranging for the maintenance of books and records of the Trust and
the Funds, and supervision of other organizations that provide services to the
Trust and the Funds. Certain officers of the Trust and the Funds may be provided
by the Administrator. The Trust has agreed to pay the Administrator an annual
fee of 0.10% of the value of the total net assets of the Trust.
MULTIPLE CLASSES. Under the Trust's charter documents, the Board of Trustees
has the power to classify or reclassify any unissued shares of a Fund into one
or more additional classes by setting or changing in any one or more respects
their relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board of Trustees of
a Fund may similarly classify or reclassify any class of its shares into one or
more series and, without shareholder approval, may increase the number of
authorized shares of the Fund. The Board of Trustees has designated two classes
of shares for each Fund
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PURCHASING CLASS J SHARES
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GENERAL. The Funds' Class J shares are offered directly to the public at
their respective net asset values next determined after receipt of an order by
the Transfer Agent with complete information and meeting all the requirements
discussed in this Prospectus. There is no initial sales load in connection with
the purchase of Class J shares. The intial Funds' Class J shares are offered for
sale by the Funds' underwriter, First Fund Distributors, Inc.
The minimum initial investment in each Fund is $250,000, including
investments for individual investors, individual retirement accounts ("IRAs"),
SEPs, Keoghs, 401(k) and 401(a) plans and other retirement plans. Subsequent
investments for all Funds must be at least $1,000. Each Fund reserves the right
to vary the initial and additional investment minimums. In addition, the Adviser
may waive the minimum initial investment requirement for any investor. The Funds
reserve the right to reject any purchase order and to suspend the offering of
Class J shares of any Fund.
Purchase orders for Class J shares of a Fund that are received by the
Transfer Agent in proper form by 4:00 p.m., New York time, on any day that the
NYSE is open for trading, will be purchased at the Fund's next determined net
asset value. Orders for Fund shares received after 4:00 p.m. New York time will
be purchased at the next determined net asset value determined the business day
following receipt of the order.
At the discretion of the Funds, investors may be permitted to purchase a
Fund's Class J shares by transferring securities to the Fund that meet the
Fund's investment objectives and policies. Securities transferred to a Fund will
be valued in accordance with the same procedures used to determine the Fund's
net asset value at the time of the next determination of net asset value after
such acceptance. Class J shares issued by a Fund in exchange for securities will
be issued at net asset value determined as of the same time. All dividends,
interest, subscription, or other rights pertaining to such securities shall
become the property of the Fund and must be delivered to the Fund by the
investor upon receipt from the issuer. Investors who are permitted to transfer
such securities will be required to recognize a gain or loss on such transfer
and pay income tax thereon, if applicable, measured by the difference between
the fair market value of the securities and the investor's basis therein.
Securities will not be accepted in exchange for Class J shares of a Fund unless:
(1) such securities are, at the time of the exchange, eligible to be included in
the Fund's portfolio and current market quotations are readily available for
such securities; (2) the investor represents and warrants that all securities
offered to be exchanged are not subject to any restrictions upon their sale by
the Fund under the Securities Act of 1933; and (3) the value of any such
security (except U.S. Government securities), being exchanged together with
other securities of the same issuer owned by the Fund, will not exceed 5% of the
Fund's net assets immediately after the transaction.
Each Fund may accept telephone orders from brokers, financial institutions
or service organizations which have been previously approved by that Fund. It is
the responsibility of such brokers, financial institutions or service
organizations to forward promptly purchase orders and payments to the Funds.
Class J shares of a Fund may be purchased through brokers, financial
institutions, service organizations, banks, and bank trust departments, each of
which may charge the investor a transaction fee or other fee for its services at
the time of purchase. Such fees would not otherwise be charged if the shares
were purchased directly from the Funds.
Shares or classes of shares of each Fund may, at some point, be available
through certain brokerage services that do not charge transaction fees to
investors. However, the Adviser, from its own resources, may pay service fees
charged by these brokers for distribution and subaccounting services
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with respect to Fund shares held by such brokers. Typically these fees are based
on a percentage of the annual average value of these accounts.
Shareholders who invest through sponsored retirement plans should contact
their program administrators responsible for transmitting all orders for the
purchase, redemption or exchange of program-sponsored shares. The availability
of each Fund and the procedures for investing depend on the provisions of the
program and whether the program sponsor has contracted with the Fund or its
transfer agent for special processing services, including sub-accounting.
PURCHASES BY MAIL. Class J shares of each Fund may be purchased initially by
completing the application accompanying this Prospectus and mailing it to the
Transfer Agent, together with a check payable to the respective Fund, Jurika &
Voyles Fund Group, P.O. Box 23845, Oakland, CA 94623-0848, or P.O. Box 9291,
Boston, MA 02266-9291.
Subsequent investments in an existing account in the Funds may be made at
any time by sending a check payable to the respective Fund to Jurika & Voyles
Fund Group, P.O. Box 23845, Oakland, CA 94623-0848, or P.O. Box 9291, Boston, MA
02266-9291. Please enclose the stub of the account statement and include the
amount of the investment, the name of the account for which the investment is to
be made and the account number.
PURCHASES BY WIRE. Investors who wish to purchase Class J shares of any of
the Funds by federal funds wire should first call the Transfer Agent at (800)
JV-INVST to advise the Transfer Agent that an initial investment will be made by
wire and to receive an account number. Following notification to the Transfer
Agent, investors must request the originating bank to transmit immediately
available funds by wire to the Transfer Agent's affiliated bank as follows:
Jurika & Voyles Fund Group
State Street Bank & Trust Company
ABA No. 011000028
Acct. No. 99042665
FBO Jurika & Voyles [Name of Fund]
Shareholder Name ______________________________
Shareholder Fund Acct. No. _____________________
A completed application with signature(s) of the registrant(s) must be
mailed to the Transfer Agent immediately following to the initial wire.
Investors should be aware that banks generally impose a wire service fee. The
Funds will not be responsible for the consequence of delays, including delays in
the banking or Federal Reserve wire systems.
SUBSEQUENT INVESTMENTS. Once an account has been opened, subsequent
purchases may be made by mail, bank wire, exchange, direct deposit or automatic
investing. The minimum for subsequent investments is $1,000 for all Funds.
When making additional investments by mail, simply return the remittance
portion of a previous confirmation with the investment in the envelope provided
with each confirmation statement. Checks should be made payable to the
particular Fund in which an investment is to be made and mailed to the Fund to
Jurika & Voyles Fund Group, P.O. Box 23845, Oakland, CA 94623-0848, or P.O. Box
9291, Boston, MA 02266-9291. Orders to purchase shares are effective on the day
the Transfer Agent receives the check or money order.
If an order, together with payment in proper form, is received by the
Transfer Agent or previously approved broker or financial institution by 4:00
p.m. New York time, on any day that the NYSE is open for trading, Class J shares
will be purchased at each Fund's next determined net asset value. Orders for
Class J Fund shares received after 4:00 p.m. New York time will be purchased at
the net asset value determined on the business day following receipt of the
order.
All cash purchases must be made in U.S. dollars, and, to avoid fees and
delays, checks must be drawn only on banks located in the U.S. A charge (minimum
of $20) will be imposed if any check used for the purchase of Class J shares is
returned. The Funds and the Transfer Agent each reserve the right to reject any
purchase order in whole or in part.
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EXCHANGE OF CLASS J SHARES
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Class J shares of any of the Funds may be exchanged for Class J shares of
any of the other Funds, provided such other Class J shares may be sold legally
in the state of the investor's residence. You also may exchange your Class J
shares for shares of the Seven Seas Money Market Fund, which is not affiliated
with the Trust or the Adviser, if such shares are offered in your state of
residence. Prior to making such exchange you should obtain and carefully read
the prospectus for the Seven Seas Money Market Fund. This exchange privilege
does not constitute an offering or recommendation on the part of the Trust or
the Adviser of an investment in the Seven Seas Money Market Fund.
Class J shares may be exchanged by: (1) written request; or (2) telephone,
if a special authorization form has been completed and is on file with the
Transfer Agent in advance. Requests for telephone exchanges must be received by
the Transfer Agent by the close of regular trading on the NYSE (currently 4:00
p.m. New York time) on any day that the NYSE is open for regular trading.
Exchanges are subject to the minimum initial investment requirement.
The exchange privilege is a convenient way to respond to changes in
investment goals or in market conditions. This privilege is not designed for
frequent trading in response to short-term market fluctuations. The telephone
exchange privilege may be difficult to implement during times of drastic
economic or market changes. The purchase of Class J shares for any Fund through
an exchange transaction is accepted immediately. An exchange is treated as a
redemption for federal and state income tax purposes, which may result in
taxable gain or loss, and a new purchase, each at net asset value of the
appropriate Fund. The Funds and the Transfer Agent reserve the right to limit,
amend, impose charges upon, terminate or otherwise modify the exchange privilege
on 60 days' prior written notice to shareholders.
SELLING CLASS J SHARES (REDEMPTIONS)
- --------------------------------------------------------------------------------
Shareholders may redeem Class J shares of any Fund without charge on any
business day that the NYSE is open for business. Redemptions will be effective
at the net asset value per share next determined after the receipt by the
Transfer Agent, broker or financial intermediary of a redemption request meeting
the requirements described below. Each Fund normally sends redemption proceeds
on the next business day, but in any event redemption proceeds are sent within
seven calendar days of receipt of a redemption request in proper form. Payment
for redemption of recently purchased Class J shares will be delayed until the
Transfer Agent has been advised that the purchase check has been honored, up to
12 calendar days from the time of receipt by the Transfer Agent. Payment may
also be made by wire directly to any bank previously designated by the
shareholder on a shareholder account application. There is a $10 charge for
redemptions made by wire. Please note that the shareholder's bank may also
impose a fee for wire service. There may be fees for redemptions made through
brokers, financial institutions and service organizations.
The Funds will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Board of
Trustees, require a Fund to sell assets under disadvantageous conditions or to
the detriment of the remaining shareholders of the Fund.
The Funds may suspend the right of redemption or postpone the date of
payment for more than seven days during any period when (1) trading on the NYSE
is restricted or the NYSE is closed, other than customary weekend and holiday
closings; (2) the SEC has by order permitted such suspension; or (3) an
emergency, as defined by rules of the
16
<PAGE>
SEC, exists making disposal of portfolio investments or determination of the
value of the net assets of the Funds not reasonably practicable.
MINIMUM BALANCES. Due to the relatively high cost of maintaining smaller
accounts, each Fund reserves the right to make involuntary redemptions of all
shares in any account (other than the account of a shareholder who is a
participant in a qualified plan) for their then-current net asset value if at
any time the total investment does not have a value of at least $10,000 because
of redemptions. The shareholder will be notified that the value of the account
is less than the required minimum and will be allowed at least 60 days to bring
the value of the account up to at least $10,000 before the redemption is
processed.
REDEMPTION BY MAIL. Class J shares may be redeemed by submitting a written
request for redemption to Jurika & Voyles Fund Group, P.O. Box 23845, Oakland,
CA 94623-0848, or P.O. Box 9291, Boston, MA 02266-9291.
