As filed with the Securities and Exchange Commission
on May 26, 1999
1933 Act Registration Number 33-85982
1940 Act Registration Number 811-8846
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment [ ]
------------
Post-Effective Amendment No. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11 [X]
-------------------------------------------------
FIRST OMAHA FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
ONE FIRST NATIONAL CENTER
OMAHA, NE 68102-1596
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(402) 341-0500
MARC M. DIEHL
ONE FIRST NATIONAL CENTER
OMAHA, NE 68102-1596
(Name and Address of Agent for Service)
-------------------------------------------------
Copies of all communications to:
DONALD F. BURT, ESQ. RANDY M. PAVLICK
CLINE, WILLIAMS, WRIGHT, JOHNSON SUNSTONE FINANCIAL GROUP, INC.
& OLDFATHER 207 E. BUFFALO, SUITE 400
1900 FIRSTIER BANK BUILDING MILWAUKEE, WI 53202
LINCOLN, NE 68508
-------------------------------------------------
It is proposed that this filing will become effective 60 days after filing
pursuant to Rule 485(a)(1) under the Securities Act of 1933.
Registrant elects to register an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 and under the Investment Company
Act of 1940. Registrant intends to file the notice required by Rule 24f-2 with
respect to its fiscal ended March 31, 1999 on or about June 14, 1999.
kg 51096
xxxxx
FIRST OMAHA FUNDS
- -----------------
A family of no-load mutual funds
- - FIRST OMAHA U.S. GOVERNMENT MONEY MARKET FUND
- - FIRST OMAHA SHORT/INTERMEDIATE FIXED INCOME FUND/R
- - FIRST OMAHA FIXED INCOME FUND/R
- - FIRST OMAHA BALANCED FUND/R
- - FIRST OMAHA EQUITY FUND/R
- - FIRST OMAHA GROWTH FUNDSM
- - FIRST OMAHA SMALL CAP VALUE FUND/R
Prospectus dated July 26, 1999
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, the First National Bank of Omaha, FNC Trust Group, n.a., First
National Colorado, Inc., their parent, First National of Nebraska, Inc., or any
of their affiliates. Shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other governmental
agency. An investment in a Fund involves certain investment risks, including
the possible loss of principal.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
CONTENTS
THE FUNDS
Principal investment strategies and risks, expenses, and performance
First Omaha U.S. Government Money Market Fund...................4
First Omaha Short/Intermediate Fixed Income Fund................6
First Omaha Fixed Income Fund..................................10
First Omaha Balanced Fund......................................14
First Omaha Equity Fund........................................18
First Omaha Growth Fund........................................22
First Omaha Small Cap Value Fund...............................25
YOUR INVESTMENT
Buying and selling shares, account policies, and management
Buying shares..................................................29
Selling shares.................................................30
Exchanging shares..............................................31
Transaction policies...........................................31
Dividends and taxes............................................34
Management of the company......................................35
Financial Highlights...........................................38
FOR MORE INFORMATION...................................Back cover
THE FUNDS
FIRST OMAHA U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------------------
OBJECTIVE
The investment objective of the Money Market Fund is maximum current income
while preserving capital and maintaining liquidity.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENTS. The Money Market Fund invests only in U.S. dollar-
denominated instruments that the adviser determines present minimal credit
risks. They must be rated at purchase in one of the two highest rating
categories of a national rating organization, or if unrated, considered at
purchase to be of comparable quality by the Fund's investment adviser. The Fund
will invest no more than 5% of its assets in securities rated in the second
highest category.
All securities in which the Fund invests mature within 397 calendar days. The
dollar-weighted average maturity of the Fund's securities will not exceed 90
days.
The Fund may invest in:
- - U.S. Treasury obligations, offering varied interest rates, maturities, and
times of issuance. These include "stripped" obligations such as Treasury
Receipts, representing either future interest or principal payments.
- - Obligations issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities.
- - Repurchase agreements.
PRINCIPAL RISKS
Preservation of value. An investment in the Fund is not a deposit of the bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the Fund.
Interest rate. Changes in interest rates affect the value of the Fund's debt
securities, including securities issued or guaranteed by the U.S. government or
other government agencies. The rate of income on Fund shares will vary from day
to day so that dividends on your investment will vary. The Fund is subject to
interest rate risk; when interest rates increase, fixed income securities will
decline in value.
Stripped securities. Stripped securities are issued at a discount to their face
value and may be more volatile than ordinary debt securities because of the way
their principal and interest are returned to investors.
Repurchase agreements. If the seller of a repurchase agreement defaults, the
Fund may be exposed to possible loss because of adverse market conditions or a
delay in selling the underlying securities to another person.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year and the table shows the Fund's average annual returns. The
variability of performance over time provides an indication of the risks of
investing in the Fund. As with all mutual funds, past performance is no
guarantee of future results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1992 3.27
1993 2.56
1994 3.56
1995 5.36
1996 4.80
1997 4.90
1998 4.81
The Fund's total return for the three-month period ended March 31, 1999 was
1.02%.
- ----------------------------------------
Best Quarter 2Q 1995 1.36%
- ----------------------------------------
Worst Quarter 2Q 1993 0.61%
- ----------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- ------------------------------------------------------------------------------
1 Year 5 Year Since Inception (12/4/91)
- ------------------------------------------------------------------------------
U.S. Government Obligations Fund 4.81% 4.68% 4.18%
- ------------------------------------------------------------------------------
The performance information stated above, from inception through April 9, 1995,
relates to a predecessor mutual fund, First Omaha U.S. Government Money Market
Fund, which began operations on December 4, 1991. The Fund acquired all of the
net assets of the predecessor mutual fund on April 9,1995.
EXPENSES
- --------
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- ------------------------------------------------------------------------
FEE TABLE U.S. GOVERNMENT OBLIGATIONS FUND
- --------- --------------------------------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.25%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.33%
Total Fund Operating Expenses <F1> 0.59%
- ------------------------------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.25% and
0.29%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 0.54%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$60 $189 $329 $738
- --------------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
FIRST OMAHA SHORT/INTERMEDIATE FIXED INCOME FUND/R
- --------------------------------------------------
OBJECTIVE
This Fund seeks generation of current income consistent with the preservation of
capital.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Principal investments. Under normal market conditions, this Fund intends to
invest primarily all, but must invest at least 65%, of its assets in fixed
income securities, consisting of
- - bonds, notes and debentures from a wide range of U.S. corporate issuers
- - mortgage-related securities
- - state, municipal or industrial revenue bonds
- - obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities
- - fixed income securities that can be converted into or exchanged for common
stock
- - U.S. Treasury obligations
The Fund's investment strategy emphasizes fundamental analysis, relative value,
and a long-term outlook. The adviser looks for securities that appear to be
underpriced compared to other investments available and that keep the Fund
diversified.
Fixed income securities are chosen so their maturities are staggered, to manage
reinvestment risk and value fluctuations. However, the adviser can go outside
this laddered approach if the adviser believes a security appears to offer
greater relative value.
The Fund seeks to maintain a dollar-weighted average portfolio maturity of two
to five years and is expected to be somewhat less volatile than the Fixed Income
Fund. To calculate maturity, the adviser uses each instrument's ultimate
maturity date, or the probable date of a call, refunding or redemption
provision, or other maturity-shortening device. For securities expected to be
repaid before their maturity date (such as mortgage-backed securities), the
adviser uses the effective maturity, which is shorter than the stated maturity.
The fixed income securities in which the Fund invests will be "investment
grade," which means they will be
- - rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation, or
- - if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.
Mortgage-related securities. Under normal market conditions, the Fund will
invest no more than 25% of its assets in mortgage-related securities, which are
backed by obligations such as
- - conventional 30 year fixed rate mortgages
- - fifteen year mortgages
- - adjustable rate mortgages
Mortgage-related securities are pass-through securities--an interest in a pool
or pools of mortgage obligations. The cash flow from the mortgage obligations is
"passed through" to the securities' holders as periodic payments of interest,
principal and prepayments (net of service fees).
Other mortgage securities the Fund may purchase include collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs), some
of which are issued privately. CMOs may be collateralized by whole mortgage
loans or, more typically, by portfolios of pass-through securities guaranteed by
the Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Federal National Mortgage Association.
PRINCIPAL RISKS. The value of the Fund's shares depends on the value of the
securities it owns. An investment in the Funds is not a deposit of the bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency The value of your investment may fluctuate
significantly, which means you could lose money.
General market risks. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.
Interest rate risk. Changes in interest rates affect the value of the Fund's
debt securities, including securities issued or guaranteed by the U.S.
government or other government agencies. When interest rates rise, the value of
the Fund's securities and its shares will decline. The opposite occurs when
interest rates fall. A change in interest rates will also affect the amount of
income the Fund generates.
Credit risk. The value of the Fund's fixed income securities is affected by the
issuer's continued ability to make interest and principal payments. The Fund
could lose money if the issuers cannot meet their financial obligation or go
bankrupt.
Reinvestment risk. When interest rates decline, cash flows from maturing
securities may have to be reinvested at a lower rate.
Prepayment risk. Mortgage- and asset-backed securities involve prepayment risk,
which is the risk that the underlying mortgages or other debts may be refinanced
or paid off before they mature during a period of declining interest rates. That
will tend to lower the Fund's return and could result in losses to the Fund if
it acquired some securities at a premium. Due to prepayments and the need to
reinvest principal payments at current rates, mortgage-related securities may be
less effective than bonds at maintaining yields when interest rates decline.
Mortgage-related securities may be more volatile than other fixed income
securities.
Securities ratings. Securities rated in the lowest of the investment grade
categories (e.g., Baa or BBB) are considered more speculative than higher rated
securities. Their issuers may not be as financially strong as those of higher
rated bonds and may be more vulnerable to periods of economic uncertainty or
downturn.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table gives some indication of the risks of an investment in
the Fund by comparing the Fund's performance over time to that of the Lehman
Bros. Mutual Fund Short (1-5) U.S. Gov't Index, an index made up of the Treasury
Bond Index (all public obligations of the U.S. Treasury, excluding flower bonds
and foreign-targeted issues) and the Agency Bond Index (all publicly issued debt
of the U.S. government agencies and quasi-federal corporations, and corporate
debt guaranteed by the U.S. government). Both the bar chart and table assume
reinvestment of dividends and distributions. The returns for this index do not
reflect any fees or expenses. It is not possible to make a direct investment in
an index. As with all mutual funds, past performance is no guarantee of future
results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1991 17.61
1992 5.85
1993 6.38
1994 (1.33)
1995 12.74
1996 3.38
1997 6.71
1998 7.76
The Fund's total return for the three-month period ended March 31, 1999 was
- -0.72%.
- ------------------------------------------
Best Quarter 1Q 1991 8.38%
- ------------------------------------------
Worst Quarter 1Q 1994 (1.31)%
- ------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- -------------------------------------------------------------------------------
1 Year 5 Year Since Inception (1/1/91)
- -------------------------------------------------------------------------------
Short/Intermediate
Fixed Income Fund 7.75% 5.75% 7.25%
- -------------------------------------------------------------------------------
Lehman Bros. Mutual Fund Short
(1-5) U.S. Gov't Bond Index 7.65% 6.16% 7.14%
- -------------------------------------------------------------------------------
The above performance information of this Fund includes the performance of the
Fund's respective predecessor mutual fund and common trust fund. Performance
data from December 13, 1992 through April 9, 1995 relates to a predecessor
mutual fund, First Omaha Short/Intermediate Fixed Income Fund. The Fund acquired
all of the net assets of the predecessor mutual fund on April 9,1995. The
performance prior to December 13, 1992 relates to a predecessor common trust
fund. The common trust fund was managed by First National Bank of Omaha, which
manages the Fund. The bar chart and table above include information regarding
the common trust fund's operations for periods before the Fund's registration
statement became effective, as adjusted to reflect the higher expenses incurred
by the Funds. The common trust fund was not registered under the Investment
Company Act of 1940 and therefore was not subject to certain investment
restrictions that are imposed by that Act. If the common trust fund had been
registered, its performance might have been adversely affected.
EXPENSES
- --------
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- ----------------------------------------------------------------------------
FEE TABLE SHORT/INTERMEDIATE FIXED INCOME FUND
- --------- ------------------------------------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.50%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.63%
Total Fund Operating Expenses <F1> 1.14%
- ----------------------------------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.45% and
0.52%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 0.97%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- ---------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$116 $362 $628 $1,386
- ---------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
FIRST OMAHA FIXED INCOME FUND/R
- -------------------------------
OBJECTIVE
This Fund seeks current income consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Principal investments. Under normal market conditions, the Fund intends to
invest primarily all, but must invest at least 65%, of its assets in fixed
income securities, consisting of
- - bonds, notes and debentures from a wide range of U.S. corporate issuers
- - mortgage-related securities
- - state, municipal or industrial revenue bonds
- - obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities
- - fixed income securities that can be converted into or exchanged for common
stock
The Fund's investment strategy emphasizes fundamental analysis, relative value,
and a long-term outlook. The adviser looks for securities that appear to be
underpriced compared to other investments available and that keep the Fund
diversified.
Fixed income securities are chosen so their maturities are staggered, to manage
reinvestment risk and value fluctuations. However, the adviser can go outside
this laddered approach if the adviser believes a security appears to offer
greater relative value.
The Fund seeks to maintain a dollar-weighted average portfolio maturity of five
years or more. To calculate maturity, the adviser uses each instrument's
ultimate maturity date, or the probable date of a call, refunding or redemption
provision, or other maturity-shortening device. For securities expected to be
repaid before their maturity date (such as mortgage-backed securities), the
adviser uses the effective maturity, which is shorter than the stated maturity.
The fixed income securities in which the Fund invests will be "investment
grade," which means they will be
- - rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation, or
- - if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.
Mortgage-related securities. Under normal market conditions, the Fund will
invest no more than 25% of its value in mortgage-related securities, which are
backed by obligations such as
- - conventional 30 year fixed rate mortgages
- - fifteen year mortgages
- - adjustable rate mortgages
Mortgage-related securities are pass-through securities--an interest in a pool
or pools of mortgage obligations. The cash flow from the mortgage obligations is
"passed through" to the securities' holders as periodic payments of interest,
principal and prepayments (net of service fees).
