<PAGE>
IPS MILLENNIUM FUND
A NO-LOAD FUND
PROSPECTUS
October 15, 1996
625 S. GAY STREET, SUITE 630
KNOXVILLE, TN 37902
For questions about investing in the Fund: 423-524-1676
For Shareholder Services: 800-424-2295
The investment objectives of the Fund are growth of capital along with
growth of income. The Fund seeks to accomplish this objective by
investing primarily in common stocks with constant supervision of these
stocks. The Fund is designed for long term investors and should not be
considered by investors with short term time horizons.
The Fund is "no-load", which means there are no sales charges or
commissions. In addition, there are no 12b-1 fees, distribution
expenses or deferred sales charges which are borne by the shareholders.
There is a $2,000 minimum investment requirement to open an account.
Shares of the Fund are not deposits or obligations of any bank, are not
endorsed or guaranteed by any bank, and are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any
other government agency, entity, or person. The purchase of Fund shares
involves investment risks, including the possible loss of principal.
This Prospectus provides information you should know before investing in
the Fund. It should be read and retained for future reference. A
Statement of Additional Information for the Fund dated December 5, 1994,
containing additional information about the Fund, has been filed with
the Securities and Exchange Commission, and is incorporated by reference
into this Prospectus. The Statement of Additional Information may be
obtained without charge by writing to the Secretary of the Fund at the
above address. The Fund is a series of IPS Funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.<PAGE>
SUMMARY OF EXPENSES
This table is designed to help you understand the cost an investor in
the Fund may incur as a shareholder. The expense information is based upon
anticipated operating expenses of the Fund for the current fiscal year;
the actual expenses may be more or less than those shown. Shareholder
Transaction Expenses
<TABLE>
<CAPTION>
Maximum sales load on purchases ....................................None
Maximum sales load on reinvested dividends .........................None
Deferred sales load ................................................None <F1>
Redemption fees ....................................................None
Exchange fees ......................................................None
Annual Fund Operating Expenses (as a percentage of average net assets)
Management fees ....................................................1.40% <F2>
12b-1 expenses .....................................................None
Other expenses .....................................................None
Total Fund operating expenses ......................................1.40%
Example 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following total
expenses on a $1,000 investment, $14 $44 $76 $168
assuming a 5% annual return <F3> and
redemption at the end of the period.
______________________
<FN>
<F1> The Fund's Custodian charges a $10 fee for each wire
redemption.
<F2> The Fund's total operating expenses are equal to the management
fees paid to the Advisor because the Advisor pays all of the Fund's
operating expenses.
<F3> Use of this assumed 5% return is required by the Securities and
Exchange Commission; it is not an illustration of past or future
investment results.
</FN>
</TABLE>
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an investor
in the Fund will bear, directly or indirectly. This example should
not be considered a representation of past or future expenses.
Shareholders should be aware that the Fund is a no-load fund and, accordingly,
a shareholder does not pay any sales charge or commission upon purchase
or redemption of shares of the Fund. The Fund does not have a 12b-1 Plan.
Unlike most other mutual funds, the Fund does not pay directly for transfer
agency, pricing, custodial, auditing or legal services, nor does it pay
directly any general administrative or other operating expenses. The Advisor
pays all of the expenses of the Fund except brokerage, taxes,interest
and extraordinary expenses.<PAGE>
FINANCIAL HIGHLIGHTS
The following Financial Highlights for the period December 1,
1994 through November 30, 1995 are derived from the audited financial
statements of the Fund. These financial statements, and the independent
auditor s report thereon, are included in the Statement of Additional
Information which can be attained by shareholders. The Fund began selling
shares and making investments on January 4, 1995; therefore the ratios
are calculated for that period of time and the total return number has
been annualized. The Fund s Annual Report contains additional performance
information and will be made available upon request and without charge.
IPS MILLENNIUM FUND
<TABLE>
<CAPTION>
For the year end
November 30, 1995
<S> <C>
Per share data for a share outstanding
throughout the year:
Net Asset Value, Beginning of Period $12.000
INCOME FROM INVESTMENT OPERATIONS
Net Investment income $ 0.121
Net realized and unrealized gain
(loss) on investment $ 2.982
Total income (loss) from investment operations $ 3.103
LESS DISTRIBUTIONS
Dividends (from net investment income) $ 0.107
Distributions (from capital gains) $ 0.000
Total Distributions $ 0.107
Net asset value, End of Period $14.996
Total Return 28.83% <FN1>
Ratios/Supplemental Data
Net assets, end of period (thousands) 1625.6
Ratio of expenses to average net assets 1.4%
Ratio of net income to average net assets 1.0%
Portfolio turnover rate 26.7%
<FN>
<F1> Annualized
</FN>
</TABLE>
1A<PAGE>
THE FUND
IPS Funds (the "Trust") was organized as an Ohio business trust
on August 10, 1994, and commenced operations on December 5, 1994.
