SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 4 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 5 /X/
(Check appropriate box or boxes.)
IPS FUNDS - File Nos. 33-83132 and 811-8718
625 S. Gay Street, Suite 630, Knoxville, Tennessee 37902
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (423) 524-1676
Gregory D'Amico, 625 S. Gay Street, Suite 630, Knoxville, TN 37902
(Name and Address of Agent for Service)
With copy to:
Reinaldo Pascual, Esq.
Kilpatrick Stockton LLP
1100 Peachtree Street
Suite 2800
Atlanta, Georgia 30309
Release Date: March 30, 1997
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of Rule 485
The Registrant continues its election made by the filing of its
Registration Statement, effective December 5, 1994, to register an
indefinite number and amount of securities under Rule 24f-2 of the
Investment Company Act of 1940. Registrant filed pursuant to paragraph
b(1) of Rule 24f-2, a 24f-2 Notice for the fiscal year ended November 30,
1997 on January 30, 1998.
TOTAL NUMBER OF PAGES -
EXHIBIT INDEX ON PAGE -
<PAGE>
IPS MILLENNIUM FUND
A NO-LOAD FUND
PROSPECTUS
March 30, 1998
625 S. GAY STREET, SUITE 630
KNOXVILLE, TN 37902
For questions about investing in the Fund: 423-524-1676
For Shareholder Services: 800-232-9142
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 March 30, 1998,
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>
TABLE OF CONTENTS
Page
-----
SUMMARY OF EXPENSES................................. 1
THE FUND ........................................... 2
INVESTMENT OBJECTIVES AND POLICIES ................. 2
Investment Objectives ........................... 2
Achieving the Objectives ........................ 2
Fundamental Policies ............................ 3
Portfolio Turnover .............................. 3
HOW TO PURCHASE FUND SHARES ........................ 3
By Mail ......................................... 3
Additional and Pre-authorized Purchases ......... 4
Payment for Shares .............................. 4
DIVIDENDS AND DISTRIBUTIONS ........................ 4
TAXES .............................................. 5
OPERATIONS OF THE FUND ............................. 5
Board of Trustees ............................... 5
The Investment Advisor .......................... 5
Advisor Compensation ............................ 6
Shareholder Rights .............................. 6
Shareholder Inquiries ........................... 6
Portfolio Transactions .......................... 6
Transfer Agent .................................. 7
How The Fund Measures Its Performance ........... 7
Net Asset Value ................................. 7
How to Redeem or Sell Fund Shares ............... 8
Systematic Withdrawals .......................... 9
Retirement Plans ................................ 9
Miscellaneous ................................... 9
<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
- --------------------------------
Maximum sales load on purchases ................... None
Maximum sales load on reinvested dividends......... None
Deferred sales load ............................... None
Redemption fees ................................... None <F1>
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% <F2>
Example 1 year 3 years
------ -------
You would pay the following total $15 $49
expenses on a $1,000 investment, 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. 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.
</FN>
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 table is included in the Fund's annual report to
shareholders. The Fund began operations January 3, 1995. The Fund's
annual report contains further information about the performance of the
Fund as well as the Fund's financial statements which were audited by
Cherry Bekaert and Holland, L.L.P. The annual report is available without
charge by calling the Fund.
IPS MILLENNIUM FUND
Financial Highlights, Selected Per Share Data and Ratios
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE 11
-------------------------------------------- MONTHS ENDED
NOV. 30, 1997 NOV. 30, 1996 NOV. 30, 1995 <F1>
------------- ------------- -------------
<S> <C> <C> <C>
PER SHARE DATA: PER SHARE DATA PER SHARE DATA
NET ASSET VALUE:
Beginning of year $18.86 $14.996 $12.000
INCOME FROM INVESTMENT OPERATIONS
Net Investment income (0.046) 0.021 0.121
Net realized and unrealized gain
(loss) on investments 3.576 3.959 2.982
------- -------- --------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 3.53 3.980 3.103
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 (0.035) 0.107
Distributions from capital gains (0.80) (0.081) 0.000
----- ------- --------
Total distributions $(0.80) $(0.116) $(0.107)
Net Increase in net asset value 3.450 3.864 2.996
NET ASSET VALUE:
End of year $22.310 $18.860 $14.996
======= ======= ========
Total return (annualized) 18.746% 26.751% 28.831%
RATIOS:
Net assets, end of period (thousands) $11,684.215 $5,613.515 $1,625.600
Ratio of expenses to average net assets 1.40% 1.40% 1.40%
Ratio of net income to average net assets 0.23% 0.76% 1.00%
Portfolio turnover rate 33.17% 55.17% 26.7%
Average commissions rate paid (per share $ 0.0405 $ 0.05705 $ 0.10056
<FN>
<F1> The Fund began operations on January 3, 1995. Financial
Highlights for the period ended November 30, 1995 have
been annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS<PAGE>
THE FUND
IPS Funds (the "Trust") was organized as an Ohio business trust on August
10, 1994, and commenced operations on January 3, 1995. 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 objective is long-term growth of capital from buying common
stocks of U.S. corporations the Advisor believes can grow at a higher
rate than the overall economy, and that are undervalued based on future
prospects. The Funds will also attempt to balance the volatility
inherent in high growth rate sectors by buying the common stocks of
companies that have relatively high, well-protected, and increasing
dividend yields.