Other mortgage securities the Fund may purchase include collateralized mortgage
obligations (CMOs) and real estate mortgage investment conduits (REMICs), some
of which are issued privately. CMOs may be collateralized by whole mortgage
loans or, more typically, by portfolios of pass-through securities guaranteed by
the Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Federal National Mortgage Association.
PRINCIPAL RISKS. The value of the Fund's shares depends on the value of the
securities it owns. An investment in the Funds is not a deposit of the bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. The value of your investment may fluctuate
significantly, which means you could lose money.
General market risks. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.
Interest rate risk. Changes in interest rates affect the value of the Fund's
debt securities, including securities issued or guaranteed by the U.S.
government or other government agencies. When interest rates rise, the value of
the Fund's securities and its shares will decline. The opposite occurs when
interest rates fall. A change in interest rates will also affect the amount of
income the Fund generates.
Credit risk. The value of the Fund's fixed income securities is affected by the
issuer's continued ability to make interest and principal payments. The Fund
could lose money if the issuers cannot meet their financial obligation or go
bankrupt.
Reinvestment risk. When interest rates decline, cash flows from maturing
securities may have to be reinvested at a lower rate.
Prepayment risk. Mortgage- and asset-backed securities involve prepayment risk,
which is the risk that the underlying mortgages or other debts may be refinanced
or paid off before they mature during a period of declining interest rates. That
will tend to lower the Fund's return and could result in losses to the Fund if
it acquired some securities at a premium. Due to prepayments and the need to
reinvest principal payments at current rates, mortgage-related securities may be
less effective than bonds at maintaining yields when interest rates decline.
Mortgage-related securities may be more volatile than other fixed income
securities.
Securities ratings. Securities rated in the lowest of the investment grade
categories (e.g., Baa or BBB) are considered more speculative than higher rated
securities. Their issuers may not be as financially strong as those of higher
rated bonds and may be more vulnerable to periods of economic uncertainty or
downturn.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table gives some indication of the risks of an investment in
the Fund by comparing the Fund's performance over time to that of the Lehman
Bros. Gov't/Corp. Bond Index, an index that includes all public obligations of
the U.S. Treasury, excluding flower bonds and foreign-targeted issues; all
publicly issued debt of U.S. government agencies and quasi-federal corporations,
and corporate debt guaranteed by the U.S. government; and all publicly issued,
fixed rate, nonconvertible, investment grade, dollar-denominated, SEC-registered
corporate debt (including debt issued or guaranteed by foreign sovereign
governments, municipalities, or governmental agencies, or international
agencies). Both the bar chart and table assume reinvestment of dividends and
distributions. The returns for this index do not reflect any fees or expenses.
It is not possible to make a direct investment in an index. As with all mutual
funds, past performance is no guarantee of future results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1989 13.67
1990 7.62
1991 14.13
1992 7.55
1993 11.06
1994 (4.73)
1995 20.43
1996 0.89
1997 9.47
1998 9.37
The Fund's total return for the three-month period ended March 31, 1999 was
- -1.78%.
- ------------------------------------------
Best Quarter 2Q 1989 7.50%
- ------------------------------------------
Worst Quarter 1Q 1996 (3.40)%
- ------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- --------------------------------------------------------------------------------
Since Inception
1 Year 5 Year 10 Year (1/31/75)
- --------------------------------------------------------------------------------
Fixed Income Fund 9.37% 6.75% 8.74% 8.90%
- --------------------------------------------------------------------------------
Lehman Bros. Gov't/Corp.
Bond Index 9.47% 7.30% 9.34% 9.63%
- --------------------------------------------------------------------------------
The above performance information of this Fund includes the performance of the
Fund's respective predecessor mutual fund and common trust fund. Performance
data from December 13, 1992 through April 9, 1995 relates to a predecessor
mutual fund, First Omaha Fixed Income Fund. The Fund acquired all of the net
assets of the predecessor mutual fund on April 9,1995. The performance prior to
December 13, 1992 relates to a predecessor common trust fund. The common trust
fund was managed by First National Bank of Omaha, which manages the Fund. The
bar chart and table above include information regarding the common trust fund's
operations for periods before the Fund's registration statement became
effective, as adjusted to reflect the higher expenses incurred by the Funds. The
common trust fund was not registered under the Investment Company Act of 1940
and therefore was not subject to certain investment restrictions that are
imposed by that Act. If the common trust fund had been registered, its
performance might have been adversely affected.
EXPENSES
- --------
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- ---------------------------------------------------------
FEE TABLE FIXED INCOME FUND
- --------- -----------------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.60%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.45%
Total Fund Operating Expenses <F1> 1.06%
- ---------------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.55% and
0.33%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 0.88%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- --------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$108 $337 $585 $1,294
- --------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
FIRST OMAHA BALANCED FUND/R
- ---------------------------
OBJECTIVE
The investment objective of the Balanced Fund is capital appreciation and
current income.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENTS. Based on the adviser's assessment of market conditions,
the Balanced Fund will allocate its assets among stocks, fixed income
securities, and cash equivalents. The Fund will normally invest 35% to 65% of
its total assets in stocks and convertible securities, and at least 35% of its
total assets in fixed income securities.
Investments may include:
- - common stock
- - securities convertible into common stock (convertible bonds, convertible
preferred stock, warrants, options and rights)
- - investment grade corporate debt
- - U.S. Treasury obligations
- - obligations issued by the U.S. government, its agencies or instrumentalities
- - cash equivalents
- - mortgage-related and asset-backed securities
- - state, municipal or industrial revenue bonds
- - fixed income securities permissible for the Fixed Income Fund
In general, the equity portion of the Balanced Fund will mirror the Equity
Fund's holdings. The fixed income portion will mirror the holdings of the Fixed
Income Fund.
The fixed income securities in which the Fund invests will be "investment
grade," which means they will be
- - rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation, or
- - if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.
PRINCIPAL RISKS. The value of the Fund's shares depends on the value of the
securities it owns. An investment in the Funds is not a deposit of the bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. The value of your investment may fluctuate
significantly, which means you could lose money.
Stocks. The stock portion of the Balanced Fund is subject to the risks of equity
investing, which include:
General market risks. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.
Common stocks. Risks associated with common stock investing include:
- - A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for its
products or services. Negative performance may affect the earnings growth the
adviser anticipated when selecting the stock.
- - Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
or decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental or regulatory change. Company news or a change
in expected earnings could also affect prices.
Over-the-counter market. Some of the common stocks in which the Fund invests
trade in the over-the-counter market. These "unlisted common stocks" generally
trade at a lower volume, which may limit their liquidity.
Value investing. This Fund is primarily value oriented and it may not perform as
well as other types of mutual funds when its investing style is out of favor.
There is also a risk that the stocks selected for this Fund may not reach what
the adviser believes are their full value.
Fixed Income securities. The fixed income securities portion of the Balanced
Fund is subject to the risks associated with the Fixed Income Fund, which
include:
- - Interest rate risk. Changes in interest rates affect the value of the Fund's
debt securities, including securities issued or guaranteed by the U.S.
government or other government agencies. When interest rates rise, the value
of the Fund's securities and its shares will decline. The opposite occurs
when interest rates fall. A change in interest rates will also affect the
amount of income the Fund generates.
- - Credit risk. The value of the Fund's fixed income securities is affected by
the issuer's continued ability to make interest and principal payments. The
Fund could lose money if the issuers cannot meet their financial obligation
or go bankrupt.
- - Reinvestment risk. When interest rates decline, cash flows from maturing
securities may have to be reinvested in securities with lower yields.
- - Prepayment risk. Mortgage- and asset-backed securities involve prepayment
risk, which is the risk that the underlying mortgages or other debts may be
refinanced or paid off before they mature during a period of declining
interest rates. That will tend to lower the Fund's return and could result in
losses to the Fund if it acquired these securities at a premium. Due to
prepayments and the need to reinvest principal payments at current rates,
mortgage-related securities may be less effective than bonds at maintaining
yields when interest rates decline. Mortgage-related securities may be more
volatile than other fixed income securities.
- - Securities ratings. Securities rated in the lowest of the investment grade
categories (e.g., Baa or BBB) are considered more speculative than higher
rated securities. Their issuers may not be as financially strong as those of
higher rated bonds and may be more vulnerable to periods of economic
uncertainty or downturn.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table gives some indication of the risks of an investment in
the Fund by comparing the Fund's performance over time to that of the S&P 500
Index, the S&P 500/Barra Value Index and the Lehman Bros. Gov't/Corp. Bond
Index. The S&P 500 Index is an unmanaged index of 500 selected common stocks,
most of which are listed on The New York Stock Exchange. The index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The S&P 500/Barra Value Index is a market capitalization-weighted index
of all the stocks in the S&P 500 that have low price to book ratios. It is
designed so that approximately 50% of the S&P 500 market capitalization is in
the Barra Value Index. The other 50% is in the Barra Growth Index. The Lehman
Bros. Gov't./Corp. Bond Index includes all public obligations of the U.S.
Treasury, excluding flower bonds and foreign-targeted issues; all publicly
issued debt of U.S. government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. government; and all publicly issued, fixed
rate, nonconvertible, investment grade, dollar-denominated, SEC-registered
corporate debt (including debt issued or guaranteed by foreign sovereign
governments, municipalities, or governmental agencies, or international
agencies). The Fund uses equity and fixed income indices for comparison because
it generally holds both equity and fixed income securities. In addition, the
Fund uses the S&P 500/Barra Value Index because this index is more
representative of the Fund's investment style. Both the bar chart and table
assume reinvestment of dividends and distributions. The returns for these
indices do not reflect any fees or expenses. It is not possible to make a direct
investment in an index. As with all mutual funds, past performance is no
guarantee of future results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1997 14.96
1998 7.66
The Fund's total return for the three-month period ended March 31, 1999 was
- -4.50%.
- ------------------------------------------
Best Quarter 2Q 1997 9.25%
- ------------------------------------------
Worst Quarter 3Q 1998 (3.91)%
- ------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- ------------------------------------------------------------------------
1 Year Since Inception (8/6/96)
- ------------------------------------------------------------------------
Balanced Fund (3.36)% 9.83%
- ------------------------------------------------------------------------
S&P 500 Index 28.58% 31.65%
- ------------------------------------------------------------------------
S&P 500/Barra Value Index 14.67% 25.93%
- ------------------------------------------------------------------------
Lehman Bros. Gov't./Corp.
Bond Index 9.47% 10.00%
- ------------------------------------------------------------------------
EXPENSES
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- -----------------------------------------------------
FEE TABLE BALANCED FUND
- --------- -------------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.75%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.57%
Total Fund Operating Expenses <F1> 1.33%
- -----------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.55% and
0.46%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 1.01%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- -------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$135 $421 $729 $1,601
- -------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
FIRST OMAHA EQUITY FUND/R
- -------------------------
OBJECTIVE
The investment objective of the Equity Fund is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENTS. Under normal market conditions, at least 65% of the
Fund's total assets will be invested in common stocks and securities that can be
converted into common stocks, such as convertible bonds, convertible preferred
stock, warrants, options and rights. The Fund invests in companies with market
capitalizations comparable to those of the largest 25% of companies listed on
the New York Stock Exchange, currently over $1.5 billion.
The Fund's investment adviser uses a value-oriented investment approach, looking
for companies whose stock is trading below book value or what the adviser
considers its actual value. The adviser may also consider other factors,
including a company's earnings record and/or dividend growth.
The Fund may also invest up to 35% of its total assets in:
- - preferred stocks
- - common stocks other than those described above
- - corporate bonds, notes, and warrants
To meet liquidity, redemption and short-term investing needs, the Fund may
invest in short-term obligations including money market funds and U.S.
government securities. The Fund may also take a temporary defensive position in
such investments, which could keep the Fund from achieving its investment
objective.
Any fixed income securities in which the Fund invests will be "investment
grade," which means they will be
- - rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation, or
- - if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.
PRINCIPAL RISKS. The value of the Fund's shares depends on the value of the
securities it owns. An investment in the Funds is not a deposit of the bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. The value of your investment may fluctuate
significantly, which means you could lose money.
General market risks. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.
Common stocks. This Fund invests primarily in common stocks of large companies.
The risks of common stock investing include:
- - A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for its
products or services. Negative performance may affect the valuation and
earnings growth the adviser perceived when selecting the stock.
- - Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
or decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental, or regulatory change. Company news or a change
in expected earnings could also affect prices.
Over-the-counter market. Some of the common stocks in which the Fund invests
trade in the over-the-counter market. These "unlisted common stocks" generally
trade at a lower volume, which may limit their liquidity.
Value investing. This Fund is primarily value oriented and it may not perform as
well as other types of mutual funds when its investing style is out of favor.
There is also a risk that the stocks selected for this Fund may not reach what
the adviser believes are their full value.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table gives some indication of the risks of an investment in
the Fund by comparing the Fund's performance over time to that of the S&P 500
Index and the S&P 500/Barra Value Index. The S&P 500 Index is an unmanaged
index of 500 selected common stocks, most of which are listed on The New York
Stock Exchange. The index is heavily weighted toward stocks with large market
capitalizations and represents approximately two-thirds of the total market
value of all domestic common stocks. The S&P 500/Barra Value Index is a market
capitalization-weighted index of all the stocks in the S&P 500 that have low
price to book ratios. It is designed so that approximately 50% of the S&P 500
market capitalization is in the Barra Value Index. The other 50% is in the
Barra Growth Index. The S&P 500 Barra Value Index is included for comparison
purposes because the securities in the index are indicative of the types of
securities held in the Fund. Both the bar chart and table assume reinvestment
of dividends and distributions. The returns for these indices do not reflect any
fees or expenses. It is not possible to make a direct investment in an index. As
with all mutual funds, past performance is no guarantee of future results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1989 24.17
1990 (0.76)
1991 25.01
1992 8.32
1993 10.87
1994 7.41
1995 26.86
1996 15.77
1997 19.25
1998 7.72
The Fund's total return for the three-month period ended March 31, 1999 was
- -6.88%.