A written request must be in good order, which means that it must: (1)
identify the shareholder's account name; (2) state the number of shares or
dollar amount to be redeemed; and (3) be signed by each registered owner exactly
as the shares are registered.
SIGNATURE GUARANTEE. To prevent fraudulent redemptions, a signature
guarantee for the signature of each person in whose name the account is
registered is required on all written redemption requests over $50,000. A
guarantee may be obtained from any commercial bank, trust company, savings and
loan association, federal savings bank, broker-dealer, or member firm of a
national securities exchange or other eligible financial institution. Credit
unions must be authorized to issue signature guarantees. Broker-dealers
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Notary public endorsements will not be
accepted as a substitute for a signature guarantee. The Transfer Agent may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians and retirement plans.
REDEMPTION BY TELEPHONE. Shareholders who have so indicated on the
application, or have subsequently arranged in writing to do so, may redeem Class
J shares by instructing the Transfer Agent by telephone. Shareholders may redeem
shares by calling the Transfer Agent at (800) JV-INVST between the hours of 8:30
a.m. and 5:00 p.m. (Eastern time) on a day when the NYSE is open for trading.
Redemptions by telephone must be at least $1,000.
In order to arrange for redemption by wire or telephone after an account has
been opened, or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent with a signature
guarantee at the address listed under "Redemption by Mail," above.
SPECIAL FACTORS REGARDING TELEPHONE REDEMPTIONS. Neither the Funds nor any
of their service contractors will be liable for any loss or expense in acting on
telephone instructions that are reasonably believed to be genuine. In attempting
to confirm that telephone instructions are genuine, the Funds will use
procedures that are considered reasonable, including requesting a shareholder to
correctly state the Fund account number, the name in which the account is
registered, the social security number, banking institution, bank account number
and the name in which the bank account is registered. To the extent that the
Funds fail to use reasonable procedures to verify the genuineness of telephone
instructions, they and/or their service contractors may be liable for any such
instructions that prove to be fraudulent or unauthorized.
The Funds reserve the right to refuse a wire or telephone redemption if it
is believed advisable to do so. Procedures for redeeming Class J shares by wire
or telephone may be modified or terminated at any time by any of the Funds after
at least 30 days' prior written notice to shareholders.
Class J shares of the Funds may be redeemed through certain brokers,
financial institutions or service organizations who may charge the investor a
transaction fee or other fee for their services at the time of redemption. Such
fees would not otherwise be charged if the shares were redeemed directly from
the Funds.
REDEMPTION BY AUTOMATED CLEARING HOUSE ("ACH"). A shareholder may elect to
have redemption proceeds, cash distributions or systematic
17
<PAGE>
cash withdrawal payments transferred to a bank, savings and loan association or
credit union that is an on-line member of the ACH system. There are no fees
associated with the use of the ACH service.
ACH redemption requests must be received by the Funds' Transfer Agent before
4:00 p.m. New York time to receive that day's closing net asset value. ACH
redemptions will be sent by the Transfer Agent on the day following the
shareholder's request. The funds from the ACH redemption will be available to
the shareholder two days after the redemption has been processed.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
The following special account options are available to individual
shareholders but not to participants in employer-sponsored retirement plans.
There are no charges for the programs noted below, and an investor may change or
stop these plans at any time by written notice to the Funds.
SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Program is an option
that may be utilized by an investor who wishes to withdraw funds from an account
on a regular basis. To participate in this option, an investor must either own
or purchase Class J shares having a value of $250,000 or more. Automatic
payments by check will be mailed to the investor on either a monthly, quarterly,
semi-annual or annual basis in amounts of $1,000 or more. All withdrawals are
processed on the last business day of the month or, if such day is not a
business day, on the next business day and paid promptly thereafter. Please
complete the appropriate section on the New Account Application indicating the
amount of the distribution and the desired frequency.
AUTOMATIC INVESTING. This service allows a shareholder to make regular
investments once an account is established. A shareholder simply authorizes the
automatic withdrawal of funds from a bank account into the specified Fund. The
minimum initial and subsequent investment pursuant to this plan is $1,000 per
month. An initial Fund account must be opened first with the $250,000 minimum
prior to participating in this plan. Please complete the appropriate section on
the New Account Application indicating the amount of the automatic investment.
RETIREMENT PLANS. The Funds are available for investment by pension and
profit sharing plans, including IRAs, SEPs, Keoghs and Defined Contribution
Plans through which investors may purchase Class J Fund shares. The Funds,
however, do not sponsor Defined Contribution Plans. For details concerning any
of the retirement plans, please call the Funds at (800) JV-INVST.
CLASS J SHARE PRICE CALCULATION
- --------------------------------------------------------------------------------
CLASS J SHARE PRICE. Class J shares of a Fund are purchased at the net asset
value after an order in proper form is received by the Transfer Agent. An order
in proper form must include all correct and complete information, documents and
signatures required to process your purchase, as well as a check or bank wire
payment properly drawn and collectable. The net asset value per share is
determined as of the close of trading of the NYSE on each day the Exchange is
open for normal trading. Orders received before 4:00 p.m. (Eastern time) on a
day when the Exchange is open for normal trading will be processed as of the
close of trading on that day. Otherwise, processing will occur on the next
business day. The Distributor reserves the right to reject any purchase order.
NET ASSET VALUE. The net asset value of each Fund is determined as of the
close of trading (currently 4:00 p.m., New York time) on each day that the NYSE
is open for trading. The net asset value per Class J share of each Fund is the
value of the Fund's assets attributable to Class J shares, less
18
<PAGE>
its liabilities attributable to Class J shares, divided by the number of
outstanding Class J shares of the Fund. Each Fund values its investments on the
basis of the market value of its securities. Portfolio securities that are
listed or admitted to trading on a U.S. exchange are valued at the last sale
price on the principal exchange on which the security is traded or, if there has
been no sale that day, at the mean between the closing bid and asked prices.
Securities admitted to trading on the NASDAQ National Market System and
securities traded only in the U.S. over-the-counter market are valued at the
last sale price or, if there has been no sale that day, at the mean between the
closing bid and asked prices. Securities and other assets for which market
prices are not readily available are valued at fair value as determined in good
faith by the Board of Trustees. Debt securities with remaining maturities of 60
days or less are normally valued at amortized cost, unless the Board of Trustees
determines that amortized cost does not represent fair value. Cash and
receivables will be valued at their face amounts. Interest will be recorded as
accrued, and dividends will be recorded on their ex-dividend date.
SHARE CERTIFICATES. Shares are credited to your account and certificates are
not issued. This eliminates the costly problem of lost or destroyed
certificates.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS. The Mini-Cap and Value + Growth Funds pay
dividends annually. The Balanced Fund pays dividends quarterly. Each Fund makes
distributions of its net capital gains, if any, at least annually. The Board of
Trustees may determine to declare dividends and make distributions more
frequently.
Dividends and capital gain distributions are automatically reinvested in
additional Class J shares of the Fund at the net asset value per share on the
reinvestment date unless the shareholder has previously requested in writing to
the Transfer Agent that payment be made in cash.
Any dividend or distribution paid by a Fund reduces its net asset value per
share on the reinvestment date by the per share amount of the dividend or
distribution. Investors should note that a dividend or distribution paid on
shares purchased shortly before such dividend or distribution was declared will
be subject to income taxes as discussed below even though the dividend or
distribution represents, in substance, a partial return of capital to the
shareholder.
TAX STATUS. Each Fund has elected and intends to continue to qualify to be
treated as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code"). As long as the Fund continues to qualify, and
as long as the Fund distributes all of its income each year to the shareholders,
the Fund will not be subject to any federal income or excise taxes based on net
income. The distributions made by the Fund will be taxable to shareholders
whether received in shares (through dividend reinvestment) or in cash.
Distributions derived from net investment income, including net short-term
capital gains, are taxable to shareholders (other than tax-exempt shareholders
who have not borrowed to purchase or carry their shares) as ordinary income. A
portion of these distributions may qualify for the intercorporate
dividends-received deduction. Distributions designated as capital gains
dividends are taxable as long-term capital gains regardless of the length of
time shares of the Fund have been held. Although distributions are generally
taxable when received, certain distributions made in January are taxable as if
received the prior December. Shareholders will be informed annually of the
amount and nature of the Fund's distributions. A Fund may be required to impose
backup withholding at a current rate of 31% from income dividends and capital
gain distributions and upon payment of redemption proceeds if provisions of the
Code relating to the furnishing and certification of taxpayer identification
numbers and reporting of dividends are not complied with by a shareholder. Any
such accounts without a tax identification number may be liquidated and
distributed to a shareholder, net of withholding, after the 60th day of
investment.
19
<PAGE>
Additional information about taxes is set forth in the Statement of
Additional Information. Shareholders should consult their own advisers
concerning federal, state and local taxation of distributions from the Funds.
Heller, Ehrman, White & McAuliffe, counsel to the Trust, has expressed no
opinion in respect thereof.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
TOTAL RETURN. From time to time, each Fund may publish its total return in
advertisements and communications to investors. Performance data may be quoted
separately for Class J shares as for other classes of shares of the Funds. Total
return information will include the Fund's average annual compounded rate of
return over the four most recent calendar quarters and over the period from the
Fund's inception of operations. Each Fund may also advertise aggregate and
average total return information over different periods of time. Each Fund's
total return will be based upon the value of the shares acquired through a
hypothetical $1,000 investment (at beginning of the specified period and the net
asset value of such shares at the end of the period, assuming reinvestment of
all the distributions) at the maximum public offering price. Total return
figures will reflect all recurring charges against Fund income. Investors should
note that the investment results of each Fund will fluctuate over time, and any
presentation of a Fund's total return for any prior period should not be
considered as a representation of what an investor's total return may be in any
future period.
YIELD. The Balanced Fund may also refer in its advertising and promotional
materials to its yield. This Fund's yield shows the rate of income that it earns
on its investments, expressed as a percentage of the net asset value of Fund
shares. The Fund calculates yield by determining the interest income it earned
from its portfolio investments for a specified 30-period (net of expenses),
dividing such income by the average number of Fund shares outstanding, and
expressing the result as an annualized percentage based on the net asset value
at the end of that 30-day period. Yield accounting methods differ from the
methods used for other accounting purposes; accordingly, this Fund's yield may
not equal the dividend income actually paid to investors or the income reported
in this Fund's financial statements.
In addition to standardized return, performance advertisements and sales
literature may also include other total return performance data ("non-
standardized return"). Non-standardized return may be quoted for the same or
different periods as those for which standardized return is quoted and may
consist of aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof.
All data included in performance advertisements will reflect past
performance and will not necessarily be indicative of future results. The Funds
may also advertise their relative rankings by mutual fund ranking services such
as Lipper Analytical Services ("Lipper") or Morningstar, Inc. ("Morningstar")
Provided the Funds are eligible for reporting by rating services such as Lipper
or Morningstar, such ranking services would include the Funds in the following
categories: Mini-Cap Fund -- Small Company; Value + Growth Fund -- Growth; and
Balanced Fund -- Balanced. The investment return and principal value of an
investment in a Fund will fluctuate and an investor's proceeds upon redeeming
Class J shares may be more or less than the original cost of the Class J shares.