The Trust offers one series of shares: The IPS Millennium Fund
(the "Fund"). The investment advisor to the Fund is IPS
Advisory Inc. (the "Advisor").
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES
The Fund's investment objectives are long term growth of capital
and income. The Fund will strive to achieve the objective of
growth primarily through the purchase of U.S. common stocks that
the Advisor believes have higher than average long term growth
prospects, and that may be undervalued compared with the market
and their own history. The Fund will strive to achieve its
objective of income through selection of companies with the
potential to increase dividends regularly, and whose dividends
appear well-protected.
ACHIEVING THE OBJECTIVES
The management philosophy of the Fund is to accumulate a
diversified portfolio of U.S. common stocks. The Fund will
emphasize companies which have above average prospects for
consistent, long term growth, are undervalued on fundamentals,
and have characteristics that make them more resistant than most
companies to economic contraction. The Fund generally will be
invested in companies that pay dividends, but will invest in some
companies that do not pay dividends and may not have any dividend
history. While there can be no assurance of its ability to do so
in every case, the Advisor's goal will be to select companies
with low debt to equity ratios, relative to their industry peers.
The Fund is managed as a whole and does not seek to fulfill all
of its objectives in any one security. It is anticipated that
under normal market conditions common stocks (including dividend
paying common stocks) will constitute at least 65% of the Fund's
investment portfolio, with the belief they will participate in
the long term growth of American business. However, it is also
anticipated that the Fund will hold less than 35% of its assets
in money market instruments, U.S. Government securities,
repurchase agreements collateralized by U.S. Government
securities, and shares of other investment companies for
liquidity purposes or when common stocks are viewed as
overvalued. In addition, for temporary defensive purposes under
abnormal market or economic conditions, the Fund may hold up to
100% of its assets in such securities. If the Fund acquires
securities of another investment company, the shareholders of the
Fund generally will be subject to duplicate management fees. The
Fund does not attempt to time the market. The Fund will try to
minimize fluctuations in value through diversification among
companies and industries, and constant monitoring.<PAGE>
A repurchase agreement is a short term investment in which the
purchaser (i.e., the Fund) acquires ownership of a U.S.
Government security and the seller agrees to repurchase the
security at a future time at a set price, thereby determining the
yield during the purchaser's holding period. Any repurchase
transaction in which the Fund engages will require full
collateralization of the seller's obligation during the entire
term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both
delays in liquidating the underlying security and losses in value.
However, the Fund intends to enter into repurchase agreements
only with the Fund's Custodian, other banks with assets of $1
billion or more, and registered securities dealers determined by
the Advisor (subject to review by the Board of Trustees) to be
creditworthy.
The Fund will not invest more than 5% of the market value of its
total assets at the time of investment in securities of any one
issuer. Nor will the Fund buy securities on margin, sell
securities short, use commodities or futures contracts, or use
derivative securities of any kind. See "Investment Limitations"
in the Statement of Additional Information.
As all investment securities are subject to inherent market risks
and fluctuations in value due to earnings, economic and political
conditions and other factors, the Fund cannot give any assurance
that its investment objective will be achieved. Current rates of
total return quoted by the Fund may be higher or lower than past
quotations, and there can be no assurance that any current rate
of total return will be maintained.
FUNDAMENTAL POLICIES
The investment limitations set forth in the Statement of
Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding
shares of the Fund. The investment objective of the Fund may be
changed without the affirmative vote of a majority of the
outstanding shares of the Fund.
PORTFOLIO TURNOVER
The Fund does not intend to purchase or sell securities for short
term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has
been held) when the Advisor believes that market conditions,
company-specific factors or general economic conditions warrant
such action. It is anticipated that the Fund will have a
portfolio turnover rate of less than 50%. <PAGE>
HOW TO PURCHASE FUND SHARES
BY MAIL
The minimum investment in the Fund is $2,000. To purchase shares
in the Fund, simply complete the application form enclosed with
this Prospectus.
Make your check payable to, and mail your application and
check to:
IPS Millennium Fund
c/o The Provident Bank
P. O. Box 14967
Cincinnati, Ohio 45250-0967
The price at which the purchase will be effected is based on the
next calculation of net asset value after the order is received
by The Provident Bank, the Fund's Transfer Agent. A confirmation
indicating the details of the transaction will be promptly sent
to shareholders. The purchase will be made in full and
fractional shares calculated to three decimal places.