- -------------------------------------------
Best Quarter 2Q 1997 12.30%
- -------------------------------------------
Worst Quarter 3Q 1990 (10.94)%
- -------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- ----------------------------------------------------------------------------
Since Inception
1 Year 5 Year 10 Year (1/31/75)
- ----------------------------------------------------------------------------
Equity Fund 7.72% 15.17% 14.13% 15.32%
- ----------------------------------------------------------------------------
S&P 500 Index 28.58% 24.06% 19.21% 16.57%
- ----------------------------------------------------------------------------
S&P 500/Barra Value Index 14.67% 19.87% 16.67% 16.87%
- ----------------------------------------------------------------------------
The above performance information of this Fund includes the performance of the
Fund's respective predecessor mutual fund and common trust fund. Performance
data from December 13, 1992 through April 9, 1995 relates to a predecessor
mutual fund, First Omaha Equity Fund. The Fund acquired all of the net assets of
the predecessor mutual fund on April 9,1995. The performance prior to December
13, 1992 relates to a predecessor common trust fund. The common trust fund was
managed by First National Bank of Omaha, which manages the Fund. The bar chart
and table above include information regarding the common trust fund's operations
for periods before the Fund's registration statement became effective, as
adjusted to reflect the higher expenses incurred by the Funds. The common trust
fund was not registered under the Investment Company Act of 1940 and therefore
was not subject to certain investment restrictions that are imposed by that Act.
If the common trust fund had been registered, its performance might have been
adversely affected.
EXPENSES
- --------
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- ---------------------------------------------------
FEE TABLE EQUITY FUND
- --------- -----------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.75%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.40%
Total Fund Operating Expenses <F1> 1.16%
- ---------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.75% and
0.28%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 1.03%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- -------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$118 $368 $638 $1,409
- -------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
FIRST OMAHA GROWTH FUND/SM
- --------------------------
OBJECTIVE
The investment objective of the Growth Fund is long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENTS. In pursuit of long-term capital appreciation, this Fund
invests principally in companies the adviser believes have the potential to grow
earnings more rapidly than their competitors. Under normal market conditions,
more than 50% of the Fund's total assets will be invested in the common stock
and convertible securities of companies with mid-market capitalizations, from
$500 million to $10 billion.
The rest of the Fund's assets may be invested in companies with market
capitalizations over $10 billion. Holdings are typically diversified across the
major sectors.
In choosing investments, the Fund's investment adviser looks for companies with:
- - market share gains
- - product innovation
- - low-cost production
- - a history of above-average earnings and dividend growth
For capital appreciation, the Fund may invest up to 35% of its assets in:
- - preferred stocks
- - bonds, notes and warrants
or, for liquidity needs, pending investment or expense payments in short-term
obligations including
- - commercial paper, bankers' acceptances, certificates of deposit, money market
funds, repurchase agreements, and U.S. government obligations
Any fixed income securities in which the Fund invests will be "investment
grade," which means they will be
- - rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation, or
- - if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.
PRINCIPAL RISKS. The value of the Fund's shares depends on the value of the
securities it owns. An investment in the Funds is not a deposit of the bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. The value of your investment may fluctuate
significantly, which means you could lose money.
General market risks. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.
Common stocks. This Fund invests primarily in common stocks, whose risks
include:
- - A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for its
products or services. Negative performance may affect the earnings growth the
adviser anticipated when selecting the stock.
- - Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
or decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental or regulatory change. Company news or a change
in expected earnings could also affect prices.
Mid-cap stocks. The emphasis on medium-capitalization companies may lead to
risks greater than those of other equity investments. Mid-cap stocks are
generally less liquid than large-cap stocks, and may be more affected by
technological, environmental or regulatory change.
Over-the-counter market. Some of the stocks in which the Fund invests trade in
the over-the-counter market. These "unlisted common stocks" generally trade at a
lower volume, which may limit their liquidity.
Growth investing. This Fund is primarily growth oriented and may not perform as
well as other types of mutual funds when its investing style is out of favor.
There is also a risk that the stocks selected for this Fund may not grow as the
adviser anticipates.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table gives some indication of the risks of an investment in
the Fund by comparing the Fund's performance over time to that of the S&P MidCap
400 Stock Index, an unmanaged index of 400 domestic stocks, chosen for market
size, liquidity and industry group representation. Both the bar chart and table
assume reinvestment of dividends and distributions. The returns for this index
do not reflect any fees or expenses. It is not possible to make a direct
investment in an index. As with all mutual funds, past performance is no
guarantee of future results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1993 (0.16)
1994 (0.49)
1995 37.77
1996 12.81
1997 25.86
1998 8.18
The Fund's total return for the three-month period ended March 31, 1999 was
(3.27)%.
- -------------------------------------------
Best Quarter 4Q 1998 16.95%
- -------------------------------------------
Worst Quarter 3Q 1998 (11.95)%
- -------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- -------------------------------------------------------------------------------
1 Year 5 Year Since Inception(11/30/92)
- -------------------------------------------------------------------------------
Growth Fund 8.18% 16.06% 12.97%
- -------------------------------------------------------------------------------
S&P MidCap 400 Stock Index 19.13% 18.85% 18.37%
- -------------------------------------------------------------------------------
The above performance information of this Fund includes the performance of the
Fund's predecessor common trust fund. The performance prior to April 1, 1998
relates to a predecessor common trust fund. The common trust fund was managed
by FNC Trust Group, n.a., which manages the Fund. The bar chart and table above
include information regarding the common trust fund's operations for periods
before the Fund's registration statement became effective, as adjusted to
reflect the higher expenses incurred by the Funds. The common trust fund was not
registered under the Investment Company Act of 1940 and therefore was not
subject to certain investment restrictions that are imposed by that Act. If the
common trust fund had been registered, its performance might have been adversely
affected.
EXPENSES
- --------
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- ---------------------------------------------------
FEE TABLE GROWTH FUND
- --------- -----------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.75%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.88%
Total Fund Operating Expenses <F1> 1.64%
- ---------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.50% and
0.71%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 1.21%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- -------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$167 $517 $892 $1,944
- -------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
FIRST OMAHA SMALL CAP VALUE FUND/R
- ----------------------------------
OBJECTIVE
The investment objective of the Small Cap Value Fund is long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENTS. Under normal market conditions, the Fund invests at least
65% of its assets in common stocks and convertible securities of companies with
small market capitalization. A company's market capitalization is considered
"small" if it is less than those of the largest 25% of companies listed on the
New York Stock Exchange, currently $1.5 billion. The Fund expects most of these
companies will have a market cap of $200 million to $1 billion.
The Fund's investment adviser follows a value-oriented investment style, looking
for companies whose stock is trading below book value or what the adviser
considers its actual value. The adviser may also consider other factors,
including a company's earnings record and/or dividend growth. This Fund does not
emphasize current dividend or interest income.
In choosing investments, the adviser looks at quantitative and qualitative
measures of a company.
Quantitative measures of a company include:
- - price-to-earnings ratio
- - balance sheet strength
- - cash flow
- - dividend growth potential
Qualitative measures of a company include:
- - efficient use of capital
- - management style and adaptability
- - market share
- - product lines and pricing flexibility
- - distribution systems
- - use of technology to improve productivity, quality
The Fund typically diversifies across major industries, holding 30 to 65
companies at a time. Turnover is expected to be low, around 20% under normal
market conditions. However, the Fund will sell a security without regard to how
long it has owned the security if the investment adviser believes this
necessary.
The Fund may also invest up to 35% of its total assets in:
- - preferred stocks
- - common stocks other than those described above
- - corporate bonds, notes and warrants
To meet liquidity, redemption and short-term investing needs, the Fund may
invest in short-term obligations including money market funds and U.S.
government securities. The Fund may also take a temporary defensive position in
such investments, which could keep the Fund from achieving its investment
objective.
Any fixed income securities in which the Fund invests will be "investment
grade," which means they will be
- - rated at purchase within the four highest ratings of a nationally recognized
rating organization, such as Moody's Investors Service, Inc. and Standard &
Poor's Corporation, or
- - if unrated, considered at purchase by the Fund's investment adviser to be of
comparable quality.
PRINCIPAL RISKS. The value of the Fund's shares depends on the value of the
securities it owns. An investment in the Fund is not a deposit of the bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. The value of your investment may fluctuate
significantly, which means you could lose money.
General market risks. Factors affecting the securities markets include domestic
and foreign economic growth and decline, interest rate levels and political
events. There is a risk the adviser won't accurately predict the direction of
these and other factors and, as a result, the adviser's investment decisions may
not accomplish what they were intended to achieve. You should consider your own
investment goals, time horizon, and risk tolerance before investing in the Fund.
Common stocks. This Fund invests primarily in common stocks, whose risks
include:
- - A company not performing as anticipated. Factors affecting a company's
performance can include the strength of its management and the demand for its
products or services. Negative performance may affect the full value
potential the adviser anticipated when selecting the stock.
- - Instability in the stock market. The market generally moves in cycles, with
prices rising and falling. The value of the Fund's investments may increase
or decrease more than the stock market in general. A downturn in the stock
market may lead to lower prices for the stocks the Fund holds even when
company fundamentals are strong. A company's stock may drop as a result of
technological, environmental or regulatory change. Company news or a change
in expected earnings could also affect prices.
Small-cap stocks. The price of smaller-cap companies may fluctuate dramatically
due to such factors as:
- - the company's greater dependence on key personnel
- - potentially limited internal resources
- - difficulty obtaining adequate working resources
- - greater dependence on newer products and/or markets
- - technological, regulatory or environmental changes
- - predatory pricing
In short, the Fund's risks are likely to be greater than those of other equity
investments. It will typically be more volatile than the stock market in
general, as measured by the S&P 500 Index.
Over-the-counter market. Some of the common stocks in which the Fund invests
trade in the over-the-counter market. These "unlisted common stocks" generally
trade at a lower volume, which may limit their liquidity.
Value investing. This Fund is primarily value oriented and it may not perform as
well as other types of mutual funds when its investing style is out of favor.
There is also a risk that the stocks selected for this Fund may not reach what
the adviser believes are their full value.
The bar chart and table below show the Fund's annual returns and its long-term
performance. The bar chart shows you how the Fund's performance has varied from
year-to-year. The table gives some indication of the risks of an investment in
the Fund by comparing the Fund's performance over time to that of the S&P
SmallCap 600 Index and the S&P 600/Barra Value Index. The S&P SmallCap 600
Index is a market-weighted index of 600 domestic stocks chosen for market size,
liquidity and industry group representation. The S&P SmallCap 600/Barra Value
Index is a market capitalization-weighted index of all the stocks in the S&P
SmallCap 600 that have low price to book ratios. It is designed so that
approximately 50% of the S&P SmallCap 600 market capitalization is in the Barra
Value Index. The other 50% is in the Barra Growth Index. The S&P SmallCap 600
Barra Value Index is included for comparison purposes because the securities in
the index are indicative of the types of securities held in the Fund. Both the
bar chart and table assume reinvestment of dividends and distributions. The
returns for these indices do not reflect any fees or expenses. It is not
possible to make a direct investment in an index. As with all mutual funds, past
performance is no guarantee of future results.
YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%)
1997 21.75
1998 (3.36)
The Fund's total return for the three-month period ended March 31, 1999 was
- -12.70%.
- -------------------------------------------
Best Quarter 4Q 1998 14.05%
- -------------------------------------------
Worst Quarter 3Q 1998 (13.57)%
- -------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/98
- ------------------------------------------------------------------------
1 Year Since Inception (6/10/96)
- ------------------------------------------------------------------------
Small Cap Value Fund (3.36)% 9.83%
- ------------------------------------------------------------------------
S&P SmallCap 600 Index (1.31)% 11.02%
- ------------------------------------------------------------------------
S&P SmallCap 600/Barra Value Index (5.06)% 15.19%
- ------------------------------------------------------------------------
EXPENSES
- --------
This table describes the fees and expenses you may pay in connection with
investing in the Fund. The Fund has no shareholder transaction fees. Annual
fund operating expenses are deducted from Fund assets, so their effect is
reflected in the Fund's share price.
- ------------------------------------------------------------
FEE TABLE SMALL CAP VALUE FUND
- --------- --------------------
Annual Fund Operating Expenses
(% of average net assets)
Management Fees <F1> 0.85%
Distribution (12b-1) Fees <F2> 0.01%
Other Expenses <F1> <F3> 0.86%
Total Fund Operating Expenses <F1> 1.72%
- ------------------------------------------------------------
<F1> The table above reflects all fees the Fund's service providers were
entitled to receive during the fiscal year ended March 31, 1999 pursuant to
their contracts with the Fund or others. However, during that year, certain
service providers voluntarily waived a portion of their respective fees.
Taking these waivers into account, the actual Management Fees and Other
Expenses incurred for the fiscal year ended March 31, 1999 were 0.50% and
0.71%, respectively. The actual Total Fund Operating Expenses incurred by
the Fund for the fiscal year ended March 31, 1999 was 1.21%. These waivers
by the service providers are voluntary and therefore may be eliminated at
any time.
<F2> The Company has adopted a Rule 12b-1 Plan, pursuant to which the Fund is
authorized to pay distribution expenses. The Plan limits the amount of
distribution expenses that may be paid by the Fund to an annual rate of no
more than 0.25% of the average daily net asset value of the Fund. As of the
date of this Prospectus, it is estimated that 12b-1 expenses will be 0.01%
of average daily net assets of the Fund. As these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of
sales charges.
<F3> "Other Expenses" include miscellaneous fund expenses such as
administration, legal, accounting, custody, shareholder servicing and
transfer agent fees.
- -------------------------------------------------------------------------
EXPENSE EXAMPLE
1 Year 3 Years 5 Years 10 Years
$175 $542 $933 $2,030
- -------------------------------------------------------------------------
The example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds and shows what you could pay in
expenses over time, based on Total Fund Operating Expenses described in the Fee
Table. It uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 initial investment, 5% total return each year and the
Fund's operating expenses remain the same. The figure shown would be the same
whether you sold your shares at the end of a period or kept them. Because actual
return and expenses will be different, this example is for comparison only.