20
<PAGE>
GENERAL INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS. Shareholders are entitled to one vote for each dollar of net
asset value per Class J share of each series (and fractional votes for
fractional dollar amounts) and may vote in the election of Trustees and on other
matters submitted to meetings of shareholders. It is not contemplated that
regular annual meetings of shareholders will be held. Rule 18f-2 under the
Investment Company Act of 1940, as amended, provides that matters submitted to
shareholders be approved by a majority of the outstanding securities of each
series, unless it is clear that the interests of each series in the matter are
identical or the matter does not affect a series. However, the rule exempts the
selection of accountants and the election of Trustees from the separate voting
requirements.
Except as set forth herein, all classes of shares issued by a Fund shall
have identical voting, dividend, liquidation and other rights, preferences, and
terms and conditions. The only differences among the classes of shares relate
solely to the following: (a) each class may be subject to different class
expenses; (b) each class may bear a different identifying designation; (c) each
class may have exclusive voting rights with respect to matters solely affecting
such class; (d) each class may have different exchange privileges; and (e) each
class may provide for the automatic conversion of that class into another class.
SHAREHOLDER MEETINGS. The Trustees have undertaken to the SEC that they will
promptly call a meeting for the purpose of voting on the question of removal of
any Trustee when requested to do so by not less than 10% of the dollar-weighted
total votes of the respective Fund. In addition, subject to certain conditions,
shareholders of each Fund may apply to the Fund to communicate with other
shareholders to request a shareholders' meeting to vote on the removal of a
Trustee or Trustees.
SHAREHOLDER REPORTS AND INQUIRES. Shareholders will receive annual financial
statements which are examined by the Funds' independent accounts, as well as
unaudited semi-annual financial statements. Unless otherwise requested, only one
copy of each shareholder report or other material sent to shareholders will be
sent to each household or address regardless of the number of shareholders or
accounts at that household or address. Shareholder inquiries should be addressed
to the Funds c/o Jurika & Voyles Fund Group, 1999 Harrison Street, Suite 700,
Oakland, California 94612, (800) JV-INVST.
21
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[This Page Intentionally Left Blank]
<PAGE>
JURIKA & VOYLES
Fund Group
A Commonsense Approach to Investing
1999 Harrison Street
Suite 700
Oakland, California 94612-3517
800 JV-INVST
800 58-46878
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JURIKA & VOYLES FUND GROUP
INVESTMENT ADVISER:
Jurika & Voyles
1999 Harrison Street, Suite 700
Oakland, CA 94612
(800) JV-INVST
This Statement of Additional Information pertains to all classes of Jurika &
Voyles Mini-Cap Fund (the "Mini- Cap Fund"), Jurika & Voyles Value + Growth Fund
(the "Value + Growth Fund"), Jurika & Voyles Balanced Fund (the "Balanced
Fund"), and Jurika & Voyles Small Cap Fund (the "Small Cap Fund"), each a series
of Jurika & Voyles Fund Group (the "Trust"). It supplements the information
contained in the Funds' current Prospectuses dated December 31, 1996, which may
be revised from time to time, and should be read in conjunction therewith. The
Prospectuses for the Funds may be obtained by writing or calling First Fund
Distributors, Inc. at (800) JV-INVST. This Statement of Additional Information,
although not in and of itself a prospectus, is incorporated by reference into
the Prospectuses in its entirety.
TABLE OF CONTENTS
CAPTION PAGE
- ------- ----
Investment Objectives and Policies..........................................B- 2
The Funds' Investment Limitations...........................................B- 8
Management of the Funds.....................................................B-11
The Funds' Administrator....................................................B-17
The Funds' Distributor......................................................B-17
Transfer Agent and Custodian................................................B-17
How Net Asset Value is Determined...........................................B-17
Share Purchases and Redemptions.............................................B-19
Dividends, Distributions and Taxes..........................................B-19
How Performance is Determined...............................................B-22
Additional Information......................................................B-24
Financial Statements........................................................B-24
For ease of reference, the same section headings are used in both the
Prospectuses and this Statement of Additional Information with respect to the
same subject matter, except for "Share Purchases and Redemptions" (see the
sections in the Prospectuses "How to Purchase Shares" and "How to Redeem
Shares").
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS STATEMENT OF ADDITIONAL
INFORMATION AND THE PROSPECTUSES IDENTIFIED ABOVE, AS REVISED FROM TIME TO TIME,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND.
This Statement of Additional Information is dated December 31, 1996.
B-1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Funds are managed by Jurika & Voyles ("Jurika & Voyles" or the "Adviser").
The investment objectives and policies of the Funds are described in detail in
the Prospectuses. The achievement of each Fund's investment objective will
depend on market conditions generally and on the analytical and portfolio
management skills of the Adviser. The following discussion supplements the
discussion in the Prospectuses.
Lower-Rated Debt Securities
The Funds may purchase lower-rated debt securities (e.g., those rated BB and B
by Standard & Poor's Corporation ("S&P") or Ba and B by Moody's Investors
Service, Inc. ("Moody's")) that have poor protection of payment of principal and
interest. See Appendix A for a description of these ratings. These securities
often are considered to be speculative and involve greater risk of default or
price changes due to changes in the issuer's creditworthiness. Market prices of
these securities may fluctuate more than higher-rated debt securities and may
decline significantly in periods of general economic difficulty which may follow
periods of rising rates. While the market for high-yield corporate debt
securities has been in existence for many years and has weathered previous
economic downturns, the market in recent years has experienced a dramatic
increase in the large-scale use of such securities to fund highly leveraged
corporate acquisitions and restructurings. Accordingly, past experience may not
provide an accurate indication of future performance of the high-yield bond
market, especially during periods of economic recession.
The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. If market quotations are not available, these
securities are valued in accordance with procedures established by the Board of
Trustees, including the use of outside pricing services. Judgment plays a
greater role in valuing high-yield corporate debt securities than is the case
for securities for which more external sources for quotations and last-sale
information are available. Adverse publicity and changing investor perceptions
may affect the ability of outside pricing services used by the Funds to value
their portfolio securities, and their ability to dispose of these lower- rated
debt securities.
Because the risk of default is higher for lower-quality securities and sometimes
increases with the age of these securities, the Adviser's research and credit
analysis are an integral part of managing any securities of this type held by
the Funds. In considering investments for the Funds, the Adviser attempts to
identify those issuers of high-yielding securities whose financial condition is
adequate to meet future obligations, has improved, or is expected to improve in
the future. The Adviser's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earnings prospects,
and the experience and managerial strength of the issuer.
Each Fund may choose, at its expense or in conjunction with others, to pursue
litigation or otherwise exercise its rights as a security holder to seek to
protect the interests of security holders if it determines this to be in the
best interest of Fund shareholders.
Jurika & Voyles Balanced Fund Fiscal Year 1995-96 Debt Holdings, by Rating
Moody's Investors Service, Inc.
Rating Average
------ -------
Investment Grade
- ----------------
Highest quality Aaa 18.5%
High quality Aa 1.2%
Upper-medium grade A 2.4%
Medium grade Baa 3.7%
B-2
<PAGE>
Rating Average
------ -------
Non-Investment Grade
- --------------------
Moderatively speculative Ba 1.1%
Speculative B 2.4%
Highly speculative Caa 0%
Poor quality Ca 0%
Lowest quality C 0%
See Appendix A of this Statement of Additional Information for a complete
description of securities.
Foreign Investments
As noted in the Prospectuses, the Funds may invest in foreign securities and
securities denominated in or indexed to foreign currencies. Each Fund currently
intends to invest no more than 25% of its total assets in such foreign
securities and will limit its exposure to the currency and political risk of a
single foreign country to 5% of its total assets.
Foreign investments can involve significant risks in addition to the risks
inherent in U.S. investments. The value of securities denominated in or indexed
to foreign currencies, and of dividends and interest from such securities, can
change significantly when foreign currencies strengthen or weaken relative to
the U.S. dollar. Foreign securities markets generally have less trading volume
and less liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, generally are
higher than for U.S.
investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks. Foreign
investments may be affected by actions of foreign governments adverse to the
interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that the Adviser will be able to
anticipate or counter these potential events and adverse impacts they may have
on a Fund's share price.
The Funds may invest in foreign securities that impose restrictions on transfer
within the U.S. or to U.S. persons. Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American Depositary Receipts and Global Depositary Receipts ("ADRs" and "GDRs")
are certificates evidencing ownership of shares of a foreign-based issuer held
by a bank or similar financial institution as depository. Designed for use in
U.S. and global securities markets, respectively, ADRs and GDRs are alternatives
to the direct purchase of the underlying securities in their national markets
and currencies.
B-3
<PAGE>
Foreign Currency Transactions. Because the Funds may invest in foreign
securities, the Funds may hold foreign currency deposits from time to time, and
may convert U.S. dollars and foreign currencies in the foreign exchange markets.
Currency conversion involves dealer spreads and other costs, although
commissions usually are not charged. Currencies may be exchanged on a spot
(i.e., cash) basis, or by entering into forward contracts to purchase or sell
foreign currencies at a future date and price. Forward contracts generally are
traded in an interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The parties to a forward
contract may agree to offset or terminate the contract before its maturity, or
may hold the contract to maturity and complete the contemplated currency
exchange.
In connection with purchases and sales of securities denominated in foreign
currencies, the Funds may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." The Adviser expects to enter into settlement hedges in the
normal course of managing the Funds' foreign investments. A Fund also could
enter into forward contracts to purchase or sell a foreign currency in
anticipation of future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected by the
Adviser.
The Funds also may use forward contracts to hedge against a decline in the value
of existing investments denominated in foreign currency. For example, if a Fund
owned securities denominated in Deutsche marks, it could enter into a forward
contract to sell Deutsche marks in return for U.S. dollars to hedge against
possible declines in the Deutsche mark's value. Such a hedge (sometimes referred
to as a "position hedge") would tend to offset both positive and negative
currency fluctuations, but would not offset changes in security values caused by
other factors. A Fund also could hedge the position by selling another currency
expected to perform similarly to the Deutsche mark -- for example, by entering
into a forward contract to sell Deutsche marks or European Currency Units in
return for U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally will not hedge currency exposure as effectively as a simple hedge into
U.S. dollars. Proxy hedges may result in losses if the currency used to hedge
does not perform similarly to the currency in which the hedge securities are
denominated.
SEC guidelines require mutual funds to segregate cash and appropriate liquid
assets to cover currency forward contracts that are deemed speculations. The
Funds do not currently intend to enter into any such forward contracts. The
Funds are not required to segregate assets to cover forward contracts entered
into for hedging purposes, including settlement hedges, position hedges, and
proxy hedges.
The successful use of forward currency contracts will depend on the Adviser's
skill in analyzing and predicting currency values. Forward contracts may change
a Fund's investment exposure to changes in currency exchange rates
substantially, and could result in losses to a Fund if exchange rates do not
perform as the Adviser anticipates. For example, if a currency's value rose at a
time when the Adviser had hedged a Fund by selling currency in exchange for
dollars, a Fund would be unable to participate in the currency's appreciation.