Achieving the Objectives
- ------------------------
The Advisor will attempt to predict broadly where civilization is heading
to identify the major investment sectors that will benefit from these
changes and invest in the companies it believes that the best chance
of using these changes to add long-term value for shareholders. It
will attempt to identify the companies with the most consistent growth,
and with characteristics that make them more resistant than most
companies to economic contractions. The Advisor will not attempt to
time the stock market, and expects to remain fully invested during all
normal times, including normal bear markets and recessions.
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.
The Advisor expects that under most circumstances, over 65% of the
Fund's assets will be invested in common stocks. There are no restrictions
as to company size, although the advisor will avoid very small companies
(micro-caps) under approximately $250 million in market capitalization
(market value). Thus, the Fund may own everything from small to very
large companies, with a median company size somewhere under $10 billion
most of the time. The Advisor considers funds under $1 billion in market
cap to be small cap, and large caps are over $10 billion in market value.
In most cases the Fund will hold the common stock of the market leading
companies in their industry, although in some sectors even the market
leader may be quite small.
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.
Investment Risks
- ----------------
All investments carry risks. There is no such thing as a risk-free
investment. Stocks are subject to short term loss of principal
because their value fluctuates significantly during the year. Stocks
are more resistant to the other major risk of the long-term erosion of
purchasing power due to inflation, as can happen with debt securities
and cash.
It is normal for most stocks that do not have high dividend yields to
drop in price from 30% to 60% during the course of any 12 month period.
Thus, investors in the Fund must be able to tolerate such short-term price
volatility in order to benefit from the potentially higher longer term growth
of stocks. Such characteristics can prevent investors or the Fund from
achieving their investment objectives, especially over shorter periods of
a few years or less.
In addition, the Fund will invest in fast growing, more volatile companies.
The advisor expects that the Fund will have a higher risk, or overall
volatility, than its peer group of funds, and the stock market in general.
While the income-oriented portion of the stock portfolio will dampen this
volatility somewhat, investors should still expect greater than normal
volatility in the share price. The Fund may not do as well in the future
as it has in the past. No investment strategy works all the time, and
investors should expect that there will be extended periods when the Fund's
investment philosophy and strategies will not be aligned with where the
overall stock market, or particular large segments of the market (i.e.,
large vs. small companies), is going.
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
1-800-232-9142 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.
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, 625 S. Gay Street, Suite 630, Knoxville, TN 37902.
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.
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 Drive, 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. The Advisor may also use its own resources, which
may include a portion of its fee undeer the Management Agreement, to pay
for distribution or other marketing related expenses of the Fund. 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.
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.
Shareholder Inquiries
- ---------------------
Shareholders can make inquiries about the Fund or their personal account
by calling the Fund's Transfer Agent at 800-232-9142 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
- --------------
IPS Advisory, Inc., 625 S. Gay Street, Suite 630, Knoxville, Tennessee
37902 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.
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.
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: Traditional
Individual Retirement Accounts (IRAs), 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. Also available are Roth IRAs and Education
IRAs. 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 1-800-232-9142.
Miscellaneous
- -------------
The Advisor may follow a policy of considering sales of shares of the Funds
as a factor in the selection of brokers to be used in portfolio transactions
for the Funds, subject to the requirement of best execution discussed in the
Statement of Additional Information under "Portfolio Transactions and
Brokerage."
<PAGE>
IPS MILLENNIUM FUND
PART B
STATEMENT OF ADDITIONAL INFORMATION
March 30, 1998
This Statement of Additional Information is not a prospectus, but should
be read in conjunction with the current Prospectus, dated March 30, 1998.
The Prospectus may be obtained by writing to the Fund at the following
address:
IPS MILLENNIUM FUND
TWO CENTER SQUARE
625 S. GAY STREET, SUITE 630
KNOXVILLE, TN 37902
Shareholder Services: 800-232-9142
TABLE OF CONTENTS
Page
General Information and History. . . . . . . . . . . . . . . . . . . 1
U.S. Government Securities . . . . . . . . . . . . . . . . . . . . . 2
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . 2
Fundamental . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Borrowing Money. . . . . . . . . . . . . . . . . . . . . . . 2
Senior Securities. . . . . . . . . . . . . . . . . . . . . . 2
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . 2
Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . 3
Commodities. . . . . . . . . . . . . . . . . . . . . . . . . 3
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Concentration. . . . . . . . . . . . . . . . . . . . . . . . 3
Non-Fundamental . . . . . . . . . . . . . . . . . . . . . . . . . 3
Pledging . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Margin Purchases . . . . . . . . . . . . . . . . . . . . . . 4
Short Sales. . . . . . . . . . . . . . . . . . . . . . . . . 4
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Illiquid Investments . . . . . . . . . . . . . . . . . . . . 4
Fund Trustees and Officers . . . . . . . . . . . . . . . . . . . . . 4
The Investment Advisor and Underwriter . . . . . . . . . . . . . . . 5
Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . 6
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Independent Accountants . . . . . . . . . . . . . . . . . . . . . . 7
Portfolio Transactions and Brokerage . . . . . . . . . . . . . . . . 7
Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
General Information and History
IPS Funds (the "Trust") is an open-end investment company established
under the laws of Ohio by an Agreement and Declaration of Trust dated
August 10, 1994 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Shares of one series have been
authorized, which shares constitute the interests in the IPS Millennium
Fund series (the "Fund").