YEAR 2000 ISSUES
- ----------------
While Year 2000 related computer problems could have a negative effect on the
Funds, the advisers are working to avoid any problems associated with Year 2000
issues and to obtain assurances from service providers that they are taking
similar steps. However, the Funds could be adversely affected if the computer
systems used by the advisers and the Funds' other service providers don't
properly process and calculate date-related information from and after January
1, 2000.
BUYING, SELLING, AND EXCHANGING SHARES
- --------------------------------------
[Note: to be laid out in chart form]
BUYING SHARES
You can buy First Omaha shares by mail or wire, or through the First National
Bank of Omaha and its affiliates, your broker/dealer, or other institutions. For
a purchase application, call 1-800-OMAHA-03. The Funds reserve the right to
refuse purchases and redemptions that may adversely affect the Funds.
Opening an account Adding to your account
------------------ ----------------------
By mail Make out a check or money order Make out a check or money order
for the amount you want to invest, for the amount you want to invest,
payable to the Fund you want. payable to the Fund you want.
See below for minimum amounts. See below for minimum amounts.
Mail the check or money order Mail the check or money order
and a completed purchase and a note with your account
application to: number to:
First Omaha Funds, Inc.
P.O. Box 219022
Kansas City, MO 64141
By wire ------- Call 1-800-OMAHA-03 for the
account number to which funds
should be wired. Your bank may
charge a wire transfer fee.
Through First National Bank of Omaha, its correspondents or affiliates. You may
be able to buy shares through some bank accounts, including those that sweep
cash into Money Market Fund shares. These accounts have their own requirements
and may charge fees associated with your investment, which will reduce your net
return. For details, see your bank representative.
Through other institutions. To find out if you can buy shares through your bank,
broker/dealer, or other institution, call 1-800-OMAHA-03. Check with your
institution on account requirements, procedures, and any fees, which will reduce
your net return.
Auto Invest Plan. You can make regular monthly or quarterly purchases by ACH
transfer from your bank account. The minimum investment to open your account is
$100; the minimum for additional investments is $50. To start, complete the Auto
Invest Plan of the purchase application. To change your plan, send the Funds a
signature-guaranteed written request. See "Signature Guarantees," below.
SELLING (REDEEMING) SHARES
If you purchase your shares from the Funds, you can redeem them as described
below. If you purchase shares through a bank or other institution, you need to
meet that institution's account requirements.
By mail.
- - Send a written request to: First Omaha Funds, Inc.
P.O. Box 4219022
Kansas City, MO 64121-6022
- - The Funds will mail a check payable to the shareholder(s) of record to the
address of record, or wire the funds at no charge to a previously designated
bank account. Check with your bank to determine if it charges a wire transfer
fee. See "Signature Guarantees," below.
By phone.
- - When you open your account, check the box authorizing telephone redemptions
on your purchase application.
- - Call 1-800-OMAHA-03 to request the redemption.
- - The Funds will mail a check payable to the shareholder(s) of record to the
address of record, or transfer the funds via ACH to a previously designated
bank account. There is no charge for ACH transfers. See "Telephone
Transactions," below.
By Check.
- - You may also redeem shares of the Money Market Fund by redemption check in
amounts of $250 or more, once your checkwriting privilege is established.
- - You may not use checks to close an account or redeem shares purchased within
the past fifteen days.
Auto Withdrawal Plan. You can redeem shares automatically every month or quarter
and have a check for the specified amount mailed to you. The minimum withdrawal
is $100. To start, call 1-800-OMAHA-03. To change your plan, send the Funds a
signature-guaranteed written request. See "Signature Guarantees," below. You
could have negative tax results if you purchase shares while you're making
withdrawals. Be sure to check with your tax adviser on the effects of this plan,
especially if you're also purchasing shares.
EXCHANGING SHARES
You can exchange shares of one First Omaha Fund for shares of another. An
exchange is considered a sale of shares; you may have a capital gain or loss for
federal income tax purposes.
- - Read the prospectus of the Fund whose shares you want to buy in the exchange.
- - Mail the Funds your request or call 1-800-OMAHA-03.
- - The amount to be exchanged must meet minimum investment requirements,
described below.
The Funds may change or eliminate the exchange privilege with 60 days' notice to
shareholders, though there are no plans to do so. You may exchange only into
Fund shares legally available in your state.
TRANSACTION POLICIES
- --------------------
SHARE PRICE
The price per share for each Fund, equal to net asset value (NAV), is calculated
each business day at the close of trading on the New York Stock Exchange
(typically 4 p.m. Eastern Time). A business day is a day on which the NYSE is
open for trading. A Fund is not required to calculate NAV if none of its shares
were bought or sold that day.
If the Funds receive your buy or sell order before the daily valuation time, you
will pay or receive that day's NAV for each share. Otherwise you will pay or
receive the next business day's NAV for each share.
To calculate the NAV, First Omaha adds up the value of all a Fund's securities
and other assets, subtracts any liabilities, and divides by the number of shares
of that Fund outstanding. You can determine the value of your account on any
particular day by multiplying the number of shares you own by that day's NAV.
Assets in the Money Market Fund are valued using the amortized cost method. The
other Funds' securities are valued at market value.
If market prices aren't available, the Funds' Board of Directors will choose
another valuation method. For details, see "Net Asset Value" in the SAI.
MINIMUM INVESTMENT
The minimum initial investment for each Fund is $500. For additional
investments, it's $50. Under the Auto Invest Plan, the required initial
investment drops to $100. The Funds may also waive minimum requirements for
Individual Retirement Accounts and payroll deduction plans.
If an exchange or redemption causes the value of your account (other than an
Auto Invest Plan or payroll deduction account ) to fall below $500, the Funds
may ask you to add to your account. If the balance remains below the minimum
after 60 days, the Funds may close out your account and mail you the proceeds.
CONFIRMATION
You'll receive an account statement after each transaction. However, any Auto
Invest Plan, Auto Withdrawal Plan, automatic dividend reinvestment and capital
gain distribution transactions are reported on your quarterly statement. If you
want to confirm these transactions before the end of the quarter, call 1-800-
OMAHA-03.
The Funds do not issue share certificates.
REDEMPTION PAYMENTS
If you redeem shares, you'll receive payment within seven days of the transfer
agent receiving your request. Shares are sold at the next NAV calculated after
your request is received in good order. Unless it would hurt a Fund or its
shareholders, the Funds try to honor requests for next-day payment if your order
is received on a business day before 4 p.m. Eastern Time, or second-day payment
if your order is received after that time.
Before selling recently purchased shares, please note that if the transfer agent
has not yet collected payment for the shares you are selling, it may delay
sending the proceeds for up to 15 calendar days. This is intended to protect the
Funds and their shareholders from loss.
The Funds intend to pay cash for all shares redeemed, but under unusual
conditions may make payment wholly or partly in portfolio securities whose
market value equals the redemption price. You will incur brokerage costs when
converting them to cash.
The Funds may also suspend redemptions and payments if the New York Stock
Exchange closes or in other emergencies. See "Additional Purchase and Redemption
Information" in the SAI.
CHECKWRITING PRIVILEGE
Establishing the Privilege.
You can establish the checkwriting privilege by checking the appropriate box on
the Purchase Application, or if your Money Market Fund account is already open,
by completing the appropriate form which may be obtained by calling 1-800-OMAHA-
03. When establishing checkwriting for an account that is already opened, the
form must be signed by each person whose name appears on the account accompanied
by signature guarantees. For your protection, additional requirements may be
imposed.
Stop Payment/Insufficient Shares.
You may place stop payment requests on checks by calling a shareholder service
representative at 1-800-OMAHA-03. A $20 fee will be charged for each stop
payment request. If there are insufficient shares in your Money Market Fund
account to cover the amount of your redemption by check, the check will be
returned, marked "insufficient funds," and a fee of $20 will be charged to the
account.
Additional Information.
Checks you write will not be returned to you, although copies are available upon
request. First Omaha Funds reserves the right, at any time without prior notice,
to suspend, limit or terminate the checkwriting privilege or its use by any
person.
SIGNATURE GUARANTEES
Signature guarantees are designed to prevent unauthorized transactions. The
guarantor pledges that the signature presented is genuine--and, unlike a notary
public, is financially responsible if it's not.
You can obtain signature guarantees from banks, brokers, dealers, credit unions,
securities exchanges, and some other institutions. A notary public is not
acceptable. The Funds require a signature guarantee to change the address to
which a redemption check is to be mailed, to make the check payable to someone
other than the shareholder(s) of record, or to establish the checkwriting
privilege for an existing account. The transfer agent reserves the right to
reject any signature guarantee.
TELEPHONE TRANSACTIONS
For purchases made by telephone, the Funds and their agents will use reasonable
procedures to confirm telephoned instructions are genuine. These procedures may
include, among others, requiring some form of identification before acting on
telephoned instructions; providing written confirmation of all such
transactions; and tape recording all telephone instructions. If reasonable
procedures are followed, the Funds and their agents will not be liable for any
loss, cost, or expense due to an investor's telephoned instructions or an
unauthorized telephone redemption.
If, because of peak activity or adverse conditions, you can't place a telephone
transaction, consider mailing your request as described in "Buying shares" and
"Selling shares" above. The Funds reserve the right to refuse a telephone
transaction.
DIVIDENDS AND TAXES
- -------------------
The Funds generally pass net investment income and realized capital gains, if
any, on to shareholders in the form of dividends and capital gains.
DIVIDENDS
The Money Market Fund declares income dividends daily and pays them monthly.
When redeeming shares of the Money Market Fund by check, dividends are earned
until the check clears the transfer agent. Shares purchased before 4 p.m.
Eastern Time accrue interest on the date of purchase. The other Funds declare
and pay dividends monthly, generally during the last week of each month.
The Funds automatically reinvest your dividends in more shares of the Fund
unless you choose to receive them in cash. To receive dividends in cash, or to
change that election, notify the Funds in writing.
If you redeem all your shares in a Fund, you'll receive accrued dividends, if
applicable, in cash within seven business days.
Distributable net realized capital gains are distributed at least annually. The
Money Market Fund does not expect to realize any long-term capital gains or pay
any capital gains dividends.
TAXES
Here's an overview of important information about taxes.
- - Dividends and distributions you receive, whether in cash or additional
shares, are generally taxable.
- - Distributions from a Fund's long-term capital gains over net short-term
capital losses are taxable as long-term capital gains in the year you receive
them, no matter how long you've held the shares.
- - Some dividends paid in January may be taxable as if you had received them the
previous December.
- - Dividends attributable to interest on U.S. Treasury obligations may be
subject to state and local taxes, even though the interest would be tax-
exempt if you received it directly.
- - If the distribution of income or gain realized on the sale of securities
causes a share's NAV to fall below what you paid for it, the distribution is
a "return of invested principal" but is still taxable as described above.
- - If you buy shares shortly before the record date of a Fund's dividend or
capital gains distribution, the payment of those dividends or capital gains
will reduce your NAV per share. All or a part of such distributions are
taxable.
- - Corporations may be eligible for a dividends-received deduction on certain
dividends. Because the Money Market Fund expects to derive its net investment
income from earned interest and short-term capital gains, none of its
distributions are expected to qualify for the dividends-received deduction.
At least annually, the Funds will advise you of the source and tax status of all
the distributions you've received.
This Prospectus gives only general tax information. Before you invest, consult
your tax adviser on federal, state, and local tax considerations for your
specific situation.
MANAGEMENT OF THE COMPANY
- -------------------------
INVESTMENT ADVISER
For six of the seven Funds (the Money Market Fund, the Short/Intermediate Fund,
the Fixed Income Fund, the Balanced Fund, the Equity Fund and the Small Cap
Value Fund), First National Bank of Omaha, One First National Center, Omaha, NE
is the investment adviser. These Funds are managed by a committee.
The bank is a subsidiary of First National of Nebraska, Inc., a Nebraska
corporation with total assets of about $8.2 billion as of December 31, 1998.
First National Bank offers clients in the Midwest a full range of financial
services and has more than 65 years of experience in trust and investment
management. As of December 31, 1998, the bank's trust division had about $8.4
billion in assets under administration, with about $3.4 billion under
management.
The Growth Fund is advised by FNC Trust Group, n.a., established in May 1997 as
a wholly-owned subsidiary of First National Colorado, Inc.--which is a wholly-
owned subsidiary of First National of Nebraska, Inc.
FNC Trust Group was created to offer a full range of trust and asset management
services, both directly and as an agent for banks with trust powers. Currently
FNC is an agent for clients of Union Colony Bank, Greeley, Colorado, and serves
customers directly from its offices in Boulder and Loveland, Colorado.
The predecessor to the adviser was Union Colony Bank's trust division, whose
staff moved to the FNC Trust Group when it was formed. The adviser has no
previous experience managing a registered investment company.
David Jordan, the Growth Fund portfolio manager, has been the senior investment
officer of First National Bank of Fort Collins since 1996. From 1992-96 he was
portfolio manager and primarily responsible for making investment decisions for
First Interstate Bank of Denver. He is a Chartered Financial Analyst and has
managed institutional portfolios since 1982.
As of December 31, 1998, FNC had $31.8 million in assets under administration,
directly or as an agent, including more than $30.1 million under investment
management.
Responsibilities. Supervised by the Board of Directors and following each Fund's
investment objectives and restrictions, the adviser:
- - manages a Fund's investments
- - makes buy/sell decisions and places the orders
- - keeps records of purchases and sales
Investment decisions are made by committee. No one person is primarily
responsible for making investment recommendations.
Fees. For services and related expenses, First National Bank of Omaha receives a
fee from the six Funds it advises. Computed daily and paid monthly, the fee is a
percent of each Fund's average daily net assets at these annual rates:
- - Small Cap Value Fund: 0.85%
- - Equity Fund: 0.75%
- - Balanced Fund: 0.75%
- - Fixed Income Fund: 0.60%
- - Short/Intermediate Fund: 0.50%
- - Money Market Fund: 0.25%
Similarly, FNC Trust Group's fee for advising the Growth Fund is 0.75% of
average daily net assets, or a lesser fee agreed to in writing.