If the Adviser hedges currency exposure through proxy hedges, a Fund could
realize currency losses from the hedge and the security position at the same
time if the two currencies do not move in tandem. Similarly, if the Adviser
increases a Fund's exposure to a foreign currency, and that currency's value
declines, the Fund will realize a loss. There is no assurance that the Adviser's
use of forward currency contracts will be advantageous to any Fund or that the
Adviser will hedge at an appropriate time. If the Adviser is not correct in its
forecast of interest rates, market values and other economic factors, a Fund
would be better off without a hedge. The policies described in this section are
non-fundamental policies of the Funds.
Indexed Securities
The Funds may purchase securities whose prices are indexed to the prices of
other securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. No Fund will invest more than 5% of
its net assets in indexed securities. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or coupon rate
is determined by reference to a specific instrument or statistic. Gold-indexed
securities, for example, typically provide for a maturity value that
B-4
<PAGE>
depends on the price of gold, resulting in a security whose price tends to rise
and fall together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed securities
may be positively or negatively indexed; for example, their maturity value may
increase when the specified currency value increases, resulting in a security
whose price characteristics are similar to a call option on the underlying
currency. Currency-indexed securities also may have prices that depend on the
values of a number of different foreign currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, commodity or other instrument to which
they are indexed, and also may be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the credit
risks associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
Government agencies.
Repurchase Agreements
In a repurchase agreement, a Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed upon price on an
agreed upon date within a specified number of days (usually not more than seven)
from the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or maturity
of the purchased security. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price, which obligation is, in effect, secured by
the value (at least equal to the amount of the agreed upon resale price and
marked to market daily) of the underlying security. A Fund may engage in a
repurchase agreement with respect to any security in which it is authorized to
invest. Any repurchase transaction in which a Fund engages will require at least
100% collateralization of the seller's obligation during the entire term of the
repurchase agreement. Each Fund may engage in straight repurchase agreements and
tri-party repurchase agreements. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility of a
decline in the market value of the underlying securities, as well as delays and
costs to a Fund in connection with bankruptcy proceedings), it is each Fund's
current policy to limit repurchase agreement transactions to those parties whose
creditworthiness has been reviewed and deemed satisfactory by the Adviser.
Reverse Repurchase Agreements
The Funds may engage in reverse repurchase agreements. In a reverse repurchase
agreement, a Fund sells a portfolio instrument to another party, such as a bank,
broker-dealer or other financial institution, in return for cash, and agrees to
repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a Fund generally will segregate cash and
high quality liquid assets to cover its obligation under the agreement. The
Funds enter into reverse repurchase agreements only with parties whose
creditworthiness has been reviewed and deemed satisfactory by the Adviser. A
Fund's reverse repurchase agreements and dollar roll transactions that are
accounted for as financings will be included among that Fund's borrowings for
purposes of its investment policies and limitations.
Zero Coupon Debt Securities
The Funds may invest in zero coupon securities. Zero coupon debt securities do
not make interest payments; instead, they are sold at a discount from face value
and are redeemed at face value when they mature. Because zero coupon bonds do
not pay current income, their prices can be very volatile when interest rates
change. In calculating its daily net asset value, a Fund takes into account as
income a portion of the difference between a zero coupon bond's purchase price
and its face value.
B-5
<PAGE>
Securities Lending
The Funds may lend securities to parties such as broker-dealers, banks, or
institutional investors. Securities lending allows the Funds to retain ownership
of the securities loaned and, at the same time, to earn additional income.
Because there may be delays in the recovery of loaned securities, or even a loss
of rights in collateral supplied, should the borrower fail financially, loans
will be made only to parties whose creditworthiness has been reviewed and deemed
satisfactory by the Adviser. Furthermore, they will only be made if, in the
judgment of the Adviser, the consideration to be earned from such loans would
justify the risk.
The Adviser understands that it is the current view of the SEC staff that the
Funds may engage in loan transactions only under the following conditions: (1) a
Fund must receive 100% collateral in the form of cash, cash equivalents (e.g.,
U.S. Treasury bills or notes) or other high-grade liquid debt instruments from
the borrower; (2) the borrower must increase the collateral whenever the market
value of the securities loaned (determined on a daily basis) rises above the
value of the collateral; (3) after giving notice, a Fund must be able to
terminate the loan at any time; (4) a Fund must receive reasonable interest on
the loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to any
increase in market value; (5) a Fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able to vote
proxies on the securities loaned, either by terminating the loan or by entering
into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in which
the Funds are authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
Short Sales
The Funds currently have no intention to seek to hedge investments or realize
additional gains through short sales that are not covered or "against the box,"
but may do so in the future. Short sales are transactions in which a Fund sells
a security it does not own, in anticipation of a decline in the market value of
that security. To complete such a transaction, a Fund must borrow the security
to make delivery to the buyer. A Fund then is obligated to replace the security
borrowed by purchasing it at the market price at or prior to the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by a Fund. Until the security is replaced, a Fund is
required to repay the lender any dividends or interest that accrue during the
period of the loan. To borrow the security, a Fund also may be required to pay a
premium, which would increase the cost of the security sold. The net proceeds of
the short sale will be retained by the broker (or by the Fund's custodian in a
special custody account) to the extent necessary to meet margin requirements
until the short position is closed out. A Fund also will incur transaction costs
in effecting short sales.
A 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 a
Fund replaces the borrowed security. A Fund will realize a gain if the security
declines in price between those dates. The amount of any gain will be decreased,
and the amount of any loss increased, by the amount of the premium, dividends,
interest or expenses a Fund may be required to pay in connection with a short
sale.
When a Fund engages in short sales, its custodian segregates an amount of cash
or U.S. Government securities or other high-grade liquid debt securities equal
to the difference between (1) the market value of the securities sold short at
the time they were sold short and (2) any cash or U.S. Government securities
required to be deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). The segregated assets are
marked-to-market daily, provided that at no time will the amount segregated plus
the amount deposited with the broker be less than the market value of the
securities at the time they were sold short.
B-6
<PAGE>
In addition, the Funds in the future also may make short sales "against the
box," i.e., when a security identical to one owned by a Fund is borrowed and
sold short. If a Fund enters into a short sale against the box, it is required
to segregate securities equivalent in kind and amount to the securities sold
short (or securities convertible or exchangeable into such securities), and is
required to hold such securities while the short sale is outstanding. A Fund
will incur transaction costs, including interest, in connection with opening,
maintaining, and closing short sales against the box.
Illiquid Investments
Illiquid investments are investments that cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued. Under the supervision of the Board of Trustees, the Adviser determines
the liquidity of the Funds' investments and, through reports from the Adviser,
the Board monitors trading activity in illiquid investments. In determining the
liquidity of the Funds' investments, the Adviser 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), (5) the nature of the marketplace for trades (including the ability
to assign or offset a Fund's rights and obligations relating to the investment);
and (6) in the case of foreign currency-denominated securities, any restriction
on currency conversion. Investments currently considered by a Fund to be
illiquid include repurchase agreements not entitling the holder to payments of
principal and interest within seven days, over-the-counter options (and
securities underlying such options), non-government stripped fixed-rate
mortgage-backed securities, restricted securities and government- stripped
fixed-rate mortgage-backed securities determined by the Adviser to be illiquid.
In the absence of market quotations, illiquid investments are priced at fair
value as determined in good faith by a committee appointed by the Board of
Trustees. If through a change in values, net assets, or other circumstances, a
Fund were in a position where more than 15% of its net assets were invested in
illiquid securities, it would seek to take appropriate steps to protect
liquidity.
Restricted Securities. Restricted securities, which are one type of illiquid
securities, generally can be sold in privately negotiated transactions, pursuant
to an exemption from registration under the Securities Act of 1933, or in a
registered public offering. Where the registration is required, a 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
a Fund may be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to develop,
a Fund might obtain a less favorable price than the price that prevailed when it
decided to seek registration of the security. Currently, no Fund invests more
than 10% of its assets in illiquid securities which have legal or contractual
restrictions on their resale unless there is an actual dealer market for the
particular issue and it has been determined to be a liquid issue as described
below.
In recent years a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including securities sold
in private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not determinative of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a safe harbor from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities sold
pursuant to Rule 144A in many cases provide both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets might include automated systems for the
trading, clearance and settlement of unregistered securities of domestic and
foreign issuers, such as the PORTAL System sponsored by the National Association
of Securities Dealers, Inc. An insufficient number of qualified buyers
interested in purchasing Rule 144A-eligible restricted securities held by a
Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
B-7
<PAGE>
The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Adviser pursuant to guidelines approved by
the Board. The Adviser takes into account a number of factors in reaching
liquidity decisions, including but not limited to (1) the frequency of trades
for the security, (2) the number of dealers that make quotes for the security,
(3) the number of dealers that have undertaken to make a market in the security,
(4) the number of other potential purchasers and (5) the nature of the security
and how trading is effected (e.g., the time needed to sell the security, how
bids are solicited and the mechanics of transfer). The Adviser monitors the
liquidity of restricted securities in the Fund's portfolio and reports
periodically on such decisions to the Board of Trustees.
THE FUNDS' INVESTMENT LIMITATIONS
As stated in the Prospectuses and as set forth in greater detail below, various
restrictions apply to each Fund's investments. In particular, each Fund has
adopted certain fundamental investment limitations. These fundamental
restrictions cannot be changed in any material fashion without the approval of
the holders of the majority of a Fund's outstanding shares, which, for this
purpose, means the lesser of (1) more than 50% of a Fund's outstanding shares,
or (2) 67% of the shares represented at a meeting where more than 50% of a
Fund's shares are represented. The Board of Trustees, as a matter of policy or
in response to specific state and/or federal legal requirements, has adopted
certain additional investment restrictions which may be changed at the Board's
discretion (consistent with any applicable legal requirements).
These restrictions (both fundamental and discretionary) may make reference to
certain activities -- such as futures and options -- in which the Funds
currently do not engage, but which might be used by a Fund in the future. A Fund
will not engage in any substantive new activity without prior Board of Trustees'
approval, notification to shareholders, and, in the case of fundamental
restrictions, shareholder approval. Unless otherwise provided, all references to
the value of a Fund's assets are in terms of current market value at the time of
calculation.
As a matter of fundamental restriction, a Fund may not:
(1) Change its status as a diversified series, which requires that each Fund,
with respect to 75% of its total assets, not invest in the securities of any one
issuer (other than the U.S. Government and its agencies and instrumentalities)
if immediately after and as a result of such investment more than 5% of the
total assets of the Fund would be invested in such issuer (the remaining 25% of
the Fund's total assets may be invested without restriction except to the extent
other investment restrictions may be applicable);
(2) invest 25% or more of the value of the Fund's total assets in the securities
of companies engaged in any one industry (except securities issued by the U.S.