Each share of a series represents an equal proportionate interest in the
assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of
income belonging to the series as are declared by the Trustees. The
shares do not have cumulative voting rights or any preemptive or
conversion rights, and the Trustees have the authority from time to time
to divide or combine the shares of any series into a greater or lesser
number of shares of that series so long as the proportionate beneficial
interest in the assets belonging to that series and the rights of shares
of any other series are in no way affected. In case of any liquidation
of a series, the holders of shares of the series being liquidated will be
entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any
series are borne by that series. Any general expenses of the Trust not
readily identifiable as belonging to a particular series are allocated by
or under the direction of the Trustees in such manner as the Trustees
determine to be fair and equitable. No shareholder is liable to further
calls or to assessment by the Trust without his or her express consent.
If at least ten shareholders (the "Petitioning Shareholders") wish to
obtain signatures to request a meeting for the purpose of voting upon
removal of any Trustee of the Trust, they may make a written application
to the Trust requesting to communicate with other shareholders. The
Petitioning Shareholders must hold in the aggregate at least 1% of the
shares then outstanding or shares then having a net asset value of
$25,000, whichever is less, and each Petitioning Shareholder must have
been a shareholder for at least six months prior to the date of the
application. The application must be accompanied by the form of
communication which the shareholders wish to transmit. Within five
business days after receipt of the application, the Trust will (a)
provide the Petitioning Shareholders with access to a list of the names
and addresses of all shareholders of the Trust; or (b) inform the
Petitioning Shareholders of the approximate number of shareholders and
the estimated costs of mailing such communication, and undertake such
mailing promptly after tender by the Petitioning Shareholders to the
Trust of the material to be mailed and the reasonable expenses of such
mailing. The Trustees will promptly call a meeting for the purpose of
voting upon the question of removal of any Trustee when requested in
writing to do so by the record holders of not less than 10% of the
outstanding shares.
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property
if the Trustees determine that existing conditions make cash payments
undesirable. For other information concerning the purchase and
redemption of shares of the Fund, see "How to Purchase Fund Shares" and
"How to Redeem or Sell Fund Shares" in the Prospectus. For a description
of the methods used to determine the share price and value of the Fund's
assets, see "Net Asset Value" in the Prospectus.
U.S. Government Securities
- --------------------------
U.S. government securities may be backed by the credit of the government
as a whole or only by the issuing agency. U.S. Treasury bonds, notes,
and bills and some agency securities, such as those issued by the Federal
Housing Administration and the Government National Mortgage Association
(GNMA), are backed by the full faith and credit of the U.S. government as
to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government
agencies or instrumentalities, such as securities issued by the Federal
Home Loan Banks and the Federal Home Loan Mortgage Corporation, are
supported only by the credit of the agency that issued them, and not by
the U.S. government. Securities issued by the Federal Farm Credit
System, the Federal Land Banks, and the Federal National Mortgage
Association (FNMA) are supported by the agency's right to borrow money
from the U.S. Treasury under certain circumstances, but are not backed by
the full faith and credit of the U.S. government.
Repurchase Agreements
- ---------------------
A repurchase agreement is a short term investment in which the purchaser
(i.e., the Fund) acquires ownership of a U.S. Government security 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.
Investment Restrictions
- -----------------------
FUNDAMENTAL. The investment limitations described below have been
adopted by the Fund and are fundamental ("Fundamental"), i.e., they may
not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and this
Statement of Additional Information, the term "majority" of the
outstanding shares of the Fund means the lesser of (1) 67% or more of the
outstanding shares of the Fund present at a meeting, if the holders of
more than 50% of the outstanding shares of the Fund are present or
represented at such meeting; or (2) more than 50% of the outstanding
shares of the Fund. Other investment practices which may be changed by
the Board of Trustees without the approval of shareholders to the extent
permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").
1. BORROWING MONEY. The Fund will not borrow money, except (a) from
a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of the Fund; or (b) from a bank or
other persons for temporary purposes only, provided that such temporary
borrowings are in an amount not exceeding 5% of the Fund's total assets
at the time when the borrowing is made. This limitation does not
preclude the Fund from entering into reverse repurchase transactions,
provided that the Fund has an asset coverage of 300% for all borrowings
and repurchase commitments of the Fund pursuant to reverse repurchase
transactions.
2. SENIOR SECURITIES. The Fund will not issue senior securities.
This limitation is not applicable to activities that may be deemed to
involve the issuance or sale of a senior security by the Fund, provided
that the Fund's engagement in such activities is (a) consistent with or
permitted by the Investment Company Act of 1940, as amended, the rules
and regulations promulgated thereunder or interpretations of the
Securities and Exchange Commission or its staff and (b) as described in
the Prospectus and this Statement of Additional Information.
3. UNDERWRITING. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of portfolio securities
(including restricted securities), the Fund may be deemed an underwriter
under certain federal securities laws.
4. REAL ESTATE. The Fund will not purchase or sell real estate.
This limitation is not applicable to investments in marketable securities
which are secured by or represent interests in real estate. This
limitation does not preclude the Fund from investing in mortgage-backed
securities or investing in companies engaged in the real estate business.
5. COMMODITIES. The Fund will not purchase or sell commodities
unless acquired as a result of ownership of securities or other
investments.
6. LOANS. The Fund will not make loans to other persons, except (a)
by loaning portfolio securities, (b) by engaging in repurchase
agreements, or (c) by purchasing nonpublicly offered debt securities.