The advisers may choose to waive all or some of their advisory fees, which will
cause a Fund's yield and total return to be higher than it would be without the
waiver. The advisers may end such waivers anytime and may not seek
reimbursement.
OTHER SERVICE PROVIDERS
The Funds' Board of Directors has appointed various parties to advise and
administer the Funds.
Administrator and distributor. Sunstone Financial Group, Inc., 207 E. Buffalo
St., Suite 400, Milwaukee, WI 53202-5712, is administrator for each Fund,
providing clerical, compliance, regulatory, accounting and other services.
Sunstone Distribution Services, LLC, an affiliate of the administrator, is
distributor for the Funds.
Custodian and transfer agent. First National Bank of Omaha provides for the
safekeeping of the Funds' assets. DST Systems, Inc., 210 W. 10th Street, Kansas
City, MO 64105 is sub-transfer agent, disbursing dividends and other
distributions.
All service providers receive fees. They may choose to waive some or all of
their fees, which will cause the Funds' returns to be higher than they would
have been without the waiver.
DISTRIBUTION AND SERVICE PLAN
The company has adopted a plan under federal securities rule 12b-1 that allows
the Funds to pay fees for the sale and distribution of their respective shares.
The fees will not exceed an annual rate of 0.25% of a Fund's average daily net
assets. Because these fees are paid regularly out of the Fund's assets, over
time they will increase the cost of your investment and may cost you more than
paying other types of sales charges.
The company has also adopted an administrative service plan under which each
Fund may pay compensation to banks and other financial institutions that provide
various administrative services for shareholders. Such institutions may include
the adviser, its correspondent and affiliated banks, and the administrator and
its affiliates.
Computed daily and paid monthly, these fees range up to an annual rate of 0.25%
of the average daily net asset value of the shares held by the institution's
customers. The Funds' agreement with First National Bank of Omaha (the adviser)
sets that institution's fee at the annual rate of 0.10% of the average aggregate
net asset value of shares of each Fund held during the period by customers for
whom the adviser provided services under the Servicing Agreement. The adviser
may choose to waive some or all of this fee, which will cause a Fund's total
return and yield to be higher than without the waiver.
BANKING LAWS
First National Bank of Omaha believes it has authority under current law to act
as adviser, custodian, and transfer agent, and FNC as adviser and to receive
fees for these services and for services they each provide to shareholders. If
banking laws or interpretations change, that could change the way the companies
operate; however, the Funds believe this wouldn't affect net asset value per
share or result in financial loss to any shareholder. See "Management of the
Company - Glass-Steagall Act" in the SAI for further discussion.
FINANCIAL HIGHLIGHTS<F1>
U.S. GOVERNMENT OBLIGATIONS FUND
----------------------------------
<TABLE>
<CAPTION>
YEAR YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
ENDED MARCH31, MARCH 31, 1995<F2> TO TO APRIL 9, JUNE 30,
MARCH 1998 1997 MARCH 31, 1995 1994
31,1999 1996
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------
INCOME FROM INVESTMENT OPERATIONS:
- -----------------------------------
Net investment income 0.05 0.05 0.05 0.05 0.04 0.03
Net realized and unrealized gains
(losses) on investments - - - - - -
-------- -------- -------- -------- -------- --------
Total from investment operations 0.05 0.05 0.05 0.05 0.04 0.03
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
- -----------------------------------
Dividends from net investment income 0.05 0.05 0.05 0.05 0.04 0.03
Distributions from capital gains - - - - - -
-------- -------- -------- -------- -------- --------
Total distributions 0.05 0.05 0.05 0.05 0.04 0.03
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------------- ======== ======== ======== ======== ======== ========
TOTAL RETURN<F3> 4.63% 4.95% 4.76% 5.14% 3.51% 2.74%
SUPPLEMENTAL DATA AND RATIOS:
- -----------------------------------
Net assets, end of period (000s) $133,730 $100,497 $125,413 $87,715 $76,105 $89,195
Ratio of net expenses to average
net assets<F4> 0.54% 0.55% 0.58% 0.54% 0.63% 0.60%
Ratio of net investment income to
average net assets<F4> 4.52% 4.83% 4.66% 5.12% 4.46% 2.68%
Ratio of net expenses to average
net assets<F4><F5> 0.58% 0.58% 0.59% 0.59% 1.23% 1.13%
Ratio of net investment income to
average net assets<F4><F5> 4.48% 4.80% 4.65% 5.07% 3.86% 2.15%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the asset of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
FINANCIAL HIGHLIGHTS<F1> (CONTINUED)
SHORT/INTERMEDIATE FIXED INCOME FUND
-------------------------------------
<TABLE>
<CAPTION>
YEAR YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
ENDED MARCH31, MARCH 31, 1995<F2> TO TO APRIL 9, JUNE 30,
MARCH 1998 1997 MARCH 31, 1995 1994
31,1999 1996
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.97 $9.73 $9.85 $9.66 $9.62 $10.18
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.51 0.56 0.49 0.52 0.42 0.55
Net realized and unrealized gains
(losses) on investments 0.04 0.24 (0.10) 0.17 0.05 (0.56)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.55 0.80 0.39 0.69 0.47 (0.01)
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.51 0.56 0.51 0.50 0.43 0.55
Distributions from capital gains - - - - - -
-------- -------- -------- -------- -------- --------
Total distributions 0.51 0.56 0.51 0.50 0.43 0.55
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $10.01 $9.97 $9.73 $9.85 $9.66 $9.62
======== ======== ======== ======== ======== ========
TOTAL RETURN<F2> 5.61% 8.37% 4.00% 7.24% 5.05% (0.22)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $21,636 $19,509 $21,042 $22,056 $22,130 $21,938
Ratio of net expenses to average
net assets<F3> 0.97% 0.99% 0.97% 0.89% 0.88% 0.83%
Ratio of net investment income to
average net assets<F4> 5.05% 5.54% 5.01% 5.34% 5.63% 5.44%
Ratio of net expenses to average
net assets<F4> 1.13% 1.15% 1.08% 1.02% 1.51% 1.38%
Ratio of net investment income
to average net assets<F4><F5> 4.89% 5.38% 4.90% 5.21% 5.00% 4.89%
21.36% 26.58% 4.73% 41.45% 9.93% 20.52%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the asset of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
FINANCIAL HIGHLIGHTS<F1> (CONTINUED)
FIXED INCOME FUND
------------------
<TABLE>
<CAPTION>
YEAR YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
ENDED MARCH31, MARCH 31, 1995<F2> TO TO APRIL 9, JUNE 30,
MARCH 1998 1997 MARCH 31, 1995 1994
31,1999 1996
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.45 $9.84 $10.00 $9.63 $9.58 $10.49
- -----------------------------------
INCOME FROM INVESTMENT OPERATIONS:
- -----------------------------------
Net investment income 0.61 0.59 0.45 0.59 0.51 0.67
Net realized and unrealized gains
(losses) on investments - 0.61 (0.15) 0.35 0.07 (0.88)
-------- -------- -------- -------- -------- --------
Total from investment operations 0.61 1.20 0.30 0.94 0.58 (0.21)
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
- -----------------------------------
Dividends from net investment income 0.61 0.59 0.46 0.57 0.53 0.67
Distributions from capital gains 0.03 - - - - 0.03
-------- -------- -------- -------- -------- --------
Total distributions 0.64 0.59 0.46 0.57 0.53 0.70
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $10.42 $10.45 $9.84 $10.00 $9.63 $9.58
- ----------------------------------- ======== ======== ======== ======== ======== ========
TOTAL RETURN<F3> 5.93% 12.50% 3.06% 9.79% 6.35% (2.29)%
SUPPLEMENTAL DATA AND RATIOS:
- -----------------------------------
Net assets, end of period (000s) $82,420 $77,671 $75,524 $76,342 $66,488 $61,714
Ratio of net expenses to average
net assets<F4> 0.88% 0.89% 0.89% 0.83% 0.87% 0.86%
Ratio of net investment income to
average net assets<F4> 5.78% 5.74% 4.48% 5.94% 6.98% 6.52%
Ratio of net expenses to average
net assets<F4><F5> 1.05% 1.05% 1.00% 0.96% 1.51% 1.41%
Ratio of net investment income to
average net assets<F4><F5> 5.61% 5.58% 4.37% 5.81% 6.34% 5.97%
Portfolio turnover rate<F3> 31.35% 19.03% 12.66% 37.35% 7.04 % 13.09%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the asset of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
FINANCIAL HIGHLIGHTS<F1>
Balanced Fund
--------------
YEAR YEAR AUGUST 6,
ENDED ENDED 1996<F2> TO
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.24 $10.41 $10.00
- -----------------------------------
INCOME FROM INVESTMENT OPERATIONS:
- -----------------------------------
Net investment income 0.38 0.38 0.21
Net realized and unrealized gains
(losses) on investments (0.81) 1.90 0.40
-------- -------- --------
Total from investment operations (0.43) 2.28 0.61
-------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
- -----------------------------------
Dividends from net investment income 0.38 0.38 0.20
Distributions from capital gains 0.37 0.07 -
-------- -------- --------
Total distributions 0.75 0.45 0.20
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $11.06 $12.24 $10.41
- ----------------------------------- ======== ======== ========
TOTAL RETURN<F3> (3.73)% 22.34% 6.14%
SUPPLEMENTAL DATA AND RATIOS:
- -----------------------------------
Net assets, end of period (000s) $23,883 $25,692 $10,895
Ratio of net expenses to average
net assets<F4> 1.01% 0.88% 1.16%
Ratio of net investment income to
average net assets<F4> 3.20% 3.37% 3.25%
Ratio of net expenses to average
net assets<F4><F5> 1.32% 1.43% 3.04%
Ratio of net investment income to
average net assets<F4><F5> 2.89% 2.82% 1.37%
Portfolio turnover rate<F3> 33.17% 10.46% 5.92%
- ----------------------------------------------------------------------------
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the asset of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
FINANCIAL HIGHLIGHTS<F1> (CONTINUED)
EQUITY FUND
-----------
<TABLE>
<CAPTION>
YEAR YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
ENDED MARCH31, MARCH 31, 1995<F2> TO TO APRIL 9, JUNE 30,
MARCH 1998 1997 MARCH 31, 1995 1994
31,1999 1996
- --------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $16.19 $13.74 13.07 $11.39 $10.48 $10.55
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.26 0.29 0.30 0.28 0.21 0.20
Net realized and unrealized gains
(losses) on investments (1.66) 3.50 1.63 2.13 1.48 0.15
-------- -------- -------- -------- -------- --------
Total from investment operations (1.40) 3.79 1.93 2.41 1.69 0.35
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.26 0.29 0.30 0.28 0.22 0.20
Distributions from capital gains 1.17 1.05 0.96 0.45 0.56 0.22
-------- -------- -------- -------- -------- --------
Total distributions 1.43 1.34 1.26 0.73 0.78 0.42
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $13.36 $16.19 $13.74 $13.07 $11.39 $10.48
======== ======== ======== ======== ======== ========
TOTAL RETURN<F2> (9.20)% 28.89% 14.99% 21.52% 16.48% 3.34%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $231,586 $312,073 $259,200 $224,169 $161,323 $129,381
Ratio of net expenses to average
net assets<F3> 1.03% 1.03% 1.04% 0.99% 1.03% 1.04%
Ratio of net investment income to
average net assets<F4> 1.74% 1.89% 2.17% 2.32% 2.50% 1.93%
Ratio of net expenses to average
net assets<F4> 1.15% 1.14% 1.10% 1.07 % 1.62% 1.54%
Ratio of net investment income to
average net assets<F4><F5> 1.62% 1.78% 2.11% 2.24% 1.91% 1.43%
24.19% 15.87% 25.66% 26.60% 14.36% 15.86%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the asset of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
FINANCIAL HIGHLIGHTS<F1>(CONTINUED)
<TABLE>
<CAPTION>
Growth Fund Small Cap Value Fund
------------ ------------------------------------------
YEAR YEAR ENDED YEAR ENDED APRIL 10,
ENDED MARCH31, MARCH 31, 1995<F2> TO
MARCH 1998 1997 MARCH 31,
31,1999 1996
- ----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $12.94 $10.52 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.10 0.18 0.19 0.15
Net realized and unrealized gains
(losses) on investments (0.53) (2.73) 2.88 0.58
-------- -------- -------- --------
Total from investment operations (0.43) (2.55) 3.07 0.73
-------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.09 0.18 0.19 0.15
Distributions from capital gains - 0.36 0.46 0.06
-------- -------- -------- --------
Total distributions 0.09 0.54 0.65 0.21
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $9.48 $9.85 $12.94 $10.52
======== ======== ======== ========
TOTAL RETURN<F2> (4.28)% (20.18)% 29.60% 7.30%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $14,318 $13,096 $17,019 $7,173
Ratio of net expenses to average
net assets<F3> 1.21% 1.21% 1.11% 1.34%
Ratio of net investment income to
average net assets<F4> 1.15% 1.55% 1.62% 2.15%
Ratio of net expenses to average
net assets<F4> 1.63% 1.71% 1.92% 3.76%
Ratio of net investment income to
average net assets<F4><F5> .73% 1.05% 0.81% (0.27)%
71.80% 26.20% 16.54% 7.45%
- -----------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the asset of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
For more information on the Funds, ask for a free copy of the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI). The SAI has been filed with the
Securities and Exchange Commission and is incorporated by reference, which means
it is legally considered part of this prospectus. It contains more details on
all aspects of the Funds.
ANNUAL/SEMI-ANNUAL REPORTS. These reports describe the Funds' performance, list
portfolio holdings and include financial statements. The Annual Report contains
a discussion of the market conditions and investment strategies that
significantly affected each Fund's performance during its last fiscal year.
To obtain information
By phone
Call 1-800-OMAHA-03
By mail
Write to: First Omaha Funds
P.O. Box 219022
Kansas City, MO 64141
On the Internet
View or download fund documents at www.firstomahafunds.com
You can also copy information about the Funds at the SEC Public Reference Room
in Washington, D.C.; call 1-800-SEC-0330 for details. Reports and other
information about the Funds are available at the Commission's web site,
http://www.sec.gov, or by sending your request and a duplicating fee to the
Public Reference Section of the Commission, 405 5th Street, N.W., Washington,
D.C. 20549-6009.