Government, its agencies and instrumentalities or tax-exempt securities issued
by state governments or political subdivisions);
(3) borrow money, except each Fund may (1) enter into bank loans or engage in
otherwise permissible leveraging activities (including reverse repurchase
agreements and dollar roll transactions that are accounted for as financings) in
any amount not in excess of one-third of the value of the Fund's total assets
(at the lesser of acquisition cost or current market value) and (2) borrow up to
5% of its total assets on a temporary basis for periods of up to 60 days. No
investments will be made by any Fund if its borrowings exceed 5% of total
assets;
(4) issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from making any otherwise
permissible borrowings, mortgages or pledges, or entering into permissible
reverse repurchase agreements, and options and futures transactions, or issuing
shares of beneficial interest in multiple classes;
B-8
<PAGE>
(5) make loans of more than one-third of the Fund's net assets, including loans
of securities, except that the Fund may, subject to the other restrictions or
policies stated herein, purchase debt securities or enter into repurchase
agreements with banks or other institutions to the extent a repurchase agreement
is deemed to be a loan;
(6) purchase or sell commodities or commodity contracts, or interests in oil,
gas, or other mineral leases, or other mineral exploration or development
programs, except that the Fund may invest in companies that engage in such
businesses to the extent otherwise permitted by the Fund's investment policies
and restrictions and by applicable law, and may engage in otherwise permissible
options and futures activities as described in the Prospectuses and this
Statement of Additional Information [currently none authorized];
(7) purchase or sell real estate, except that the Fund may invest in securities
secured by real estate or real estate interests, or issued by companies,
including real estate investment trusts, that invest in real estate or real
estate interests;
(8) underwrite securities of any other company, except that the Fund may invest
in companies that engage in such businesses, and except to the extent that the
Fund may be considered an underwriter within the meaning of the Securities Act
of 1933, as amended, in the disposition of restricted securities; and
(9) notwithstanding any other fundamental investment restriction or policy, each
Fund reserves the right to invest all of its assets in the securities of a
single open-end investment company with substantially the same fundamental
investment objectives, restrictions and policies as that Fund.
As a matter of additional investment restriction, implemented at the discretion
of the Board of Trustees, a Fund may not:
(10) purchase or write put, call, straddle or spread options or engage in
futures transactions except as described in the Prospectuses or Statement of
Additional Information [none currently authorized];
(11) make short sales (except covered or "against the box" short sales) or
purchases on margin, except that the Fund may obtain short-term credits
necessary for the clearance of purchases and sales of its portfolio securities
and, as required in connection with permissible options, futures, short selling
and leveraging activities as described elsewhere in the Prospectuses and
Statement of Additional Information [none currently authorized];
(12) mortgage, hypothecate, or pledge any of its assets as security for any of
its obligations, except as required for otherwise permissible borrowings
(including reverse repurchase agreements, short sales, financial options and
other hedging activities);
(13) purchase the securities of any company for the purpose of exercising
management or control (but this restriction shall not restrict the voting of any
proxy);
(14) purchase more than 10% of the outstanding voting securities of any one
issuer;
(15) purchase the securities of other investment companies, except as permitted
by the 1940 Act, except as otherwise provided in the Prospectuses (each Fund
reserves the right to invest all of its assets in shares of another investment
company);
(16) invest more than 5% of the value of its total assets in securities of any
issuer which has not had a record, together with its predecessors, of at least
three years of continuous operations;
(17) except as required in connection with otherwise permissible options and
futures activities [none currently authorized], invest more than 5% of the value
of the Fund's total assets in rights or warrants (other than those that
B-9
<PAGE>
have been acquired in units or attached to other securities), or invest more
than 2% of its total assets in rights or warrants that are not listed on the New
York or American Stock Exchanges;
(18) participate on a joint basis in any trading account in securities, although
the Adviser may aggregate orders for the sale or purchase of securities with
other accounts it manages to reduce brokerage costs or to average prices;
(19) invest, in the aggregate, more than 15% of its net assets in illiquid
securities or more than 10% of its net assets in illiquid restricted securities;
(20) purchase or retain in the Fund's portfolio any security if any officer,
trustee or shareholder of the issuer is at the same time an officer, trustee or
employee of the Trust or the Adviser and such person owns beneficially more than
1/2 of 1% of the securities and all such persons owning more than 1/2 of 1% own
in the aggregate more than 5% of the outstanding securities of the issuer;
(21) invest more than 25% of its total assets in foreign securities, invest more
than 5% of its total assets in any one foreign country, or invest more than 5%
of its net assets in securities denominated in foreign currencies;
(22) invest more than 5% of its net assets in indexed securities; and
(23) invest more than 10% of the value of its total assets in real estate
investment trusts.
Except as otherwise noted, all percentage limitations set forth above apply
immediately after a purchase and a subsequent change in the applicable
percentage resulting from market fluctuations does not require elimination of
any security from the portfolio.
B-10
<PAGE>
MANAGEMENT OF THE FUNDS
Trustees and Officers
Set forth below is certain information about the Trust's trustees and
executive officers:
*WILLIAM K. JURIKA, Chairman of the Board of Trustees and Principal
Executive Officer (Age 56)
c/o Jurika & Voyles, 1999 Harrison Street, Suite 700, Oakland, CA 94612.
Mr. Jurika has been a principal, the President and a portfolio manager at
Jurika & Voyles since 1983.
*GLENN C. VOYLES, Trustee and President (Age 55)
c/o Jurika & Voyles, 1999 Harrison Street, Suite 700, Oakland, CA 94612.
Mr. Voyles has been a principal, the Chairman and a portfolio manager at
Jurika & Voyles since 1983.
*KARL O. MILLS, Trustee, (Age 35) Executive Vice President, Treasurer,
Secretary, Principal Financial and Principal Accounting Officer
c/o Jurika & Voyles, 1999 Harrison Street, Suite 700, Oakland, CA 94612.
Mr. Mills has been a principal, the Senior Vice President and a portfolio
manager at Jurika & Voyles since 1988.
DARLENE T. DeREMER, Trustee (Age 40)
c/o DeRemer & Associates, 155 South Street, P.O. Box 487, Wrentham, MA
02093. Ms. DeRemer has been the founder and President of DeRemer &
Associates since 1987. DeRemer & Associates is a marketing consulting firm
to the financial services industry.
ROBERT E. BOND, Trustee (Age 55)
221 Bonita Avenue, Piedmont, CA 94611. Mr. Bond has been the principal of
Bond & Associates since 1988, a real estate, business and franchise
consultant. Mr. Bond also has been the principal of Source Book
Publications since 1983, a book publishing and distribution company.
Finally, Mr. Bond has been a principal of The Center for Independent
Financial Analysis since 1992, an independent contractor to the U.S.
Department of Commerce with regard to franchise publications.
BRUCE M. MOWAT, Trustee (Age 52)
1999 Harrison Street, Suite 750, Oakland, CA 94612-3517. Mr. Mowat has been
a partner of Mowat Mackie & Anderson, CPAs since 1976, an accounting firm.
WILLIAM H. PLAGEMAN, JR., Trustee (Age 53)
1999 Harrison Street, Suite 2700, Oakland, CA 94612. Mr. Plageman has been
the principal of William H. Plageman, Jr. & Associates since 1993. Mr.
Plageman specializes in probate, trust and estate law.
* Denotes a Trustee who is an "interested person," as defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
B-11
<PAGE>
JUDY G. BARBER, Trustee (Age 49)
1515 Fourth Street, Napa, CA 94559. Ms. Barber has been the principal of
JGB Associates since 1980. Ms. Barber specializes in business and other
consulting for high net worth families and individuals.
PAUL R. WITKAY, Trustee (Age 42)
2121 North California Blvd., Suite 290, Walnut Creek, CA 94596. Mr. Witkay
has been the President of Renaissance Executive Forums since April, 1996.
Mr. Witkay is also the Chief Executive Officer of the Peer Review
Organization.
The following compensation was paid to each of the following Trustees for the
fiscal year ended June 30, 1996. No other compensation or retirement benefits
were received by any Trustee or officer from the Registrant or other registered
investment company in the Trust.
Name of Trustee Total Compensation
- --------------- ------------------
Darlene T.DeRemer $7,500(1)
Robert E. Bond $7,500(1)
Bruce M. Mowat $7,500(1)
William H. Plageman $0(2)
Judy G. Barber $0(2)
Paul R. Witkay $0(2)
(1) Compensation was paid by the trust.
(2) Voted as Trustee effective December 5, 1996.
B-12
<PAGE>
Control Persons and Share Ownership
As of October 17, 1996, to the knowledge of the Funds, the following
shareholders owned of record 5% or more of the outstanding shares of the
respective Funds indicated:
<TABLE>
<CAPTION>
Number Percent
Of Shares of
Name of Fund Name and Address of Record Owner Owned Shares
- ------------ -------------------------------- ----- ------
<S> <C> <C> <C>
Balanced Fund Charles Schwab & Co, Inc. 216,909 6.63%
Special Custody Account for
For Bnft Customer
Attn. Mutual Funds
101 Montgomery St.
San Francisco, CA 94101-4122
First Interstate Bank of Washington 219,388 6.71%
TTEE FBO S E H Amer. Inc.
# 18-853204
P.O. Box 9800
Attn: Mutual Funds A88-4
Calabasas, CA 91372-0800
Mini-Cap Fund Charles Schwab & Co, Inc. 2,941,570 56.36%
Special Custody Account for
For Bnft Customer
Attn. Mutual Funds
101 Montgomery St.
San Francisco, CA 94101-4122
Jupiter & Company 344,074 6.59%
c/o Investors Bank & Trust Co.
P.O. Box 1537 Top 57
Boston, MA 02205-1537
Value + Growth Charles Schwab & Co., Inc. 185,564 16.52%
Fund Special Custody Account for
For Bnft Cust
Attn. Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4122
The Lefevre Limited Partnership 169,189 15.06%
c/o Waverley Associates
Attn. Meredith Tennent
525 University Avenue
Palo Alto, CA 94301-1918
Marin Radiology Medical Group, Inc. 64,795 5.77%
8 Inverness Drive
San Rafael, CA 94901-2418
Strafe & Co. 210,674 18.75%
FAO F & J Fund 13
P.O. Box 160
Westerville, OH 43086-0160
</TABLE>
As of October 17, 1996, the Trustees and officers of the Trust, as a group,
owned less than 1% of the outstanding shares of each Fund, except for Mini-Cap
Fund which Trustees and officers of the Trust, as a group, own 1.19% of the
outstanding shares.
B-13
<PAGE>
The Adviser
As set forth in the Prospectuses, Jurika & Voyles is the Adviser for the Funds.
Pursuant to an Investment Advisory Agreement (the "Advisory Agreement"), the
Adviser determines the composition of the Funds' portfolios, the nature and
timing of the changes to the Funds' portfolios and the manner of implementing
such changes. The Adviser also (a) provides the Funds with investment advice,
research and related services for the investment of their assets, subject to
such directions as it may receive from the Board of Trustees; (b) pays all of
the Trust's executive officers' salaries and executive expenses (if any); pays
all expenses incurred in performing its investment advisory duties under the
Advisory Agreement; and (d) furnishes the Funds with office space and certain
administrative services. The services of the Adviser to the Funds are not deemed
to be exclusive, and the Adviser or any affiliate thereof may provide similar
services to other series of the Trust, other investment companies and other
clients, and may engage in other activities. The Funds may reimburse the Adviser
(on a cost recovery basis only) for any services performed for a Fund by the
Adviser outside its duties under the Advisory Agreement.
Jurika & Voyles is a California corporation incorporated in 1983. William K.
Jurika and Glenn C. Voyles control the majority of the Adviser's voting stock.
As of June 30, 1996, the Adviser had discretionary management authority for
approximately $5 billion of assets.