For purposes of this limitation, the term "loans" shall not include the
purchase of a portion of an issue of publicly distributed bonds,
debentures or other securities.
7. CONCENTRATION. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government,
its agencies and instrumentalities or repurchase agreements with respect
thereto.
With respect to the percentages adopted by the Fund as maximum
limitations on its investment policies and limitations, an excess above
the fixed percentage due to growth will not be a violation of the policy
or limitation unless the excess results immediately and directly from the
acquisition of any security or the action taken. This paragraph does not
apply to the borrowing policy set forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a
personal holding company, may be merged or consolidated with or acquired
by the Fund, provided that if such merger, consolidation or acquisition
results in an investment in the securities of any issuer prohibited by
said paragraphs, the Fund shall, within ninety days after the
consummation of such merger, consolidation or acquisition, dispose of all
of the securities of such issuer so acquired or such portion thereof as
shall bring the total investment therein within the limitations imposed
by said paragraphs above as of the date of consummation.
<PAGE>
NON-FUNDAMENTAL. The Fund intends to adhere to the following
limitations, which are Non-Fundamental (see "Investment Restrictions-
Fundamental" above).
1. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in
any manner transfer, as security for indebtedness, any assets of the Fund
except as may be necessary in connection with borrowings described in
limitation (1) above. Margin deposits, security interests, liens and
collateral arrangements with respect to transactions involving options,
futures contracts, short sales and other permitted investments and
techniques are not deemed to be a mortgage, pledge or hypothecation of
assets for purposes of this limitation.
2. BORROWING. The Fund will not enter into reverse repurchase
agreements. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of
its total assets are outstanding.
3. MARGIN PURCHASES. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not
applicable to short term credit obtained by the Fund for the clearance of
purchases and sales or redemption of securities, or to arrangements with
respect to transactions involving permitted investments and techniques.
4. SHORT SALES. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind
and amount to the securities sold short.
5. OPTIONS. The Fund will not purchase or sell put or call options.
6. ILLIQUID INVESTMENTS. The Fund will not invest more than 15% of
its net assets in securities for which there are legal or contractual
restrictions on resale and other illiquid securities.
Fund Trustees and Officers
- --------------------------
The Trustees and executive officers of the Trust and their principal
occupations during the last five years are set forth below. Each Trustee
who is an "interested person" of the Trust, as defined in the Investment
Company Act of 1940, is indicated by an asterisk.
NAME (AGE) AND ADDRESS POSITIONS HELD
- ---------------------- --------------
*Greg D'Amico (33) President, Chief Financial
625 S. Gay Street, Suite 630 Officer, Treasurer and
Trustee
Knoxville, TN 37902
Robert Loest (53) Vice President, Secretary and
625 S. Gay Street, Suite 630 Trustee
Knoxville, TN 37902
Woodrow Henderson (39) Trustee
6504 Clary Lane
Knoxville, TN 37919
Veenita Bisaria (36) Trustee
12416 Fort West Drive
Knoxville, TN 37922
Billy Wayne Stegall, Jr. (40) Trustee
309 Kingston Court
Knoxville, TN 37919
Mr. D'Amico is also President of IPS Advisory, Inc., and a portfolio
manager for individually managed accounts as a registered representative
of Securities Service Network, Inc.
Mr. Loest is also Chief Executive Officer of IPS Advisory, Inc., and a
senior portfolio manager and research analyst for individually managed
accounts as a registered representative of Securities Service Network,
Inc. Mr. Loest is a Chartered Financial Analyst and has a Ph.D. in
Biology.
Mr. Henderson is also Director of Planned Giving for the University of
Tennessee at Knoxville.
Ms. Bisaria has been a financial analyst for the Tennessee Valley
Authority since February 1, 1997. Prior to that time she was Director of
Business Planning at Lockhead Martin Energy Systems, and is a Chartered
Financial Analyst (CFA).
Mr. Stegall has been an account executive at Colony Life & Accident since
June 1, 1995. Prior to that time, he was a teacher of history and
economics at Austin East High School in Knoxville, Tennessee.
Pursuant to the terms of its Management Agreement with the Trust, the
Adviser pays all of the fees and expenses of the Trustees. Each trustee
who is not affiliated with the Adviser receives an annual retainer of
$100, plus $50 for each Board meeting attended. During the fiscal year
ended November 30, 1997, each Trustee not related to the Advisor
received aggregate compensation of $300.
As of March 18, 1998, Charles Schwab & Co., Inc. (Schwab) is a record-holder
of 11.95% of the Fund's outstanding shares on behalf of its clients, but
Schwab has advised that no single Schwab client owns more than 5% of
the outstanding shares. Schwab's address is 101 Montgomery Street,
San Francisco, California 94104.
As of March 30, 1998, the Trustees and Officers of the Trust, as a group,
beneficially owned 1.28% of the outstanding shares of the Fund.
The Investment Advisor and Underwriter
- --------------------------------------
IPS Advisory, Inc. (the "Advisor"), 625 S. Gay St., Suite 630, Knoxville,
TN 37902, is the investment advisor for the Fund. Greg D'Amico and
Robert Loest may be deemed to be controlling persons and affiliates of
the Advisor due to their ownership of its shares and their positions as
directors and officers of the Advisor. Because of such affiliation, they
may receive benefits from the management fees paid to the Advisor. The
Fund retains the Advisor to manage the business affairs of the Fund, and
to furnish advice and recommendations to the Fund regarding securities to
be purchased and sold by the Fund.