ADDITIONAL AND PRE-AUTHORIZED PURCHASES
Shareholders may, at any time, purchase additional shares subject
to a minimum investment of $100. A check made payable to "IPS
Millennium Fund", in the amount to be invested, should be sent to
The Provident Bank at the address set forth above. Each
additional purchase request must contain your name and account
number. If you prefer to invest automatically each month, you
may authorize the Fund to debit your bank account for the
periodic purchase of Fund shares in the middle of the month. You
will receive a confirmation every time you make a transaction in
the Fund.
PAYMENT FOR SHARES
Payment for shares purchased should be made by check or money
order in dollars drawn on a United States Bank. Funds for
investment may also be wired by the investor's bank to the
Transfer Agent. Please call 1-800-424-2295 for wiring
instructions.
The Fund reserves the right in its sole discretion to reject
purchase orders when, in the judgment of management, such
rejection is in the best interests of the Fund. The Fund also
reserves the right at any time to waive or increase the minimum
investment requirements applicable to initial or subsequent
investments. No application to purchase shares is binding until
accepted in writing by the Fund.<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to declare dividends representing net investment
income four times annually, generally in the months of April,
July, October, and December. It is the present policy of the
Fund to distribute annually all of its net long term capital
gains in the month of December. When a dividend or capital gain
is distributed, the net asset value per share is reduced by the
amount of the payment.
All dividends or capital gains distributions paid by the Fund
will be automatically reinvested in shares of the Fund at the
next determined net asset value, unless an investor specifically
requests that either dividends or capital gains distributions or
both be paid in cash. If cash payment is requested, a check
normally will be mailed within five business days after the
payable date. If you withdraw your entire account, all dividends
accrued to the time of withdrawal, including the day of
withdrawal, will be paid at that time. You may elect to have
distributions on shares held in IRA's and 403(b) plans paid in
cash only if you are 59 1/2 years old or permanently and totally
disabled or if you otherwise qualify under the applicable plan.
To change the election of dividends or capital gains
distributions, send a written request to the IPS Millennium Fund,
c/o The Provident Bank, P.O. Box 14967, Cincinnati, OH 45250-
0967.
TAXES
All dividends and capital gains are taxable whether they are
reinvested or received in cash, unless you are exempt from
taxation or entitled to tax deferral. Each year investors are
notified of the federal tax status of all dividends and capital
gains paid during the prior year. It is the Fund's intention to
meet all requirements of Subchapter M of the Internal Revenue
Code, and to distribute to its investors all, or substantially
all, of its taxable income as defined in the Code.
If you have not furnished a certified correct taxpayer
identification number (generally your Social Security number) and
have not certified that withholding does not apply, or if the
Internal Revenue Service has notified the Fund that the taxpayer
identification number listed on your account is incorrect
according to their records or that you are subject to backup
withholding, federal law generally requires the Fund to withhold
31% from any dividends and/or redemptions. Shareholders should
be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each
account for which a certified taxpayer identification number is
not provided. In the event that such a fine is imposed with
respect to a specific account in any year, the Fund will make a
corresponding charge against the account.
Amounts withheld are applied to your federal tax liability; a
refund may be obtained from the Internal Revenue Service if
withholding results in overpayment of taxes. Federal law also
requires the Fund to withhold 30% or the applicable tax treaty
rate from dividends paid to certain non-resident alien, non-U.S.
partnership and non-U.S. corporation shareholder accounts.
Shareholders are urged to consult their own tax advisors
regarding specific questions as to the federal, state or local
taxes and the tax effect of distributions and withdrawals. <PAGE>
OPERATIONS OF THE FUND
BOARD OF TRUSTEES
The Fund is a diversified series of IPS Funds, an open-end
management investment company organized as an Ohio business trust
on August 10, 1994. The Board of Trustees of the Trust
supervises the operations of the Fund according to applicable
state and federal law and is responsible for the overall
management of the Fund's business affairs.
THE INVESTMENT ADVISOR
IPS Advisory Inc., 625 S. Gay Street, Suite 630, Knoxville, TN
37902 is the investment advisor engaged to supervise the
operation of the Fund, to manage its investments and business
affairs, and provide investment research for the Fund. The
principals of the Advisor are Greg D'Amico, President and Robert
Loest, Ph.D., CFA, Chief Executive Officer. Both have extensive
experience in equities analysis, having managed investment
portfolios for individual clients, including corporations and
retirement plans, on a full time basis since 1986.