The Advisory Agreement for the Funds permits the Adviser to seek reimbursement
of any reductions made to its management fee within the three-year period
following such reduction, subject to a Fund's ability to effect such
reimbursement and remain in compliance with applicable expense limitations. Any
such management fee reimbursement may be accounted for on the financial
statements of the Fund as a contingent liability of the Fund, and may appear as
a footnote to the Fund's financial statements until such time as it appears that
the Fund will be able to effect such reimbursement. At such time as it appears
probable that the Fund is able to effect such reimbursement, the amount of
reimbursement that the Fund is able to effect will be accrued as an expense of
the Fund for that current period.
The Advisory Agreement for the Funds was most recently approved by the Trust's
Board of Trustees on July 31, 1996 and each Fund's initial shareholder on
September 20, 1994. The Advisory Agreements may be terminated by the Advisers or
the Trust, without penalty, on 60 days' written notice to the other and will
terminate automatically in the event of its assignment.
Expenses
Each Fund will pay all expenses related to its operation which are not borne by
the Adviser or the Distributor. These expenses include, among others: legal and
auditing expenses; interest; taxes; governmental fees; fees, voluntary
assessments and other expenses incurred in connection with membership in
investment company organizations; brokerage commissions or charges; fees of
custodians, transfer agents, registrars, third-party servicing agents or other
agents; distribution plan fees; expenses relating to the redemption or
repurchase of a Fund's shares; expenses of registering and qualifying Fund
shares for sale under applicable federal and state laws and maintaining such
registrations and qualifications; expenses of preparing, printing and
distributing to Fund shareholders prospectuses, proxy statements, reports,
notices and dividends; costs of stationery; costs of shareholders' and other
meetings of a Fund; fees paid to members of the Board of Trustees (other than
members who are affiliated persons of the Adviser or Distributor); a Fund's pro
rata portion of premiums of any fidelity bond and other insurance covering a
Fund and the Trust's officers and trustees or other expenses of the Trust; and
expenses including prorated portions of overhead expenses (in each case on cost
recovery basis only) of services for a Fund performed by the Adviser outside of
its investment advisory duties under the Advisory Agreement. A Fund also is
liable for such nonrecurring expenses as may arise, including litigation to
which a Fund may be a party. Each Fund has agreed to indemnify its trustees and
officers with respect to any such litigation. Each Fund also paid its own
organizational expenses, which are being amortized over five years.
B-14
<PAGE>
As noted in the Prospectuses, the Adviser has agreed to reduce its fee to each
Fund by the amount, if any, necessary to keep the Fund's annual operating
expenses (excluding any Rule 12b-1 fees)(expressed as a percentage of its
average daily net assets), at or below the lesser of the following levels:
Mini-Cap Fund -- 1.50%; Value + Growth Fund -- 1.35%; Balanced Fund -- 1.25%;
Small Cap Fund -- 1.35%; and/or the maximum expense ratio allowed by any state
in which such Fund's shares are then qualified for sale. The Adviser also may at
its discretion from time to time pay for other respective Fund expenses from its
own assets, or reduce the management fee of a Fund in excess of that required.
During the fiscal year ended June 30, 1996, the Advisory Fees for the Mini-Cap
Fund, the Value + Growth Fund, and the Balanced Fund were $333,678, $145,483,
and $385,547, respectively, and the Adviser reimbursed other expenses totaling
$79,036, $130,535, and $60,481, respectively. For the initial fiscal period
ended June 30, 1995, the Advisor reimbursed expenses in the aggregate amount of
$102,398 and $103,440 to the Mini-Cap Fund and to the Value + Growth Fund,
respectively. During the fiscal year ended June 30, 1995, the Advisory Fee for
the Balanced Fund was $222,439 and the Advisor reimbursed other expenses
totaling $23,858. During the fiscal years 1994 and 1993, the Balanced Fund paid
$256,000 and $80,000 in advisory fees, respectively.
Share Marketing Plan
The Trust has adopted a Share Marketing Plan (or Rule 12b-1 Plan) (the "12b-1
Plan") with respect to the Funds pursuant to Rule 12b-1 under the Investment
Company Act. The Adviser serves as the distribution coordinator under the 12b-1
Plan and, as such, receives any fees paid by the Funds pursuant to the 12b-1
Plan.
Prior to August 31, 1996, the Funds offered only one class of shares. On May 1,
1996, the Board of Trustees of the Trust, including a majority of the Trustees
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the 12b-1 Plan or in any agreement
related to the 12b- 1 Plan (the "Independent Trustees"), at their regular
quarterly meeting, adopted the 12b-1 Plan for the newly designated Class K
shares of each Fund. The single class of shares existing before that date was
redesignated the Class J shares. Class J shares are not covered by the 12b-1
Plan.
Under the 12b-1 Plan, each Fund pays distribution fees to the Adviser at an
annual rate of 0.25% of the Fund's aggregate average daily net assets
attributable to its Class K shares to reimburse the Adviser for its expenses in
connection with the promotion and distribution of Class K shares.
The 12b-1 Plan provides that the Adviser may use the distribution fees received
from the Class of the Fund covered by the 12b-1 Plan only to pay for the
distribution expenses of that Class. Distribution fees are accrued daily and
paid monthly, and are charged as expenses of the Class K shares as accrued.
Class K shares are not obligated under the 12b-1 Plan to pay any distribution
expense in excess of the distribution fee. Thus, if the 12b-1 Plan were
terminated or otherwise not continued, no amounts (other than current amounts
accrued but not yet paid) would be owed by the Class to the Adviser.
The 12b-1 Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Trustees of the Trust, including a
majority of the Independent Trustees, vote annually to continue the 12b-1 Plan.
The 12b-1 Plan (and any distribution agreement between the Trust, the
Distributor or the Adviser and a selling agent with respect to the Class K) may
be terminated without penalty upon at least 60-days' notice by the Distributor
or the Adviser, or by the Trust by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding shares (as defined in the
Investment Company Act) of the Class to which the 12b-1 Plan applies.
All distribution fees paid by the Funds under the 12b-1 Plan will be paid in
accordance with Rule 2830 of the National Association of Securities Dealers,
Inc., as such Rule may change from time to time. Pursuant to the 12b-1 Plan, the
Board of Trustees will review at least quarterly a written report of the
distribution expenses incurred by the Adviser on behalf of the Class K shares of
each Fund. In addition, as long as the 12b-1 Plan remains in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the Investment Company Act) of the Trust shall be made by the Trustees then
in office who are not interested persons of the Trust.
B-15
<PAGE>
Portfolio Transactions and Brokerage
Subject to policies established by the Board of Trustees, the Adviser is
primarily responsible for arranging the execution of the Funds' portfolio
transactions and the allocation of brokerage activities. In arranging such
transactions, the Adviser will seek to obtain the best execution for each Fund,
taking into account such factors as price, size of order, difficulty of
execution, operational facilities of the firm involved, the firm's risk in
positioning a block of securities and research, market and statistical
information provided by such firm. While the Adviser generally seeks reasonably
competitive commission rates, a Fund will not necessarily always receive the
lowest commission available.
The Funds have no obligation to deal with any broker or group of brokers in
executing transactions in portfolio securities. Brokers who provide supplemental
research, market and statistical information to the Adviser may receive orders
for transactions by a Fund. The term "research, market and statistical
information" includes advice as to the value of securities, the advisability of
purchasing or selling securities, the availability of securities or purchasers
or sellers of securities, and furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Adviser under the Advisory Agreement and the expenses of the Adviser will not
necessarily be reduced as a result of the receipt of such supplemental
information. Such information may be useful to the Adviser in providing services
to clients other than the Funds, and not all such information may be used by the
Adviser in connection with a Fund. Conversely, such information provided to the
Adviser by brokers and dealers through whom other clients of the Adviser in the
future may effect securities transactions may be useful to the Adviser in
providing services to a Fund. To the extent the Adviser receives valuable
research, market and statistical information from a broker-dealer, the Adviser
intends to direct orders for Fund transactions to that broker-dealer, subject to
the foregoing policies, regulatory constraints, and the ability of that
broker-dealer to provide competitive prices and commission rates. In accordance
with the rules of the National Association of Securities Dealers, Inc., the
Funds may also direct brokerage to broker-dealers who facilitate sales of the
Funds' shares, subject to also obtaining best execution as described above from
such broker-dealer.
A portion of the securities in which the Funds may invest are traded in the
over-the-counter markets, and each Fund intends to deal directly with the
dealers who make markets in the securities involved, except as limited by
applicable law and in certain circumstances where better prices and execution
are available elsewhere. Securities traded through market makers may include
markups or markdowns, which are generally not determinable. Under the 1940 Act,
persons affiliated with a Fund are prohibited from dealing with that Fund as
principal in the purchase and sale of securities except after application for
and receipt of an exemptive order. The 1940 Act restricts transactions involving
a Fund and its "affiliates," including, among others, the Trust's trustees,
officers, and employees and the Adviser, and any affiliates of such affiliates.
Affiliated persons of a Fund are permitted to serve as its broker in
over-the-counter transactions conducted on an agency basis only.
Investment decisions for each Fund are made independently from those of accounts
advised by the Adviser or its affiliates. However, the same security may be held
in the portfolios of more than one account. When two or more accounts advised by
the Adviser simultaneously engage in the purchase or sale of the same security,
the prices and amounts will be equitably allocated among each account. In some
cases, this procedure may adversely affect the price or quantity of the security
available to a particular account. In other cases, however, an account's ability
to participate in large volume transactions may produce better executions and
prices.
During the fiscal years ended June 30, 1996 and 1995, brokerage commissions paid
by the Value + Growth Fund totaled $37,017 and $14,454, respectively. For the
fiscal periods ended June 30, 1996 and 1995, brokerage commissions paid by the
Mini-Cap Fund totaled $134,906 and $17,131, respectively.
Brokerage commissions paid by the Balanced Fund were $52,039, $29,137, and
$39,459 for the fiscal years ended June 30, 1996, 1995, and 1994 respectively.
B-16
<PAGE>
THE FUNDS' ADMINISTRATOR
The Funds have an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), with offices at 2025 East
Financial Way, Suite 101, Glendora, CA 91741. The Administration Agreement
provides that the Administrator will prepare and coordinate reports and other
materials supplied to the Trustees; prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports, prospectuses,
statements of additional information, marketing materials, tax returns,
shareholder reports and other regulatory reports or filings required of the
Funds; prepare all required filings necessary to maintain the Funds'
qualifications and/or registrations to sell shares in all states where each Fund
currently does, or intends to do, business; coordinate the preparation, printing
and mailing of all materials (e.g., Annual Reports) required to be sent to
shareholders; coordinate the preparation and payment of Fund-related expenses;
monitor and oversee the activities of the Funds' servicing agents (i.e.,
transfer agent, custodian, fund accountants, etc.); review and adjust as
necessary each Fund's daily expense accruals; and perform such additional
services as may be agreed upon by the Funds and the Administrator. For its
services, the Administrator receives an annual fee equal to the greater of 0.10%
of the first $100 million of the Trust's average daily net assets, 0.05% of the
next $150 million, 0.03% of the next $250 million and 0.01% thereafter, subject
to a $50,000 ($30,000 for the first year) minimum per annum per fund. During the
fiscal year ended June 30, 1996, the Administrator received fees of $49,639,
$49,639 and $49,639 from the Mini-Cap, Value + Growth and Balanced Funds,
respectively.