Securities Service Network, Inc., 9041 Executive Park Drive, Suite 500,
Knoxville, TN 37923 (the "Underwriter") is the exclusive agent for
distribution of shares of the Fund. The Underwriter is a registered
investment advisor and securities broker-dealer. The Underwriter is
obligated to sell the shares of the Fund on a best efforts basis only
against purchase orders for the shares. Shares of the Fund are offered
to the public on a continuous basis. The Underwriter exerts supervisory
control over the Advisor through a Consent Guaranty Letter, and by means
of specialized compliance procedures approved by the Securities Division
of the Tennessee Department of Commerce and Insurance.
The Advisor is staffed by experienced investment professionals with
extensive experience in company analysis, and who have been officers of
IPS since 1986. Analysis is performed in-house for all core portfolio
companies, using a variety of proprietary, fundamental analytical
methods.
Under the terms of the Management Agreement, the Advisor manages the
Fund's investment subject to approval of the Board of Trustees and pays
all of the expenses of the Fund except brokerage, taxes, interest and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 1.40% of its average daily net assets to and including
$100,000,000, 1.15% of such assets from $100,000,000 to and including
$250,000,000, and .90% of such assets in excess of $250,000,000. For the
period from January 1, 1995, the Fund's inception, through November 30,
1995, the Fund paid fees of $9,923 to the Advisor. For the period from
December 1, 1995 through November 30, 1996, the Fund paid fees of $47,950
to the Adviser. For the period from December 1, 1996 through November 30,
1997, the Fund paid fees of $112,787 to the Advisor.
The Advisor retains the right to use the names "IPS" and "Millennium" in
connection with another investment company or business enterprise with
which the Advisor is or may become associated. The Fund's right to use
the names "IPS" and "Millennium" automatically ceases thirty days after
termination of the Management Agreement and may be withdrawn by the
Advisor on thirty days written notice.
The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts.
The Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of
this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of
the Fund believes that the Glass-Steagall Act should not preclude a bank
from providing such services. However, state securities laws on this
issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as
dealers pursuant to state law. If a bank were prohibited from continuing
to perform all or a part of such services, management of the Fund
believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these
services to the extent permitted by applicable regulatory authorities,
and the overall return to those shareholders availing themselves of the
bank services will be lower than to those shareholders who do not. The
Fund may from time to time purchase securities issued by banks which
provide such services; however, in selecting investments for the Fund, no
preference will be shown for such securities.
Dividends, Distributions and Taxes
- ----------------------------------
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 Internal
Revenue Code. Under Subchapter M, the Fund will be taxed only on that
portion of such investment company taxable income that it retains.
Dividends generally are taxable to shareholders at the time they are
paid. However, dividends declared in December and made payable to
shareholders of record in the following month are treated as paid and are
thereby taxable as of December 31, provided that the Fund pays the
dividend no later than the end of January of the following year.
Investors who do not elect to receive their dividends and distributions
in cash, can reinvest all income dividends and capital gains
distributions as additional Fund shares. If reinvested automatically,
the additional shares will be purchased at the net asset value determined
on the first business day following the record date.
All dividends and capital gains are taxable, whether they are reinvested
or received in cash, unless investors 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.
Dividends and capital gains distributions may also be subject to state or
local taxes. Shareholders should consult their tax advisors to discuss
their personal tax situation.
Transfer Agent
- --------------
The Fund's Transfer Agent is IPS Advisory, Inc., 625 S. Gay Street, Suite
630, Knoxville, TN 37902. The Transfer Agent performs shareholder
service functions such as maintaining the records of each shareholder's
account, answering shareholders' inquiries concerning their accounts,
processing purchase and redemptions of the Fund's shares, acting as
dividend and distribution disbursing agent and performing other
accounting and shareholder service functions.
Custodian
- ---------
The Provident Bank, One East Fourth Street, Cincinnati, Ohio 45202, is
the Custodian of the Fund's investments. The Custodian acts as the
Fund's depository, safekeeps its portfolio securities, collects all
income and other payments with respect thereto, disburses funds at the
Fund's request and maintains records in connection with its duties.
Independent Accountants
- -----------------------
The independent accounting firm for the Fund is Cherry Bekaert Holland,
L.L.P., Certified Public Accountants, located at 625 S. Gay Street, Suite
550, Knoxville, TN 37902. Cherry Bekaert Holland, L.L.P. performs an
annual audit of the Trust's financial statements and provides financial,
tax and accounting consulting services as requested.
Portfolio Transactions and Brokerage
- ------------------------------------
Subject to policies established by the Board of Trustees of the Fund, the
Advisor is responsible for the Fund's portfolio decisions and the placing
of the Fund's portfolio transactions.
In placing portfolio transactions, the Advisor seeks the best qualitative
execution for the Fund, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the
broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and
commission rates that are reasonable in relation to the benefits
received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Trust and/or the
other accounts over which the Advisor exercises investment discretion and
to pay such brokers or dealers a commission in excess of the commission
another broker or dealer would charge if the Advisor determines in good
faith that the commission is reasonable in relation to the value of the
brokerage and research services provided. The determination may be
viewed in terms of a particular transaction or the Advisor's overall
responsibilities with respect to the Trust and to other accounts over
which it exercises investment discretion.