SEC File Number 811-8846
xxxxx
First Omaha U.S. Government Money Market Fund
First Omaha Short/Intermediate Fixed Income Fund
First Omaha Fixed Income Fund
First Omaha Balanced Fund
First Omaha Equity Fund
First Omaha Growth Fund
First Omaha Small Cap Value Fund
Each an Investment Portfolio of
FIRST OMAHA FUNDS, INC.
Statement of Additional Information
July 26, 1999
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus (the "Prospectus") of First Omaha U.S.
Government Money Market Fund (the "Money Market Fund"), First Omaha
Short/Intermediate Fixed Income Fund (the "Short/Intermediate Fund"), First
Omaha Fixed Income Fund (the "Fixed Income Fund"), First Omaha Balanced Fund
(the "Balanced Fund"), First Omaha Equity Fund (the "Equity Fund"), First Omaha
Growth Fund (the "Growth Fund"), and First Omaha Small Cap Value Fund (the
"Small Cap Value Fund"), (Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund,
hereinafter collectively referred to as the "Funds" and singly, a "Fund") dated
as of the date hereof. The Funds are each separate investment portfolios of
First Omaha Funds, Inc. (the "Company"). This Statement of Additional
Information is incorporated in its entirety into the Prospectus. Copies of the
Prospectus may be obtained by writing the Company, P.O. Box 419022, Kansas City,
Missouri, 64141-6022, or by telephoning toll free (800) OMAHA-03.
TABLE OF CONTENTS
-----------------
Page
THE COMPANY ..............................................................B-1
INVESTMENT OBJECTIVES AND POLICIES........................................B-1
Additional Information on Portfolio Instruments......................B-1
Investment Restrictions.............................................B-13
Portfolio Turnover..................................................B-16
NET ASSET VALUE..........................................................B-17
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................B-19
MANAGEMENT OF THE COMPANY ...............................................B-21
Directors and Officers..............................................B-21
Investment Advisers.................................................B-23
Portfolio Transactions..............................................B-25
Glass-Steagall Act..................................................B-27
Administrator/Fund Accountant.......................................B-28
Expenses............................................................B-30
Distributor.........................................................B-30
Administrative Services Plan........................................B-32
Custodian...........................................................B-33
Transfer Agency Services............................................B-34
Auditors............................................................B-34
Legal Counsel.......................................................B-35
ADDITIONAL INFORMATION...................................................B-35
Organization and Capital Structure..................................B-35
Shareholder Meetings................................................B-36
Ownership of Shares.................................................B-36
Vote of a Majority of the Outstanding Shares........................B-37
Additional Tax Information..........................................B-37
Yield of the Money Market Fund......................................B-38
Yield of the Fixed Income Fund
and the Short/Intermediate Fund................................B-39
Calculation of Total Return.........................................B-39
Distribution Rates..................................................B-40
Performance Comparisons.............................................B-40
Miscellaneous.......................................................B-41
Financial Statements................................................B-41
FINANCIAL STATEMENTS
APPENDIX..................................................................A-1
STATEMENT OF ADDITIONAL INFORMATION
THE COMPANY
First Omaha Funds, Inc. (the "Company") is an open-end management investment
company which currently offers seven diversified investment portfolios: First
Omaha U.S. Government Money Market Fund (the "Money Market Fund"), First Omaha
Short/Intermediate Fixed Income Fund (the "Short/Intermediate Fund"), First
Omaha Fixed Income Fund (the "Fixed Income Fund"), First Omaha Balanced Fund
(the "Balanced Fund"), First Omaha Equity Fund (the "Equity Fund"), First Omaha
Growth Fund (the "Growth Fund") and First Omaha Small Cap Value Fund (the "Small
Cap Value Fund"), (the Money Market Fund, the Short/Intermediate Fund, the Fixed
Income Fund, the Balanced Fund, the Equity Fund, the Growth Fund and the Small
Cap Value Fund, hereinafter collectively referred to as the "Funds" and singly,
a "Fund").
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus of the Funds.
Capitalized terms not defined herein are defined in the Prospectus. No
investment in Shares of a Fund should be made without first reading such Fund's
Prospectus.
INVESTMENT OBJECTIVES, POLICIES, AND RISKS
Additional Information on Portfolio Instruments
- -----------------------------------------------
The following policies supplement the investment objective, policies and
risks of each Fund as set forth in the Prospectus for such Fund.
Bank Obligations. Each of the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund, may invest in
bank obligations such as bankers' acceptances, certificates of deposit, and
demand and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically
drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity. Bankers' acceptances
invested in by the Funds will be those guaranteed by domestic and foreign banks
having, at the time of investment, capital, surplus, and undivided profits in
excess of $100,000,000 (as of the date of their most recently published
financial statements).
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return. Certificates of deposit and
demand and time deposits will be those of domestic and foreign banks and savings
and loan associations, if (a) at the time of investment the depository
institution has capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of its most recently published financial
statements), or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation.
The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund may also invest in Eurodollar Certificates
of Deposit, which are U.S. dollar denominated certificates of deposit issued by
offices of foreign and domestic banks located outside the United States; Yankee
Certificates of Deposit, which are certificates of deposit issued by a U.S.
branch of a foreign bank denominated in U.S. dollars and held in the United
States; Eurodollar Time Deposits ("ETDs"), which are U.S. dollar denominated
deposits in a foreign branch of a U. S. bank or a foreign bank; and Canadian
Time Deposits, which are basically the same as ETDs except they are issued by
Canadian offices of major Canadian banks.
Commercial Paper. Commercial paper consists of unsecured promissory notes
issued by corporations. Except as noted below with respect to variable amount
master demand notes, issues of commercial paper normally have maturities of less
than nine months and fixed rates of return.
The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund may invest in domestic and foreign
commercial paper which must be rated by an NRSRO in one of the top three
categories. In general, investment in lower-rated instruments is more risky
than investment in instruments in higher-rated categories. The
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth
Fund and Small Cap Value Fund may also invest in Canadian commercial paper,
which is commercial paper issued by a Canadian corporation or a Canadian
counterpart of a U.S. corporation, and in Europaper, which is U.S. dollar
denominated commercial paper of a foreign issuer.
Under normal market conditions, the Small Cap Value Fund will invest at least
65% of its total assets in common stocks and securities convertible into common
stocks [such as convertible bonds, convertible preferred stocks, warrants,
options and rights] issued by companies having small market capitalization.
Variable Amount Master Demand Notes. Variable amount master demand notes,
in which the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity
Fund, Growth Fund and Small Cap Value Fund may invest, are unsecured demand
notes that permit the indebtedness thereunder to vary and provide for periodic
adjustments in the interest rate according to the terms of the instrument.
Because master demand notes are direct lending arrangements between a Fund and
the issuer, they are not normally traded. Although there is no secondary market
in the notes, a Fund may demand payment of principal and accrued interest at any
time. The Advisers will consider the earning power, cash flow, and other
liquidity ratios of the issuers of such notes and will continuously monitor
their financial status and ability to meet payment on demand. In determining
average weighted portfolio maturity, a variable amount master demand note will
be deemed to have a maturity equal to the longer of the period of time remaining
until the next interest rate adjustment or the period of time remaining until
the principal amount can be recovered from the issuer through demand. No Fund
will invest more than 5% of its assets in such securities.
Foreign Investment. The Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund may each invest
up to 10% of its assets in foreign securities either directly or through the
purchase of sponsored and unsponsored American Depository Receipts ("ADRs").
Unsponsored ADRs may be less liquid than sponsored ADRs, and there may be less
information available regarding the underlying foreign issuer for unsponsored
ADRs. Investments in securities issued by foreign branches of U.S. banks,
foreign banks, or other foreign issuers, including ADRs, investment companies
that invest in foreign securities and securities purchased on foreign securities
exchanges, may subject the Funds to investment risks that differ in some
respects from those related to investment in obligations of U.S. domestic
issuers or in U.S. securities markets. Such risks include trade balances and
imbalances, and related economic policies, future adverse political, economic,
and social developments, possible imposition of withholding taxes on interest
and dividend income, possible seizure, nationalization, or expropriation of
foreign investments or deposits, currency blockage, less stringent disclosure
requirements, the possible establishment of exchange controls or taxation at the
source, or the adoption of other foreign governmental restrictions. In
addition, foreign branches of U.S. banks, foreign banks and foreign issuers may
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and record keeping standards than those applicable to
domestic branches of U.S. banks and U.S. domestic issuers, and securities
markets in foreign countries may be structured differently from and may not be
as liquid as the U.S. markets. Where purchases of foreign securities are made
in foreign currencies, a Fund may incur currency conversion costs and may be
affected favorably or unfavorably by changes in the value of foreign currencies
against the U.S. dollar. Investments in emerging markets involve even greater
risks such as immature economic structures and different legal systems.
U.S. Government Obligations. Each of the Funds may invest in obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, including bills, notes and bonds issued by the U.S. Treasury.
The Money Market Fund may also invest in "stripped" U.S. Treasury obligations
such as Treasury Receipts issued by the U.S. Treasury representing either future
interest or principal payments. Stripped securities are issued at a discount to
their "face value" and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors.
Obligations of certain agencies and instrumentalities of the U.S. government
are supported by the full faith and credit of the U.S. government, such as those
of the Government National Mortgage Association and the Export-Import Bank of
the United States; others, such as those of the Federal National Mortgage
Association, are supported by the right of the issuer to borrow from the
Treasury; others, such as those of the Student Loan Marketing Association and
the Federal Home Loan Banks, are supported by the discretionary authority of the
U.S. government to purchase the agency's obligations; and still others, such as
those of the Federal Farm Credit Banks or the Federal Home Loan Mortgage
Corporation, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. government would provide financial support
to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law. The Money Market Fund, Short/Intermediate Fund,
Fixed Income Fund and Balanced Fund will invest in the obligations of such
agencies or instrumentalities only when First National believes that the credit
risk with respect thereto is minimal.
Bonds. The Short/Intermediate Fund, Fixed Income Fund and Balanced Fund may
each invest in the following short-term obligations: U.S. dollar-denominated
international bonds traded primarily in the United States or abroad; Canadian
bonds; and bonds issued by institutions such as the World Bank, the European
Community, or two or more sovereign governments.
These Funds each also expect to invest in bonds, notes and debentures of a
wide range of U.S. corporate issuers. Such obligations, in the case of
debentures, will represent unsecured promises to pay, and in the case of notes
and bonds, may be secured by mortgages on real property or security interests in
personal property and will in most cases differ in their interest rates,
maturities and times of issuance.
Preferred Stock. The Short/Intermediate Fund and Fixed Income Fund may each
invest up to 15% of their assets, respectively, in preferred stocks. Some of
the preferred stocks in which the Funds invest trade in the over-the-counter
market. These "unlisted preferred stocks" generally trade at a lower volume,
which may limit their liquidity.
When-Issued and Delayed-Delivery Securities. Each Fund may purchase
securities on a "when-issued" or delayed-delivery basis. These transactions are
arrangements in which a Fund purchases securities with payment and delivery
scheduled for a future time. When-issued securities are securities purchased
for delivery beyond the normal settlement date at a stated price and yield and
thereby involve a risk that the yield obtained in the transaction will be less
than that available in the market when delivery takes place. A Fund will
generally not pay for such securities or start earning interest on them until
they are received on the settlement date. When a Fund agrees to purchase
securities on a "when-issued" basis, the Custodian will set aside cash or liquid
portfolio securities equal to the amount of the commitment in a separate
account. Normally, the Custodian will set aside portfolio securities to satisfy
the purchase commitment, and in such a case, such Fund may be required
subsequently to place additional assets in the separate account in order to
assure that the value of the account remains equal to the amount of a Fund's
commitment. Each Fund's commitments to purchase when-issued securities will not
exceed 25% of the value of its total assets absent unusual market conditions.
It may be expected that a Fund's net assets will fluctuate to a greater degree
when it sets aside portfolio securities to cover such purchase commitments than
when it sets aside cash. In addition, because a Fund will set aside cash or
liquid portfolio securities to satisfy its purchase commitments in the manner
described above, a Fund's liquidity and the ability of the Adviser to manage it
might be affected in the event its commitments to purchase "when-issued"
securities ever exceeded 25% of the value of its assets.
When a Fund engages in "when-issued" transactions, it relies on the seller
to consummate the trade. Failure of the seller to do so may result in a Fund
incurring a loss or missing the opportunity to obtain a price or yield
considered to be advantageous. Each of the Funds will engage in "when-issued"
delivery transactions only for the purpose of acquiring portfolio securities
consistent with and in furtherance of the Fund's investment objectives and
policies and not for investment leverage, although such transactions represent a
form of leveraging.
Mortgage-Related Securities. The Short/Intermediate Fund, Fixed Income Fund
and Balanced Fund may, consistent with their respective investment objective and
policies, invest in mortgage-related securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
Mortgage-related securities, for purposes of such Funds' Prospectus and this
Statement of Additional Information, represent pools of mortgage loans assembled
for sale to investors by various governmental agencies such as the Government
National Mortgage Association and government-related organizations such as the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation, as well as by non-governmental issuers such as commercial banks,
savings and loan institutions, mortgage bankers and private mortgage insurance
companies. Although certain mortgage-related securities are guaranteed by a
third party or otherwise similarly secured, the market value of the security,
which may fluctuate, is not so secured. If a Fund purchases a mortgage-related
security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other interest-
bearing securities, the prices of such securities are inversely affected by
changes in interest rates. However, though the value of a mortgage-related
security may decline when interest rates rise, the converse is not necessarily
true, since in periods of declining interest rates the mortgages underlying the
securities are prone to prepayment, thereby shortening the average life of the
security and shortening the period of time over which income at the higher rate
is received. Conversely, when interest rates are rising, the rate of prepayment
tends to decrease, thereby lengthening the average life of the security and
lengthening the period of time over which income at the lower rate is received.