THE FUNDS' DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), a broker-dealer affiliated
with the Administrator, acts as each Fund's principal underwriter in a
continuous public offering of the Fund's shares. The Distribution Agreement
between the Funds and the Distributor continues in effect for periods not
exceeding one year if approved at least annually by (I) the Board of Trustees or
the vote of a majority of the outstanding shares of each Fund (as defined in the
1940 Act) and (ii) a majority of the Trustees who are not interested persons of
any such party, in each case cast in person at a meeting called for the purpose
of voting on such approval. The Distribution Agreement may be terminated without
penalty by the parties thereto upon 60 days' written notice, and is
automatically terminated in the event of its assignment as defined in the 1940
Act.
TRANSFER AGENT AND CUSTODIAN
Boston Financial Data Services, Inc., an affiliate of State Street Bank & Trust
Company, serves as the Funds' Transfer Agent. As Transfer Agent, it maintains
records of shareholder accounts, processes purchases and redemptions of shares,
acts as dividend and distribution disbursing agent and performs other related
shareholder functions. State Street Bank & Trust Company serves as the Funds'
Custodian. As Custodian, it and subcustodians designated by the Board of
Trustees hold the securities in the Funds' portfolio and other assets for
safekeeping. The Transfer Agent and Custodian do not and will not participate in
making investment decisions for the Funds.
HOW NET ASSET VALUE IS DETERMINED
The net asset values of each class of the Funds' shares are calculated once
daily, as of 4:00 p.m. New York time (the "Portfolio Valuation Time"), on each
day that the New York Stock Exchange (the "NYSE") is open for trading by
dividing each Fund's net assets (assets less liabilities)attributable to each
class by the total number of shares of such class outstanding and adjusting to
the nearest cent per share.
The NYSE is closed on Saturdays, Sundays, New Year's Day, Presidents Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas
Day. The Funds do not expect to determine the net asset value of their shares on
any day when the NYSE is not open for trading even if there is sufficient
trading in their portfolio securities on such days to materially affect the net
asset value per share.
B-17
<PAGE>
Because of the difference between the bid and asked prices of the
over-the-counter securities in which a Fund may invest, there may be an
immediate reduction in the net asset value of the shares of a Fund after a Fund
has completed a purchase of such securities. This is because such OTC securities
will be valued at the last sale price (which is generally below the asked
price), but usually are purchased at or near the asked price.
Each Fund's portfolio is expected to include foreign securities listed on
foreign stock exchanges and debt securities of foreign governments and
corporations. Generally, trading in and valuation of foreign securities is
substantially completed each day at various times prior to the Portfolio
Valuation Time. In addition, trading in and valuation of foreign securities may
not take place on every day that the NYSE is open for trading. Furthermore,
trading takes place in various foreign markets on days on which the NYSE is not
open for trading and on which the Funds' net asset values are not calculated.
Any changes in the value of foreign currency forward contracts due to exchange
rate fluctuations are included in determination of net asset value.
Generally, each Fund's investments are valued at market value or, in the absence
of a market value, at fair value as determined in good faith by the Adviser and
the Board of Trustees. Portfolio securities that are listed or admitted to
trading on a U.S. exchange are valued at the last sale price on the principal
exchange on which the security is traded, or, if there has been no sale that
day, at the mean between the closing bid and asked prices. Securities admitted
to trading on the Nasdaq, and securities traded only in the U.S.
over-the-counter market are valued at the last sale price, or, if there has been
no sale that day, at the mean between the closing bid and asked prices. Foreign
securities are valued at the last sale price in the principal market where they
are traded, or if the last sale price is unavailable, at the mean between the
last bid and asked prices available reasonably prior to the time the Funds' net
asset values are determined. Securities and assets for which market quotations
are not readily available (including restricted securities which are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by or under the direction of the Board of Trustees.
Short-term debt obligations with remaining maturities in excess of 60 days are
valued at current market prices, as discussed above. Short- term securities with
60 days or less remaining to maturity are, unless conditions indicate otherwise,
amortized to maturity based on their cost to a Fund if acquired within 60 days
of maturity or, if already held by a Fund on the 60th day, based on the value
determined on the 61st day.
Corporate and government debt securities held by the Funds are valued on the
basis of valuations provided by dealers in those instruments, by an independent
pricing service approved by the Board of Trustees, or at fair value as
determined in good faith by procedures approved by the Board of Trustees. Any
such pricing service, in determining value, is expected to use information with
respect to transactions in the securities being valued, quotations from dealers,
market transactions in comparable securities, analyses and evaluations of
various relationships between securities and yield to maturity information.
If any securities held by a Fund are restricted as to resale or do not have
readily available market quotations, the Adviser and the Board of Trustees
determine their fair value. The Trustees periodically review such valuations and
valuation procedures. The fair value of such securities is generally determined
as the amount which a Fund could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary from case to
case. However, consideration is generally given to the financial position of the
issuer and other fundamental analytical data relating to the investment and to
the nature of the restrictions on disposition of the securities (including any
registration expenses that might be borne by a Fund in connection with such
disposition). In addition, specific factors are also generally considered, such
as the cost of the investment, the market value of any unrestricted securities
of the same class (both at the time of purchase and at the time of valuation),
the size of the holding relative to current average trading volume, the prices
of any recent transactions or offers with respect to such securities and any
available analysts' reports regarding the issuer.
Foreign securities quoted in foreign currencies are translated into U.S. dollars
using the latest available exchange rates. As a result, fluctuations in the
value of such currencies in relation to the U.S. dollar will affect the net
asset
B-18
<PAGE>
value of a Fund's shares even though there has not been any change in the market
values of such securities. Any changes in the value of foreign currency forward
contracts due to exchange rate fluctuations are included in determination of net
asset value.
All other assets of the Funds are valued in such manner as the Board of Trustees
in good faith deems appropriate to reflect their fair value.
SHARE PURCHASES AND REDEMPTIONS
Information concerning the purchase and redemption of the Funds' shares is
contained in the Prospectuses under "How to Purchase Shares" and "How to Redeem
Shares."
The Trust reserves the right in its sole discretion (I) to suspend the continued
offering of each Fund's shares, (ii) to reject purchase orders in whole or in
part when in the judgment of the Adviser or the Distributor such rejection is in
the best interest of a Fund, and (iii) to reduce or waive the minimum for
initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of a Fund's
shares.
During any 90-day period, the Trust is committed to pay in cash all requests to
redeem shares by any one shareholder, up to the lesser of $250,000 or 1% of the
value of the Trust's net assets at the beginning of the period. Should
redemptions by any individual shareholder (excluding street name or omnibus
accounts maintained by financial intermediaries) exceed this limitation, the
Trust reserves the right to redeem the excess amount in whole or in part in
securities or other assets. If shares are redeemed in this manner, the redeeming
shareholder usually will incur additional brokerage costs in converting the
securities to cash.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to distribute substantially all of its net investment income
and net capital gains, if any. In determining amounts of capital gains to be
distributed, any capital loss carryovers from prior years will be offset against
capital gains of the current year. Unless a shareholder elects cash
distributions on the Account Application form or submits a written request to a
Fund at least 10 full business days prior to the record date for a distribution
in which the shareholder elects to receive such distribution in cash,
distributions will be credited to the shareholder's account in additional shares
of a Fund based on the net asset value per share at the close of business on the
day following the record date for such distribution.
Each Fund has qualified and elected, and intends to continue to qualify and
elect, to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and intends to maintain
such qualification. In order to qualify, a Fund must meet certain requirements
with respect to the source of its income, diversification of its assets and
distributions to its shareholders. The Trustees reserve the right not to
maintain the qualification of a Fund as a regulated investment company if they
determine such course of action to be more beneficial to the shareholders. In
such case, a Fund will be subject to federal and state corporate income taxes on
its income and gains, and all dividends and distributions to shareholders will
be ordinary dividend income to the extent of a Fund's earnings and profits.
Dividends declared by a Fund in October, November, or December of any calendar
year to shareholders of record as of a record date in such a month will be
treated for federal income tax purposes as having been received by shareholders
on December 31 of that year if they are paid during January of the following
year.
Under Subchapter M, a Fund will not be subject to federal income taxes on the
net investment income and capital gains it distributes to shareholders, provided
that at least 90% of its investment company taxable income for the taxable year
is so distributed. A Fund will generally be subject to federal income taxes on
its undistributed net investment income and capital gains. A nondeductible 4%
excise tax also is imposed on each regulated investment company to the extent
that it does not distribute to investors in each calendar year an amount equal
to 98% of its ordinary income for such calendar year plus 98% of its capital
gain net income for the one-year period ending on
B-19
<PAGE>
October 31 of such year plus 100% of any undistributed ordinary or capital gain
net income for the prior period. Each Fund intends to declare and pay dividends
and capital gain distributions in a manner to avoid imposition of the excise
tax.
The Funds may write, purchase or sell certain option contracts. Such
transactions are subject to special tax rules that may affect the amount, timing
and character of distributions to shareholders. Unless the Funds are eligible to
make and make a special election, such option contracts that are "Section 1256
contracts" will be "marked-to-market" for federal income tax purposes at the end
of each taxable year, i.e., each option contract will be treated as sold for its
fair market value on the last day of the taxable year. In general, unless the
special election referred to in the previous sentence is made, gain or loss from
transactions in such option contracts will be 60% long-term and 40% short-term
capital gain or loss.
Section 1092 of the Code, which applies to certain "straddles," may affect the
taxation of the Funds' transactions in option contracts. Under Section 1092, the
Funds may be required to postpone recognition for tax purposes of losses
incurred in certain closing transactions in options.
Section 988 of the Code contains special tax rules applicable to certain foreign
currency transactions that may affect the amount, timing, and character of
income, gain or loss recognized by a Fund. Under these rules, foreign exchange
gain or loss realized with respect to foreign currency-denominated debt
instruments, foreign currency forward contracts, foreign currency-denominated
payables and receivables, and foreign currency options and futures contracts
(other than options and futures contracts that are governed by the
mark-to-market and 60%-40% rules of Section 1256 of the Code and for which no
election is made) is treated as ordinary income or loss. Some part of a Fund's
gain or loss on the sale or other disposition of shares of a foreign corporation
may, because of changes in foreign currency exchange rates, be treated as
ordinary income or loss under Section 988 of the Code, rather than as capital
gain or loss.
One of the requirements for qualification as a regulated investment company is
that less than 30% of a Fund's gross income must be derived from gains from the
sale or other disposition of securities held for less than three months.
(Legislation has been pending from time to time in Congress that would eliminate
this limitation, however.) Accordingly, a Fund may be restricted in effecting
closing transactions within three months after entering into an option contract.
A Fund may be subject to foreign withholding taxes on dividends and interest
earned with respect to securities of foreign corporations.