The Advisor is under the supervisory control of Securities
Service Network, Inc. ("SSN"), located at 9041 Executive Park
Dr., Suite 500, Knoxville, TN 37923. SSN is a Securities and
Exchange Commission and Tennessee registered Broker-Dealer and
Investment Advisor, and exercises supervisory control of the
Advisor through a Consent & Guaranty letter and compliance
guidelines established by SSN and approved by the Securities
Division of the State of Tennessee. SSN also acts as the
exclusive agent for distribution of shares of the Fund.
Greg D'Amico and Robert Loest will be responsible for the day to
day management of the portfolio of the Fund. Greg D'Amico is
President, Trustee and Treasurer to the Trust. Mr. D'Amico is
President and a Director of the Advisor. Robert Loest Ph.D.,
CFA, is Vice President, Trustee and Secretary of the Trust. Mr.
Loest is also Chief Executive Officer and a Director of the
Advisor. Mr. D'Amico and Mr. Loest both are controlling persons
and may be deemed affiliates of the Advisor. Mr. D'Amico and Mr.
Loest are both securities representatives with Securities Service
Network Inc. (since 1986).
ADVISOR COMPENSATION
The Fund has approved a Management Agreement with the Advisor.
Under the Management Agreement, the Fund has agreed to compensate
the Advisor for its services by the payment of a monthly fee at
the annual rate of 1.40% of the average daily net assets of the
Fund to and including $100,000,000, 1.15% of the average daily
net assets of the Fund from $100,000,000 to and including
$250,000,000, and .90% of the average daily net assets of the
Fund in excess of $250,000,000. The Advisor pays all of the
expenses of the Fund except brokerage, taxes, interest and
extraordinary expenses. In this regard, it should be noted that
most investment companies pay their own operating expenses
directly, while the Fund's expenses (except those specified
above) are paid by the Advisor.<PAGE>
SHAREHOLDER RIGHTS
Any Trustee of the Fund may be removed by vote of the
shareholders holding not less than two-thirds of the outstanding
shares of the Fund. The Fund does not hold an annual meeting of
shareholders. When matters are submitted to shareholders for a
vote, each shareholder is entitled to one vote for each whole
share owned and fractional votes for fractional shares owned.
All shares of a Fund have equal voting rights and liquidation
rights. Prior to the offering made by this Prospectus,
investment advisory clients of Securities Service Network, Inc.
purchased for investment all of the outstanding shares of the
Fund. As a result, Securities Service Network, Inc. may be
deemed to control the Fund.
SHAREHOLDER INQUIRIES
Shareholders can make inquiries about the Fund or their personal
account by calling the Fund's Transfer Agent at 800-424-2295 or
writing the Fund at the address listed on the cover page.
PORTFOLIO TRANSACTIONS
The Advisor places all orders for the purchase and sale of the
Fund's securities. In selecting broker-dealers, the Advisor may
consider research and brokerage services furnished to it and its
affiliates. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and subject to
its objective of seeking best qualitative execution of portfolio
transactions, the Advisor may consider sales of shares of the
Fund in its selection of broker-dealers. Securities Service
Network Inc., which may be deemed to be an affiliate of the
Advisor, will place trades for the Fund through National
Financial Services Corporation (NFSC), a subsidiary of the
Fidelity companies and a member of the New York Stock Exchange.
The Statement of Additional Information contains more information
about the Fund's brokerage practices.
Transfer Agent
The Provident Bank, One East Fourth Street, Cincinnati, Ohio
45202 is the Fund's Transfer Agent. The Transfer Agent performs
shareholder service functions for a fee.
HOW THE FUND MEASURES ITS PERFORMANCE
The Fund may periodically advertise "average annual total
return." The "average annual total return" of the Fund refers
to the average annual compounded rate of return over the stated
period that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of
the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and
distributions.<PAGE>
The Fund may also periodically advertise its total return over
various periods in addition to the value of a $10,000 investment
(made on the date of the initial public offering of the Fund's
shares) as of the end of a specified period. The "total return"
for the Fund refers to the percentage change in the value of an
account between the beginning and end of the stated period,
assuming no activity in the account other than reinvestment of
dividends and capital gains distributions. The Fund may also
include in advertisements data comparing performance with other
mutual funds as reported in non-related investment media,
published editorial comments and performance rankings compiled by
independent organizations and publications that monitor the
performance of mutual funds (such as Morningstar or Lipper
Analytical Services). Performance information may be quoted
numerically, or may be presented in a table, graph or other
illustration. In addition, Fund performance may be compared to
well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index, S&P MidCap 400 Index, S&P/BARRA Growth
and Value Indices, the Value Line Composite Index (GEOM), the
NASDAQ Composite Index, or the Dow Jones Industrial Average. The
Fund's annual report will contain additional performance
information that will be made available upon request and without
charge.