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and
analyses of reports concerning performance of accounts. The research
services and other information furnished by brokers through whom the Fund
effects securities transactions may also be used by principals of the
Advisor in servicing all of their accounts. Similarly, research and
information provided by brokers or dealers serving other clients may be
useful to principals of the Advisor in connection with the Advisor's
services to the Fund. Although research services and other information
are useful to the Fund and the Advisor, it is not possible to place a
dollar value on the research and other information received. It is the
opinion of the Board of Trustees and the Advisor that the review and
study of the research and other information will not reduce the overall
cost to the Advisor of performing its duties to the Fund under the
Agreement. While the Fund does not deem it practicable and in its best
interests to solicit competitive bids for commission rates on each
transaction, consideration is regularly given to posted commission rates
as well as other information concerning the level of commissions charged
on comparable transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that the
Underwriter, in its capacity as a registered broker-dealer, will effect
substantially all securities transactions which are executed on a
national securities exchange and over-the-counter transactions conducted
on an agency basis. Such transactions will be executed at competitive
commission rates through National Financial Services Corporation
("NFSC").
Transactions in the over-the-counter market can be placed directly with
market makers who act as principals for their own account and include
mark-ups in the prices charged for over-the-counter securities.
Transactions in the over-the-counter market can also be placed with
broker-dealers who act as agents and charge brokerage commissions for
effecting over-the-counter transactions. The Fund may place its
over-the-counter transactions either directly with principal market
makers, or with broker-dealers if that is consistent with the Advisor's
obligation to obtain best qualitative execution. Under the Investment
Company Act of 1940, persons who may be deemed to be affiliated with the
Advisor such as the Underwriter are prohibited from dealing with the Fund
as a principal in the purchase and sale of securities. Therefore, the
Underwriter will not serve as the Fund's dealer in connection with
over-the-counter transactions. However, the Underwriter may serve as the
Fund's broker in over-the-counter transactions conducted on an agency
basis and will receive brokerage commissions in connection with such
transactions. Such agency transactions will be executed through NFSC.
The Fund will not effect any brokerage transactions in its portfolio
securities with the Underwriter if such transactions would be unfair or
unreasonable to Fund shareholders, and the commissions will be paid
solely for the execution of trades and not for any other services. The
Underwriting Agreement provides that the Underwriter may receive
brokerage commissions in connection with effecting such transactions for
the Fund. In determining the commissions to be paid to the Underwriter,
it is the policy of the Fund that such commissions will, in the judgment
of the Fund's Board of Trustees, be (a) at least as favorable to the Fund
as those which would be charged by other qualified brokers having
comparable execution capability and (b) at least as favorable to the Fund
as commissions contemporaneously charged by the Underwriter on comparable
transactions for its most favored unaffiliated customers, except for
customers of the Underwriter considered by a majority of the Trust's
disinterested Trustees not to be comparable to the Fund. The
disinterested Trustees from time to time review, among other things,
information relating to the commissions charged by the Underwriter to the
Fund and its other customers, and rates and other information concerning
the commissions charged by other qualified brokers.
Any profits from brokerage commissions earned by the Underwriter as a
result of portfolio transactions for the Fund will accrue to Greg D'Amico
and Robert Loest as registered representatives of the Underwriter. The
Agreement does not provide for a reduction of the Advisor's fee by the
amount of any profits earned by the Underwriter from brokerage
commissions generated from portfolio transactions of the Fund.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to
other firms. The Underwriter will not receive reciprocal brokerage
business as a result of the brokerage business placed by the Fund with
others.
To the extent that the Fund and another of the Advisor's clients seek to
acquire the same security at about the same time, the Fund may not be
able to acquire as large a position in such security as it desires or it
may have to pay a higher price for the security. Similarly, the Fund may
not be able to obtain as large an execution of an order to sell or as
high a price for any particular portfolio security if the other client
desires to sell the same portfolio security at the same time. On the
other hand, if the same securities are bought or sold at the same time by
more than one client, the resulting participation in volume transactions
could produce better executions for the Fund. In the event that more
than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be allocated on a random
selection basis.
For the fiscal years ended November 30, 1995, November 30, 1996, and
November 30, 1997, the Fund paid brokerage commissions of $5,251,
$10,980, and $10,332, respectively, to Securities Service Network, Inc.
for effecting 100% of the Fund's commission transactions.
Net Asset Value
- ---------------
Shares of the Fund are purchased at the next offering price after the
order is received. The offering price is effective for orders received
by the transfer agent or the Custodian prior to the time of determination
of the net asset value prior to the close of business.
The net asset value is determined at the close of the New York Stock
Exchange each day that the exchange is open. The Exchange is closed on
weekends and on New Years Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, July 4, Labor Day, Thanksgiving Day,
and Christmas each year. Securities traded on the New York Stock Exchange,
the American Stock Exchange, or the NASDAQ National Market System are
valued at the last sale price or the last bid price if there is no sale.
Securities or other assets for which quotations are not readily available
are valued at fair values determined in good faith by the Board of Trustees.
See "Net Asset Value" in the Prospectus.
Performance
- -----------
The average annual total return that will be reported by the Fund will be
calculated according to the following formula:
P(1+T)n = ERV
Where: P is a hypothetical initial Payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of hypothetical $1,000
payment made at the beginning of the 1, 5, or 10
year periods (or fractional portion thereof).