For these and other reasons, a mortgage-related security's average maturity may
be shortened or lengthened as a result of interest rate fluctuations and,
therefore, it is not possible to predict accurately the security's return to the
Short/Intermediate Fund, Fixed Income Fund and the Balanced Fund. In addition,
regular payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return the Funds
will receive when these amounts are reinvested.
The Short/Intermediate Fund, Fixed Income Fund and Balanced Fund may also
invest in mortgage-related securities which are collateralized mortgage
obligations structured on pools of mortgage pass-through certificates or
mortgage loans. Mortgage-related securities will be purchased only if rated in
the four highest bond rating categories assigned by one or more appropriate
NRSROs, or, if unrated, which the Advisers deems to present attractive
opportunities and are of comparable quality.
There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the U.S. government. GNMA is a wholly-
owned U.S. government corporation within the Department of Housing and Urban
Development. GNMA certificates also are supported by the authority of GNMA to
borrow funds from the U.S. Treasury to make payments under its guarantee.
Mortgage-related securities issued by the Federal National Mortgage Association
("FNMA") include FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are solely the obligations of the FNMA and are not
backed by or entitled to the full faith and credit of the U.S. government. The
FNMA is a government-sponsored organization owned entirely by private
stockholders. Fannie Maes are guaranteed as to timely payment of the principal
and interest by FNMA. Mortgage-related securities issued by the Federal Home
Loan Mortgage Corporation ("FHLMC") include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCS"). The FHLMC is a corporate
instrumentality of the U.S. government, created pursuant to an Act of Congress,
which is owned entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the U.S. government or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the U.S. government or of any Federal Home
Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which
is guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans. When
the FHLMC does not guarantee timely payment of principal, FHLMC may remit the
amount due on account of its guarantee of ultimate payment of principal at any
time after default on an underlying mortgage, but in no event later than one
year after it becomes payable.
As stated in the Prospectus, also included among the mortgage-related
securities that such Funds may purchase are collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"). Certain CMOs
and REMICs are issued by private issuers. Such securities may be eligible for
purchase by the Short/Intermediate Fund, Fixed Income Fund and Balanced Fund if:
(1) the issuer has obtained an exemptive order from the Commission regarding
purchases by investment companies of equity interests of other investment
companies, or (2) such purchase is within the limitations imposed by Section 12
of the Investment Company Act of 1940, as amended (the "1940 Act").
Certain debt securities such as, but not limited to, mortgage-backed
securities, CMOs, asset-backed securities and securitized loan receivables, as
well as securities subject to prepayment of principal prior to the stated
maturity date, are expected to be repaid prior to their stated maturity dates.
As a result, the effective maturity of these securities is expected to be
shorter than the stated maturity. For purposes of compliance with stated
maturity policies and calculation of the Short/Intermediate Fund's and Fixed
Income Fund's weighted average maturity, the effective maturity of such
securities will be used. Depending upon the prevailing market conditions, First
National may purchase debt securities at a discount from face value, which
produces a yield greater than the coupon rate. Conversely, if debt securities
are purchased at a premium over face value, the yield will be lower than the
coupon rate. In making investment decisions, First National will consider many
factors other than current yield, including the preservation of capital,
maturity and yield to maturity.
Other Asset-Backed Securities. The Short/Intermediate Fund, Fixed Income
Fund and Balanced Fund may also invest in interests in pools of receivables,
such as motor vehicle installment purchase obligations (known as Certificates of
Automobile Receivables or CARs) and credit card receivables (known as
Certificates of Amortizing Revolving Debts or CARDs). Such securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pools of assets. Such
securities may also be debt instruments which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and issuing such debt.
Such securities are not issued or guaranteed by the U.S. government or its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain time
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities. Non-
mortgage-backed securities will be purchased by the Short/Intermediate Fund,
Fixed Income Fund or Balanced Fund only when rated in one of the four highest
rating categories for such securities by one or more appropriate NRSROs at the
time of purchase. In addition, such securities generally will have remaining
estimated lives at the time of purchase of seven years or less.
The development of these asset-backed securities is at an early state
compared to mortgage-backed securities. While the market for asset-backed
securities is becoming increasingly liquid, the market for mortgage-backed
securities issued by certain private organizations and non-mortgage-backed
securities is not as well developed. The Advisers will limit purchases of
asset-backed securities to securities that are deemed to be readily marketable
by the Advisers at the time of purchase.
Asset-backed securities held by the Short/Intermediate Fund, Fixed Income
Fund or Balanced Fund arise through the grouping by governmental, government-
related and private organizations of loans, receivables and other assets
originated by various lenders. Interests in pools of these assets differ from
other forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal paid at maturity or specified call
dates. Instead, asset-backed securities provide periodic payments which
generally consist of both interest and principal payments.
The estimated life of an asset-backed security may vary with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of an asset-backed security, will be a function
of current market interest rates and other economic and demographic factors.
Since prepayment experience can vary, asset-backed securities may be a less
effective vehicle for locking in high long-term yields. None of these Funds
will invest more than 5% of its assets in such other asset-backed securities.
Medium-Grade Debt Securities. As stated in the Prospectus, the
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth
Fund and Small Cap Value Fund may each invest in securities within the four
highest rating groups assigned by one or more appropriate NRSROs, including
securities rated in the fourth highest rating group or, if unrated, judged by
the Advisers to be of comparable quality ("Medium-Grade Securities").
As with other fixed-income securities, Medium-Grade Securities are subject
to credit risk and market risk. Market risk relates to changes in a security's
value as a result of changes in interest rates. Credit risk relates to the
ability of the issuer to make payments of principal and interest. Medium-Grade
Securities are considered by Moody's to have speculative characteristics.
Medium-Grade Securities are considered by Moody's and Standard & Poor's to
have some speculative characteristics, and are generally subject to greater
credit risk because issuers are more vulnerable to changes in economic
conditions, higher interest rates or adverse issuer-specific developments which
are more likely to lead to a weaker capacity to make principal and interest
payments than comparable higher-rated debt securities. In addition, the price
of Medium-Grade Securities is generally subject to greater market risk and
therefore reacts more sharply to changes in interest rates. The value and
liquidity of Medium-Grade Securities may be diminished by adverse publicity and
investor perceptions.
Because certain Medium-Grade Securities are traded only in markets where the
number of potential purchasers and sellers, if any, is limited, the ability of
the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund to sell such securities at their fair value
either to meet redemption requests or to respond to changes in the financial
markets may be limited.
Particular types of Medium-Grade Securities may present special concerns.
Some Medium-Grade Securities in which the Short/Intermediate Fund, Fixed Income
Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap Value Fund may
invest may be subject to redemption or call provisions that may limit increases
in market value that might otherwise result from lower interest rates while
increasing the risk that such Funds may be required to reinvest redemption or
call proceeds during a period of relatively low interest rates.
The credit ratings issued by NRSROs are subject to various limitations. For
example, while such ratings evaluate credit risk, they ordinarily do not
evaluate the market risk of Medium-Grade Securities. In certain circumstances,
the ratings may not reflect in a timely fashion adverse developments affecting
an issuer. For these reasons, the Advisers conduct their own independent credit
analysis of Medium-Grade Securities.
Should subsequent events cause the rating of a debt security purchased by
one of the Funds to fall below the fourth highest rating category, as the case
may be, the Advisers will consider such an event in determining whether that
Fund should continue to hold that security. The Advisers expect that they would
not retain more than 5% of the assets of any Fund in such downgraded securities.
In no event, however, would that Fund be required to liquidate any such
portfolio security where the Fund should suffer a loss on the sale of such
security.
Securities of Other Investment Companies. Each of the Short/Intermediate
Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap
Value Fund may invest in securities issued by other investment companies,
including in Shares of the Money Market Fund. Each of the Short/Intermediate
Fund, Fixed Income Fund, Balanced Fund, Equity Fund, Growth Fund and Small Cap
Value Fund currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (a) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
and (c) not more than 3% of the outstanding voting stock of any one investment
company will be owned by any of these Funds. As a shareholder of another
investment company, a Fund would bear, along with other shareholders, its pro
rata portion of that company's expenses, including advisory fees. These
expenses would be in addition to the advisory and other expenses that such Fund
bears directly in connection with its own operations. Investment companies in
which a Fund may invest, other than the Money Market Fund, may also impose a
sales or distribution charge in connection with the purchase or redemption of
their shares and other types of commissions or charges. Such charges will be
payable by that Fund and, therefore, will be borne directly by shareholders. In
order to reduce the imposition of additional fees as a result of investing in
shares of the Money Market Fund, the Advisers, the Administrator and their
affiliates will reduce their fees charged to a Fund by an amount equal to the
fees charged by such service providers based on a percentage of that Fund's
assets attributable to such Fund's investment in the Money Market Fund.
Income Participation Loans. The Short/Intermediate Fund, Fixed Income Fund
and Balanced Fund may make or acquire participation in privately negotiated
loans to borrowers. Frequently, such loans have variable interest rates and may
be backed by a bank letter of credit; in other cases they may be unsecured.
Such transactions may provide an opportunity to achieve higher yields than those
that may be available from other securities offered and sold to the general
public.
Privately arranged loans, however, will generally not be rated by a credit
rating agency and will normally be liquid, if at all, only through a provision
requiring repayment following demand by the lender. Such loans made by the
Short/Intermediate Fund, Fixed Income Fund and Balanced Fund may have a demand
provision permitting such Fund to require repayment within seven days.
Participation in such loans, however, may not have such a demand provision and
may not be otherwise marketable. To the extent these securities are not readily
marketable, they will be subject to the Fund's 5% limitation on investments in
illiquid securities. Recovery of an investment in any such loan that is
illiquid and payable on demand will depend on the ability of the borrower to
meet an obligation for full repayment of principal and payment of accrued
interest within the demand period, normally seven days or less (unless such Fund
determines that a particular loan issue, unlike most such loans, has a readily
available market). As it deems appropriate, the Company's Board of Directors
will establish procedures to monitor the credit standing of each such borrower,
including its ability to honor contractual payment obligations.
The Short/Intermediate Fund, Fixed Income Fund and Balanced Fund will
purchase income participation loans only if such instruments are, in the opinion
of the Advisers, of comparable quality to securities rated within the four
highest rating groups assigned by one or more appropriate NRSROs. None of these
Funds will invest more than 5% of its assets in such securities.
Other Loans. In order to generate additional income, each Fund (excluding
the Money Market Fund) may, from time to time, lend it portfolio securities to
broker-dealers, banks or institutional borrowers of securities. A Fund must
receive 100% collateral in the form of cash or U.S. government securities. This
collateral will be valued daily by the Advisers. Should the market value of the
loaned securities increase, the borrower must furnish additional collateral to
that Fund. During the time portfolio securities are on loan, the borrower pays
that Fund any dividends or interest received on such securities. Loans are
subject to termination by such Fund or the borrower at any time. While a Fund
does not have the right to vote securities on loan, each Fund intends to
terminate the loan and regain the right to vote if that is considered important
with respect to the investment. In the event the borrower would default in its
obligations, such Fund bears the risk of delay in recovery of the portfolio
securities and the loss of rights in the collateral. A Fund will enter into
loan agreements only with broker-dealers, banks or other institutions that the
Advisers have determined are creditworthy under guidelines established by the
Company's Board of Directors.
Repurchase Agreements. Securities held by each of the Funds may be subject
to repurchase agreements. Under the terms of a repurchase agreement, a Fund
would acquire securities from member banks of the Federal Deposit Insurance
Corporation and/or registered broker-dealers which the Advisers deem credit-
worthy under guidelines approved by the Company's Board of Directors, subject to
the seller's agreement to repurchase such securities at a mutually agreed-upon
date and price. The repurchase price would generally equal the price paid by a
Fund plus interest negotiated on the basis of current short-term rates, which
may be more or less than the rate on the underlying portfolio securities.
Securities subject to repurchase agreements will be of the same type and quality
as those in which such Fund may invest directly. The seller under a repurchase
agreement will be required to maintain continually the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest) plus the transaction costs, including loss of interest, that
such Fund reasonably could expect to incur if the seller defaults. This
requirement will be continually monitored by the Advisers. If the seller were
to default on its repurchase obligation or become insolvent, a Fund holding such
obligation would suffer a loss to the extent that the proceeds from a sale of
the underlying portfolio securities were less than the repurchase price under
the agreement, or to the extent that the disposition of such securities by such
Fund were delayed pending court action. Additionally, there is no controlling
legal precedent confirming that a Fund would be entitled, as against a claim by
such seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although the Board of Directors of the Company believes that, under
the regular procedures normally in effect for custody of a Fund's securities
subject to repurchase agreements and under federal laws, a court of competent
jurisdiction would rule in favor of the Company if presented with the question.
Securities subject to repurchase agreements will be held by that Fund's
custodian or another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a Fund
under the 1940 Act.
Reverse Repurchase Agreements. As discussed in the Prospectus, each of the
Funds may borrow funds for temporary purposes by entering into reverse
repurchase agreements in accordance with that Fund's investment restrictions.
Pursuant to such agreements, a Fund would sell portfolio securities to financial
institutions such as banks and broker-dealers, and agree to repurchase the
securities at a mutually agreed-upon date and price. Each Fund intends to enter
into reverse repurchase agreements only to avoid otherwise selling securities
during unfavorable market conditions to meet redemptions. At the time a Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account assets such as U.S. government securities or other liquid,
high grade debt securities consistent with such Fund's investment restrictions
having a value equal to the repurchase price (including accrued interest), and
will subsequently continually monitor the account to ensure that such equivalent
value is maintained at all times. Reverse repurchase agreements involve the
risk that the market value of the securities sold by a Fund may decline below
the price at which a Fund is obligated to repurchase the securities and that the
buyer may default on its obligation to sell such securities back to a Fund.
Reverse repurchase agreements are considered to be borrowings by a Fund under
the 1940 Act.
Except as otherwise disclosed to the Shareholders of a Fund, the Company
will not execute portfolio transactions through, acquire portfolio securities
issued by, make savings deposits in, or enter into repurchase or reverse
repurchase agreements with the Advisers, the Administrator, or their affiliates,
and will not give preference to the Advisers' correspondents with respect to
such transactions, securities, savings deposits, repurchase agreements and
reverse repurchase agreements.