NET ASSET VALUE
Shares are purchased at the next offering price after the order
is received by the Fund. The net asset value is determined at
the close of the New York Stock Exchange each day that the
exchange is open. The current value of the Fund's total assets,
less all liabilities, divided by the total number of shares
outstanding rounded to the nearest cent, is the net asset value
per share.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price
of the day. Lacking a last sale price, a security is valued at
its last bid price except when, in the Advisor's opinion, the
last bid price does not accurately reflect the current value of
the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last
bid price. When market quotations are not readily available,
when the Advisor determines the last bid price does not
accurately reflect the current value or when restricted
securities are being valued, such securities are valued as
determined in good faith by the Advisor, in conformity with
guidelines adopted by and subject to review of the Board of
Trustees of the Fund.
Since the Fund does not impose any front end sales load or
redemption fee, both the purchase price and the redemption price
of a Fund share on any date will be equal to the next calculated
net asset value of a share.
<PAGE>
HOW TO REDEEM OR SELL FUND SHARES
To redeem shares, send a letter of instruction to the Transfer
Agent, specifying the number of shares or dollar amount to be
sold, your name and your account number. The Fund will buy back
(redeem), at current net asset value (no charge), all shares of
the Fund offered for redemption and meeting the requirements of
this Prospectus. The net asset value will be the next net asset
value determined after receipt of the request for redemption.
Payment will be made within seven days of receipt of a valid
redemption request.
Redemption requests should be sent to:
IPS Millennium Fund
c/o The Provident Bank
P. O. Box 14967
Cincinnati, Ohio 45250-0967
Requests for redemption by telephone will not be accepted.
The written request for redemption must be signed by each
registered owner exactly as the shares are registered. A
signature guarantee is required for any withdrawal which is over
$50,000, or which is mailed to another address that is not the
address of record. Signature guarantees are available at any
bank or financial institution. The signature guarantee is used
to protect shareholders from the possibility of fraudulent
application for redemption.
Payment for shares redeemed will be made by check after receipt
by the transfer agent of the properly executed redemption request
and any outstanding certificates for the shares to be redeemed.
If shares are purchased with a check, redemption within the first
fifteen days may be delayed until the check clears. A
shareholder wishing to redeem proceeds through wire redemption
will be charged $10 toward his or her account.
To keep Fund share expenses to a minimum, the Fund is authorized
to redeem accounts that fall below $2,000, or such other minimum
amount as the Fund may determine from time to time. Redemption
will only occur when the account is reduced by redemptions and
not by a decline in market value. The account holder will be
notified 60 days in advance before an account is redeemed. An
involuntary redemption constitutes a sale. You should consult
your tax advisor concerning the tax consequences of involuntary
redemptions. To prevent redemption, an account can be increased
by contributing additional funds to bring it over the account
minimum. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion
that failure to so redeem may have materially adverse
consequences to all or any of the shareholders of the Fund.
SYSTEMATIC WITHDRAWALS
Accounts valued at $10,000 or above, using the current net asset
value, are eligible for normal distributions under a systematic
withdrawal program. Setting up a Systematic Withdrawal Program
allows investors to withdraw a fixed sum each month or calendar
quarter. The minimum amount that can be withdrawn each month or
quarter under the Systematic Withdraw Program is $250. This
program may be terminated by a shareholder or the Fund at any
time without charge or penalty, and will become effective five
business days following receipt of shareholder instructions. A
withdrawal under the Systematic Withdrawal Program involves a
redemption of shares, and may result in a gain or loss for
federal income tax purposes. In addition, if the amount
withdrawn exceeds the dividends credited to the shareholder's
account, the account ultimately may be depleted.
RETIREMENT PLANS
The Fund offers several tax qualified retirement plans for
adoption by individuals and employers. The following plans are
available: IRA, Simplified Employee Pension Plans, 403(b) plans,
and 401(K) corporate profit-sharing retirement plans.
Contributions to these plans are tax-deductible and earnings are
tax exempt until distributed. When investing in a retirement
plan, you should consult with a tax advisor to determine which
plan is best for your situation. To receive all the necessary
information on fees, plan agreements and applications, contact
the Advisor at 625 S. Gay Street, Suite 630, Knoxville, TN 37902
or call 1-423-524-1676.