All total return figures reflect the deduction of a proportional share of
Fund expenses on an annual basis, and assume that all dividends and
distributions are reinvested in the Fund when paid.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the
Fund may be compared to indices of broad groups of unmanaged securities
considered to be representative of or similar to the portfolio holdings
of the Fund or considered to be representative of the stock market in
general or the fixed income securities market in general. The Fund may
use the Standard & Poor's 500 Stock Index, the Dow Jones Industrial
Average, the Value Line Composite Average, and the NASDAQ Composite
Index, as well as other appropriate indexes.
In addition, the performance of the Fund may be compared to other groups
of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives
and assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc.
The objectives, policies, limitations and expenses of other mutual funds
in a group may not be the same as those of the Fund. Performance
rankings and ratings reported periodically in national financial
publications such as Barron's may also be used.
The following table provides the total rates of return for the Fund from
its inception to Nov. 30, 1997
1 year (December 1, 1996 - Nov. 30, 1997) 18.75%;
2 year (December 1, 1995 - Nov. 30, 1997) 59.6%;
Since Inception (January 3, 1995 - Nov. 30, 1997) - 89.52%
CHERRY BEKAERT HOLLAND, L.L.P.
FINANCIAL STATEMENTS
The audited financial statements of the Fund are incorporated by
reference from the Fund's Annual Report to Shareholders for the fiscal
year ended Nov. 30, 1997. A copy of such report accompanies this
Statement of Additional Information. Additional copies are available,
without charge by calling the Fund.
<PAGE>
IPS FUNDS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A: Financial Highlights, For the Years Ended November 30,
1997, 1996 and 1995
Incorporated by reference from Annual Report
(1) Report of Independent Certified Public Accountant
(2) Statement of Assets and Liabilities - November 30, 1997
(3) Investments in Securities - November 30, 1997
(4) Statement of Operations - for the year ended November 30, 1997
(5) Statement of Changes in Net Assets - for the years ended November 30, 1997
and November 30, 1996
(6) Notes to Financial Statements
(7) Financial Highlights, Selected Per Share Data and Ratios - For the Years
Ended November 30, 1997, 1996 and 1995
(b) Exhibits
(1) (i) Copy of Registrant's Declaration of Trust, which was filed as
an Exhibit to Registrant's Registration Statement, is hereby
incorporated by reference.
(ii) Copy of Amendment No. 1 to Registrant's Declaration of Trust,
which was filed as an exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by reference.
(2) Copy of Registrant's By-Laws, as amended, which was filed as an
exhibit to Registrant's Pre-Effective Amendment No. 1, is hereby
incorporated by reference.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificate for IPS Millennium Fund, which was
filed as an exhibit to Registrant's Pre-Effective Amendment No. 1,
is hereby incorporated by reference.
(5) Copy of Registrant's Management Agreement with its Advisor, IPS
Advisory, Inc., which was filed as an exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby incorporated by reference.
(6) Copy of Registrant's Underwriting Agreement with Securities Service
Network, Inc., which was filed as an exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby incorporated by reference.
(7) Bonus, Profit Sharing, Pension or Similar Contracts for the benefit
of Directors or Officers - None.
(8) Copy of Registrant's Agreement with the Custodian, The Provident
Bank, which was filed as an exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by reference.
(9) Other Material Contracts - None.
(10) Opinion and Consent of Kilpatrick Stockton LLP which was filed with
Registrant's Rule 24f-2 Notice for the fiscal year ended November
30, 1997, is hereby incorporated by reference.
(11) Consent of Cherry, Bekaert Holland, L.L.P. is filed herewith.
(12) Financial Statements Omitted from Item 23 - None.
(13) Letters of Initial Stockholders, which was filed as an exhibit to
Registrant's Pre-Effective Amendment No. 1, is hereby incorporated
by reference.
(14) Model Plan used in Establishment of any Retirement Plan - None.
(15) 12b-1 Distribution Expense Plan - None.
(16) Schedule for Computation of Each Performance Quotation was filed
with Registrant's Post-Effective Amendment No. 2 and is incorporated
by reference herein.
(17) Financial Data Schedule (incorporated by reference from Registrant's
Form NSAR filing for the fiscal year ended November 30, 1997
(18) Power of Attorney - See signature page to this Post Effective
Amendment
Item 25. Persons Controlled by or Under Common Control with the
Registrant - None
Item 26. Number of Holders of Securities (as of March 17, 1998)
Title of Class Number of Record Holders
- -------------- ------------------------
IPS Millennium Fund 618
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust provides for
indemnification of officers and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers, etc.
Subject to and except as otherwise provided in the
Securities Act of 1933, as amended, and the 1940 Act, the Trust
shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers
or trustees of another organization in which the Trust has any
interest as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense
or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such
person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee
or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the
Trust or its Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall
advance attorneys' fees or other expenses incurred by a Covered
Person in defending a proceeding to the full extent permitted
by the Securities Act of 1933, as amended, the 1940 Act, and
Ohio Revised Code Chapter 1707, as amended. In the event any
of these laws conflict with Ohio Revised Code Section
1701.13(E), as amended, these laws, and not Ohio Revised Code
Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article VI shall not
be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article VI,
"Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the
Trust, other than Trustees and officers, and other persons
may be entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance
on behalf of any such person.
The Registrant may not pay for insurance which protects the Trustees
and officers against liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their offices.
(b) The Registrant may maintain a standard mutual fund and investment
advisory professional and directors and officers liability policy.