The Funds also may invest in the stock of foreign companies that may be treated
as "passive foreign investment companies" ("PFICs") under the Code. Certain
other foreign corporations, not operated as investment companies, may
nevertheless satisfy the PFIC definition. A portion of the income and gains that
the Funds derive from PFIC stock may be subject to a non-deductible federal
income tax at the Fund level. In some cases, each of the Funds may be able to
avoid this tax by electing to be taxed currently on its share of the PFIC's
income, whether or not such income is actually distributed by the PFIC. The
Funds will endeavor to limit their exposure to the PFIC tax by investing in
PFICs only where the election to be taxed currently will be made. Since it is
not always possible to identify a foreign issuer as a PFIC in advance of making
the investment, these Funds may incur the PFIC tax in some instances.
Dividends of net investment income (including any net realized short-term
capital gains) paid by a Fund are taxable to shareholders of the Fund as
ordinary income, whether such distributions are taken in cash or reinvested in
additional shares. Distributions of net capital gain (i.e., the excess of net
long-term capital gains over net short-term capital losses), if any, by a Fund
are taxable as long-term capital gains, whether such distributions are taken in
cash or reinvested in additional shares, and regardless of how long shares of a
Fund have been held. Fund distributions also will be included in individual and
corporate shareholders' income on which the alternative minimum tax may be
imposed. Tax-exempt shareholders will not be required to pay taxes on amounts
distributed to them, unless they
B-20
<PAGE>
have borrowed to purchase or carry their shares of a Fund. Statements as to the
tax status of distributions to shareholders will be mailed annually.
Any dividend from net investment income or distribution of long-term capital
gains received by a shareholder will have the effect of reducing the net asset
value of a Fund's shares held by such shareholder by the amount of the dividend
or distribution. If the net asset value of the shares should be reduced below a
shareholder's cost as a result of the dividend of net investment income or a
long-term capital gains distribution, such dividend or distribution, although
constituting a return of capital, nevertheless will be taxable as described
above. Investors should be careful to consider the tax implications of buying
shares just prior to a distribution. The price of shares purchased at that time
may include the amount of the forthcoming distribution. Those investors
purchasing shares just prior to a distribution will then receive a partial
return of their investment upon such distribution, which will nevertheless be
taxable to them.
Any gain or loss realized upon an exchange or redemption of shares in a Fund by
a shareholder who holds the shares as a capital asset will be treated as a
long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as a short-term capital gain or loss. However, any loss
realized by a shareholder upon an exchange or redemption of shares of a Fund
held (or treated as held) for six months or less will be treated as a long-term
capital loss to the extent of any long-term capital gain distribution received
on the redeemed shares. All or a portion of a loss realized upon the redemption
of shares may be disallowed to the extent shares are purchased (including shares
acquired by means of reinvested dividends) within 30 days before or after such
redemption.
Dividends paid by a Fund will be eligible for the 70% dividends received
deduction for corporate shareholders, to the extent that a Fund's income is
derived from certain qualifying dividends received from domestic corporations.
Availability of the deduction is subject to certain holding period and
debt-financing limitations. Capital gains distributions are not eligible for the
70% dividends received deduction.
Special tax treatment is accorded distributions from accounts maintained as
IRAs. For example, IRA distributions made to account holders who are not at
least 59 1/2 are subject to a special penalty tax.
Each Fund is required to withhold 31% of reportable payments (including
dividends, capital gain distributions and redemption proceeds) paid to
individuals and other nonexempt shareholders who have not complied with
applicable regulations. In order to avoid this backup withholding requirement,
each shareholder must provide a social security number or other taxpayer
identification number and certify that the number provided is correct and that
the shareholder is not currently subject to backup withholding, or the
shareholder should indicate that it is exempt from backup withholding. Even
though all certifications have been made on the Application, a Fund may be
required to impose backup withholding if it is notified by the IRS or a broker
that such withholding is required for previous under- reporting of interest or
dividend income or use of an incorrect taxpayer identification number.
Nonresident aliens, foreign corporations, and other foreign entities may be
subject to withholding of up to 30% on certain payments received from a Fund.
Each Fund has applied for a ruling of the Internal Revenue Service to the effect
that, concerning the Funds' offering of two classes of shares, (1) dividends
paid by a Fund with respect to different classes will not be preferential
dividends; and (2) with respect to the conversion of Class K shares into Class J
shares as described in the prospectus, such conversion will not result in the
recognition of a gain or loss for a shareholder, the shareholder's basis in the
shares remains the same, and the shareholder's holding period with respect to
such shares remains the same. The failure of a Fund to receive a favorable
ruling on the foregoing points could result in adverse tax consequences for the
Fund and its shareholders.
The foregoing discussion and related discussion in the Prospectuses do not
purport to be a complete description of all tax implications of an investment in
a Fund. A shareholder should consult his or her own tax adviser for more
information about federal, state, local, or foreign taxes. Heller, Ehrman, White
& McAuliffe has expressed no opinion in respect thereof.
B-21
<PAGE>
HOW PERFORMANCE IS DETERMINED
Standardized Performance Information
Average Annual Total Return. The average annual total return included with any
presentation of a Fund's performance data will be calculated according to the
following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a
hypothetical $10,000 payment (made
at the beginning of the 1-, 5-, or
10-year periods) at the end of the
1-, 5-, or 10-year periods or
fractional portion thereof).
Aggregate Total Return. A Fund's "aggregate total return" figures represent the
cumulative change in the value of an investment in that Fund for the specified
period and are computed by the following formula:
ERV - P
-------
P
Where: P = a hypothetical initial payment of $10,000
ERV = ending redeemable value of a
hypothetical $10,000 investment made
at the beginning of 1-, 5- or 10
-year period (or fractional portion
thereof), assuming reinvestment of
all dividends and distributions and
complete redemption of the
hypothetical investment at the end
of the measuring period.
Performance figures will be calculated separately for Class J and Class K shares
of each Fund. Each Fund's performance will vary from time to time depending upon
market conditions, the composition of its portfolio and its operating expenses.
Consequently, any given performance quotation should not be considered
representative of performance of such class of such fund for any specified
period in the future. In addition, because performance will fluctuate, it may
not provide a basis for comparing an investment in that Fund with certain bank
deposits or other investments that pay a fixed yield for a stated period of
time. Investors comparing a Fund's performance with that of other investment
companies should give consideration to the quality and maturity of the
respective investment companies' portfolio securities.
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The average annual total return for each Fund for the periods indicated was as
follows:
Year Ended Inception*
Fund 6/30/96 Through 6/30/96
- ---- ------- ---------------
Mini-Cap Fund - Class J 38.46% 46.86%
Value + Growth Fund - Class J 12.11% 23.15%
Balanced Fund - Class J 12.56% 13.90%
Small Cap Fund NA NA
*The dates of inception for the Funds were: Small Cap Fund, December 31, 1996;
Mini-Cap Class J, September 30, 1994; Value + Growth Class J Fund, September 30,
1994; and Balanced Master, March 9, 1992.
Class J Shares impose no sales load on initial purchases or on reinvested
dividends. Accordingly, no sales charges are deducted for purposes of this
calculation. The calculation of total return assumes that all dividends, if any,
and distributions paid by a Fund would be reinvested at the net asset value on
the day of payment.
Investment Philosophy
From time to time the Funds may publish or distribute information and reasons
why the Adviser believes investors should invest in the Funds. For example, the
Funds may refer to the Adviser's equity investment approach, which is founded on
the principles of Value + Growth. The Funds may state that the Adviser's
investment professionals actively research quality companies that are not only
undervalued based on their current earnings, but also offer significant
potential for future growth.
The Funds also may state that the Adviser uses a practical approach to investing
that emphasizes sound business judgment and common sense, and that this approach
involves building the Funds' portfolios as a collection of ownership in
individual companies that represent both excellent businesses and excellent
investments, based upon such companies' competitive advantage, financial health
and price. The Funds may also state that this approach has produced above market
returns while minimizing the "swings" associated with certain investment styles.
The Balanced Fund may, from time to time, state that bonds are used to reduce
volatility of the Fund.
Indices and Publications
In the same shareholder communications, sales literature, and advertising, a
Fund may compare its performance with that of appropriate indices such as the
Standard & Poor's Composite Index of 500 stocks ("S&P 500"), Standard & Poor's
MidCap 400 Index ("S&P 400"), the Nasdag Industrial Index, the Nasdaq Composite
Index, the Russell 2000 Small Stock Index (the "Russell 2000"), or other
unmanaged indices so that investors may compare the Fund's results with those of
a group of unmanaged securities. The S&P 500, the S&P 400, the Nasque Industrial
Index, the Nasdaq Composite Index and the Russell 2000 are unmanaged groups of
common stocks traded principally on national securities exchanges and the over
the counter market, respectively. A Fund also may, from time to time, compare
its performance to other mutual funds with similar investment objectives and to
the industry as a whole, as quoted by rating services and publications, such as
Lipper Analytical Services, Inc., Morningstar Mutual Funds, Forbes, Money and
Business Week.
In addition, one or more portfolio managers or other employees of the Adviser
may be interviewed by print media, such as The Wall Street Journal or Business
Week, or electronic news media, and such interviews may be reprinted or
excerpted for the purpose of advertising regarding the Fund.
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<PAGE>
ADDITIONAL INFORMATION
Legal Opinion
The validity of the shares offered by the Prospectuses will be passed upon by
Heller, Ehrman, White & McAuliffe, 333 Bush Street, San Francisco, California
94104.
Auditors
The annual financial statements of the Funds will be audited by McGladrey &
Pullen, LLP, independent public accountant for the Funds.
License to Use Name
Jurika & Voyles has granted the Trust and each Fund the right to use the
designation "Jurika & Voyles" in their names, and has reserved the right to
withdraw its consent to the use of such designation under certain conditions,
including the termination of the Adviser as the Funds' investment adviser.
Jurika & Voyles also has reserved the right to license others to use this
designation, including any other investment company.
Other Information
The Prospectuses and this Statement of Additional Information, together, do not
contain all of the information set forth in the Registration Statement of Jurika
& Voyles Fund Group filed with the Securities and Exchange Commission. Certain
information is omitted in accordance with rules and regulations of the
Commission. The Registration Statement may be inspected at the Public Reference
Room of the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates.
FINANCIAL STATEMENTS
Audited financial statements for the fiscal year ended June 30, 1996 for the
Mini-Cap Fund, the Value + Growth Fund and the Balanced Fund, as contained in
the Annual Report to Shareholders are incorporated herein by reference to the
Annual Reports.
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APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
This Appendix describes ratings applied to corporate bonds by Standard & Poor's
Corporation ("S&P") and Moody's Investors Service, Inc. ("Moody's").
S&P's Ratings
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Bonds rated A has a strong capacity to pay interest and repay principal,
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 interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB: Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B: Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB-rating.
CCC: Bonds rated CCC have a currently identifiable vulnerability to default, and
are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
CC: Bonds rated CC are typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC bond rating.
C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- bond rating.
The C rating may be used to cover a situation where a bankruptcy petition has
been filed but debt service payments are continued.
CI: The rating CI is reserved for income bonds on which no interest is being
paid.
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D: Bonds rated D are in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized. The
ratings from AA to B may be modified by the addition of a plus or minus to show
relative standing within the major rating categories.
Moody's Ratings
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 edge."
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 these 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.
A: Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium- grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
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.
Ba: Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked short-comings.
C: Bonds 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.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security 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 issue ranks in the lower end of its generic rating
category.
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