The policy, if maintained, would provide coverage to the Registrant,
its Trustees and officers, and its Advisor, among others. Coverage
under the policy would include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect or breach of
duty.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the provisions of
Ohio law and the Agreement and Declaration of the Registrant or the
By-Laws of the Registrant, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such; indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
trustee, officer or controlling person of the Trust in the
successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) Sections 10 and 11 of the Registrant's Underwriting Agreement with
Securities Service Network, Inc. (the "Underwriter") provide for
indemnification of the Underwriter and the Underwriter's employees
as well as advances of attorney's fees and other expenses. The
scope and limitations of these provisions are analogous to Sections
6.4 and 6.5 of the Registrant's Declaration of Trust, set forth in
Item 27(a) of this Part C.
Item 28. Business and Other Connections of Investment Advisor
A. IPS Advisory, Inc. (the "Advisor") is a registered investment
advisor. It has engaged in no other business during the past two
fiscal years.
B. The following list sets forth the business and other connections of
the Directors and officers of the Advisor during the past two years.
(1) Gregory D'Amico
(a) President and a Director of IPS Advisory, Inc.,
Suite 630, 625 South Gay Street, Knoxville,
Tennessee 37902.
(b) President, Chief Financial Officer, Treasurer
and a Trustee of IPS Funds, Suite 630, 625
South Gay Street, Knoxville, Tennessee 37902.
(c) Registered representative of Securities Service
Network, Inc., 222 S. Peters Road, Knoxville,
Tennessee 37923.
(2) Robert Loest
(a) Chief Executive Officer and a Director of IPS
Advisory, Inc., Suite 630, 625 South Gay Street,
Knoxville, Tennessee 37902.
(b) Vice President, Secretary and a Trustee of IPS
Funds, Suite 630, 625 South Gay Street,
Knoxville, Tennessee 37902.
(c) Registered representative of Securities Service
Network, Inc., 222 S. Peters Road, Knoxville,
Tennessee 37923.
Item 29. Principal Underwriters
(a) Securities Service Network, Inc. does not currently act as a
principal underwriter for any other investment company.
(b)
Position With Position With
Name Underwriter Registrant
- ---- -------------- -------------
Carl President
Hollingsworth and Director None
David Secretary
Coffey and Director None
Michael E. Executive Vice
Neubeck President None
Carl
Hollingsworth Treasurer None
The address of all of the above-named persons is 9041 Executive Park
Drive, Suite 500, Knoxville, Tennessee 37923.
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at Suite 630, 625 South Gay Street, Knoxville,
Tennessee 37902, and/or by The Provident Bank, the
Registrant's Custodian at One East Fourth Street, Cincinnati,
Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant hereby undertakes to furnish each person to whom
a Prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and without
charge.
(d) The Registrant hereby undertakes that, within five business
days after receipt of a written application by shareholders
holding in the aggregate at least 1% of the shares then
outstanding or shares then having a net asset value of $25,000,
whichever is less, each of whom shall have been a shareholder
for at least six months prior to the date of application
(hereinafter the "Petitioning Shareholders"), requesting to
communicate with other shareholders with a view to obtaining
signatures to a request for a meeting for the purpose of voting
upon such removal of any Trustee of the Registrant, which
application shall be accompanied by a form of communication and
request which such Petitioning Shareholders wish to transmit,
Registrant will:
(i) provide such Petitioning Shareholders with access to
a list of the names and addresses of all shareholders of
the Registrant; or
(ii) inform such Petitioning Shareholders of the
approximate number of shareholders and the estimated costs
of mailing such communication, and to undertake such
mailing promptly after tender by such Petitioning
Shareholders to the Registrant of the material to be
mailed and the reasonable expenses of such mailing.
The Registrant also undertakes to promptly call a meeting for the
purpose of voting upon the question of the removal of any Trustee
when requested in writing to do so by the record holders of not less
than 10% of the outstanding shares.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and the
Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Knoxville, State of Tennessee, on the 30th day of March, 1998.
IPS FUNDS
By: \s\ Gregory D'Amico
Gregory D'Amico, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gregory D'Amico and Robert Loest,
jointly and severally, his attorneys-in-fact, each with power of
substitution for him in any and all capacities, to sign any amendments to
this Registration Statement, and to file the same, with the exhibits
thereto, and other documents in connection therewith, with the Securities
and Exchange Commission hereby ratifying and confirming all that each of
said attorneys-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
/s/Gregory D'Amico Date: 3/30/98
Gregory D'Amico, President
Chief Financial Officer
Treasurer and Trustee
/s/Robert Loese Date: 3/30/98
Robert Loest, Trustee
/s/Woodrow Henderson Date: 3/30/98
Woodrow Henderson, Trustee
_/s/Vanita Bisaria Date: 3/30/98
Vanita Bisaria, Trustee
/s/Bill Stegall Date: 3/30/98
Bill Stegall
<PAGE>
EXHIBIT INDEX
99B.11 Consent of Cherry, Bekaert Holland, L.L.P
Exhibit 99
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants for IPS Funds, we
hereby consent to all references to our firm included in or made a
part of IPS Funds Post-Effective Amendment No. 4 to the Registration
Statement on Form N-1A of the IPS Funds. We also consent to the use of
our report dated November 30, 1997 on the financial statements and per
share data and ratios of the IPS Millinneum Fund in connection with the
Registration Statement.
CHERRY, BEKAERT HOLLAND, L.L.P.
/s/
March 30, 1998