Illiquid Securities. Each Fund may invest up to 5% of its net assets in
illiquid securities (i.e., securities that cannot be disposed of within seven
days in the normal course of business at approximately the amount at which the
Fund has valued the securities). The Board of Directors has the ultimate
authority to determine which securities are liquid or illiquid for purposes of
this limitation. Certain securities ("restricted securities") exempt from
registration or issued in transactions exempt from registration under the
Securities Act of 1933, as amended ("Securities Act") (securities that may be
resold pursuant to Rule 144A or Regulation S under the Securities Act), may be
considered liquid. The Board has delegated to the Advisers the day-to-day
determination of the liquidity of a security, although it has retained oversight
and ultimate responsibility for such determinations. Although no definite
quality criteria are used, the Board of Directors has directed the Advisers to
look to such factors as (a) the nature of the market for a security (including
the institutional private or international resale market), (b) the terms of
these securities or other instruments allowing for the disposition to a third
party or the issuer thereof (e.g., certain repurchase obligations and demand
instruments), (c) the availability of market quotations (e.g., for securities
quoted in PORTAL system), and (d) other permissible relevant factors. Certain
securities, such as repurchase obligations maturing in more than seven days, are
currently considered illiquid.
Restricted securities may be sold only in privately negotiated or other
exempt transactions, qualified non-U.S. transactions, such as under Regulation
S, or in a public offering with respect to which a registration statement is in
effect under the Securities Act of 1933. Where registration is required, a Fund
may be obligated to pay all or part of the registration expenses and a
considerable time may elapse between the decision to sell and the sale date.
If, during such period, adverse market conditions were to develop, that Fund
might obtain a less favorable price than prevailed when it decided to sell.
Restricted securities will be priced at fair value as determined in good faith
by the Board of Directors. If through the appreciation of illiquid securities
or the depreciation of liquid securities, a Fund should be in a position where
more than 5% of the value of its net assets is invested in illiquid assets,
including restricted securities which are not readily marketable, that Fund will
take such steps as it deems advisable, if any, to reduce the percentage of such
securities to 5% or less of the value of its net assets.
Temporary Defensive Positions. During temporary defensive periods as
determined by First National, the Equity Fund, Growth Fund and Small Cap Value
Fund may each hold up to 100% of its total assets in high-quality short-term
obligations including domestic bank certificates of deposit, bankers'
acceptances and repurchase agreements secured by bank instruments. However, to
the extent that a Fund is so invested in debt obligations, such Fund may not
achieve its investment objective.
Over-the-Counter Market. The Balanced Fund, Equity Fund, Growth Fund and
Small Cap Value Fund may each invest in common stocks, some of which will be
traded in the over-the-counter market. In contrast to the securities exchanges,
the over-the counter market is not a centralized facility which limits trading
activity to securities of companies which initially satisfy certain defined
standards. Any security can be traded in the over-the-counter market as long as
an individual or firm is willing to make a market in the security. Because
there are no minimum requirements for a company's assets or earnings or the
number of its stockholders in order for its stock to be traded over-the-counter,
there is great diversity in the size and profitability of companies whose stocks
trade in this market, ranging from relatively small little-known companies to
well-established corporations. When the Fund disposes of such a stock it may
have to offer the shares at a discount from recent prices or sell the shares in
small lots over an extended period of time.
Small-and-Medium-Capitalization Companies. The Growth Fund may invest in
securities issued by companies with relatively smaller or medium capitalization.
Some securities issued by companies with relatively smaller market
capitalizations in general present greater risks than securities issued by
companies with larger market capitalization and may be subject to large, abrupt
or erratic fluctuations in price due, in part, to such factors as the issuer's
dependence upon key personnel, the lack of internal resources, the inability to
obtain funds from external sources, and dependence on a new product or service
for which there is no firmly established market. Therefore, the net asset value
of the Fund could be influenced by such price fluctuations in the securities of
small-capitalization companies held by the Fund. An emphasis on appreciation
and medium-capitalization companies may result in even greater risk than is
inherent in other equity investment alternatives. The Fund will likely have
somewhat greater volatility than the stock market generally, as measured by the
S&P 500 Index.
Investment Restrictions
- -----------------------
Each Fund's investment objective is a fundamental policy and may not be
changed without a vote of the holders of a majority of such Fund's outstanding
Shares. In addition, the following investment restrictions may be changed with
respect to a particular Fund only by a vote of the majority of the outstanding
Shares of that Fund (as defined under "ADDITIONAL INFORMATION - Vote of a
Majority of the Outstanding Shares").
Each of the Funds will not:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities, if,
immediately after such purchase: (a) more than 5% of the value of such
Fund's total assets would be invested in such issuer; or (b) such Fund would
hold more than 10% of the outstanding voting securities of such issuer,
except that up to 25% of the value of a Fund's total assets may be invested
without regard to such limitations. There is no limit to the percentage of
assets that may be invested in U.S. Treasury bills, notes, or other
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
2. Purchase any securities which would cause more than 25% of the value of a
Fund's total assets at the time of purchase to be invested in securities of
one or more issuers conducting their principal business activities in the
same industry, provided that: (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and repurchase agreements secured by obligations of the
U.S. government or its agencies or instrumentalities; (b) wholly-owned
finance companies will be considered to be in the industries of their
parents if their activities are primarily related to financing the
activities of their parents; and (c) utilities will be divided according to
their services. For example, gas, gas transmission, electric and gas,
electric and telephone will each be considered a separate industry.
3. Borrow money or issue senior securities, except that each Fund may borrow
from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of such Fund's
total assets at the time of its borrowing. A Fund will not purchase
securities while its borrowings (including reverse repurchase agreements)
exceed 5% of its total assets.
4. Make loans, except that each Fund may purchase or hold debt instruments and
lend portfolio securities in accordance with its investment objective and
policies, and may enter into repurchase agreements.
In addition, the Money Market Fund may not:
1. Purchase securities on margin, sell securities short, participate on a
joint or joint and several basis in any securities trading account, or
underwrite the securities of other issuers, except to the extent that such Fund
may be deemed to be an underwriter under certain securities laws, in the
disposition of "restricted securities" acquired in accordance with that Fund's
investment objectives and policies;
2. Purchase or sell commodities, commodity contracts (including futures
contracts), oil, gas or mineral exploration or development programs, or real
estate (although investments by such Fund in marketable securities of companies
engaged in such activities are not hereby precluded);
3. Write or purchase put or call options;
4. Invest in any issuer for purposes of exercising control or management;
and
5. Purchase or retain securities of any issuer if the officers or Directors
of the Company or the officers or directors of its investment adviser owning
beneficially more than one-half of 1% of the securities of such issuer together
own beneficially more than 5% of such securities.
In addition, none of the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund and Small Cap Value Fund may:
1. Purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases of portfolio securities;
2. Engage in any short sales;
3. Underwrite the securities issued by other persons, except to the extent
that a Fund may be deemed to be an underwriter under certain securities laws in
the disposition of "restricted securities";
4. Purchase or sell commodities or commodities contracts, unless and until
disclosed in the current Prospectus of the Funds; and
5. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities are not prohibited by this
restriction).
In addition, the Growth Fund may not:
1. Act as an underwriter or distributor of securities other than shares of
the Fund except to the extent that the Fund's participation as part of a group
in bidding or by bidding alone, for the purchase of permissible investments
directly from an issuer or selling shareholders for the Fund's own portfolio may
be deemed an underwriting, and except to the extent that the Fund may be deemed
an underwriter under the Securities Act, by virtue of disposing of portfolio
securities;
2. Purchase or sell commodities or commodities contracts unless acquired as
a result of ownership of securities or other instruments (but this shall not
prevent the Fund from engaging in transactions involving foreign currencies,
futures contracts, options on futures contracts or options, or from investing in
securities or other instruments backed by physical commodities); and
3. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities are not prohibited by this
restriction).
The following additional investment restrictions may be changed without the
vote of a majority of the outstanding Shares of a Fund:
Each Fund may not purchase or otherwise acquire any securities if, as a
result, more than 5% of that Fund's net assets would be invested in securities
that are illiquid.
In addition, the Money Market Fund may not:
1. Invest in securities of other investment companies, except as such
securities may be acquired as part of a merger, consolidation, reorganization,
or acquisition of assets; and
2. Buy common stocks or voting securities.
Irrespective of fundamental investment restriction number 1 above, and
pursuant to Rule 2a-7 under the 1940 Act, the Money Market Fund will, with
respect to 100% of its total assets, limit its investment in the securities of
any one issuer in the manner provided by such Rule.
In addition to the fundamental restrictions listed above, the
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund have adopted the following restrictions that may be changed by
the Board of Directors without Shareholder approval:
1. Purchase participations or direct interests in oil, gas or other mineral
exploration or development programs (although investments by such Funds in
marketable securities of companies engaged in such activities are not prohibited
in this restriction);
2. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, acquisition or reorganization, and (b)
a Fund may invest in other investment companies if, at the time of purchase (i)
the acquiring Fund will own no more than 3% of the shares of the investment
company selling such shares, (ii) the value of the investment company shares
acquired, when aggregated with the value of other shares of such investment
company held by the acquiring Fund, does not exceed 5% of the total assets of
the acquiring Fund, and (iii) the value of the investment company shares
acquired, when aggregated with the value of any other shares of investment
companies held by the acquiring Fund, does not exceed 10% of the total assets of
the acquiring Fund; and
3. Purchase or retain the securities of an issuer if, to the knowledge of
such Fund's management, the officers or Directors of the Company, and the
officers or directors of First National, who each owns beneficially more than
.5% of the outstanding securities of such issuer, together own beneficially more
than 5% of such securities.
The following additional investment restrictions are not fundamental and may
be changed without the vote of a majority of the outstanding Shares of the
Growth Fund. The Growth Fund may not:
1. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, acquisition or reorganization, and (b)
the Fund may invest in other investment companies if, at the time of purchase
(i) the acquiring Fund will own no more than 3% of the shares of the investment
company selling such shares, (ii) the value of the investment company shares
acquired, when aggregated with the value of other shares of such investment
company held by the acquiring Fund, does not exceed 5% of the total assets of
the acquiring Fund, and (iii) the value of the investment company shares
acquired, when aggregated with the value of any other shares of investment
companies held by the acquiring Fund, does not exceed 10% of the total assets of
the acquiring Fund;
2. Purchase securities on margin (except to obtain such short-term credits
as are necessary for the clearance of purchases and sales of securities) or
participate in a joint trading account; provided, however, the Fund may (i)
purchase or sell futures contracts, (ii) make initial and variation margin
payments in connection with purchases or sales of futures contracts or options
on futures contracts, (iii) write or invest in put or call options on securities
and indexes, and (iv) engage in foreign currency transactions. (The "bunching"
of orders for the sale or purchase of marketable portfolio securities with other
accounts under the management of FNC to save brokerage costs on average prices
among them is not deemed to result in a securities trading account.);
3. Acquire illiquid securities if, as a result of such investments, more
than five percent (5%) of the Fund's net assets (taken at market value at the
time of each investment) would be invested in illiquid securities. "Illiquid
securities" means securities that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which the Fund has
valued the securities; and
3. Engage in any short sales.
If any percentage restriction described above (and in the Prospectus) is
satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in asset value will not constitute a
violation of such restriction. However, should a change in net asset value or
other external events cause a Fund's investment in illiquid securities to exceed
such Fund's limit on its investments in such securities, that Fund will act to
cause the aggregate amount of illiquid securities to come within such limit as
soon as reasonably practicable. In such an event, however, a Fund would not be
required to liquidate any portfolio securities where such Fund would suffer a
loss on the sale of such securities.
Portfolio Turnover
- ------------------
The portfolio turnover rate for each of the Funds is calculated by dividing
the lesser of a Fund's purchases or sales of portfolio securities for the year
by the monthly average value of the portfolio securities. The Commission
requires that the calculation exclude all securities whose remaining maturities
at the time of acquisition were one year or less.
Because the Money Market Fund intends to invest entirely in securities with
remaining maturities of less than one year and because the Commission requires
such securities to be excluded from the calculation of portfolio turnover rate,
the portfolio turnover with respect to the Money Market Fund is expected to be
zero percent for regulatory purposes. The portfolio turnover rate may vary
greatly from year to year as well as within a particular year, and may also be
affected by cash requirements for redemptions of Shares. Portfolio turnover
will not be a limiting factor in making investment decisions.
NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund is
determined and the Shares of each Fund are priced each Business Day at the close
of trading on the New York Stock Exchange ("NYSE") (typically 4 p.m. Eastern
time), except for Money Market Fund shares, which are priced at 2 p.m. A
"Business Day" is a day on which the NYSE is open for trading. A Fund is not
required to calculate NAV if none of its shares were bought or sold that day.
The NYSE will not open in observance of the following holidays: New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Shares are purchased at their net asset value per share. Each Fund, except
the Money Market Fund, calculates its net asset value (NAV) as follows:
NAV= (Value of Fund Assets)-(Fund Liabilities)
-----------------------------------------
Number of Outstanding Shares
Valuation of the Money Market Fund. A security listed or traded on a
recognized stock exchange or quoted on Nasdaq is valued at its last sale price
prior to the time when assets are valued on the principal exchange on which the
security is traded or on Nasdaq. If no sale is reported at that time the most
current bid price will be used. All other securities for which over-the-counter
market quotations are readily available are valued at the most current bid
price. Where quotations are not readily available, the Funds' investments are
valued at fair value as determined by management and approved in good faith by
the Directors. Debt securities which will mature in more than 60 days are
valued at prices furnished by a pricing service approved by the Directors
subject to review and determination of the appropriate price by the Company,
whenever a furnished price is significantly different from the previous day's
furnished price. Securities which will mature in 60 days or less are valued at
amortized cost, which approximates market value.
Generally, trading in foreign securities, as well as U.S. Government
securities and certain cash equivalents and repurchase agreements, is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value of
the shares of the Funds are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the NYSE.
Occasionally, events affecting the value of such securities and such exchange
rates may occur between the times at which they are determined and at the close
of the NYSE, which will not be reflected in the computation of net asset value.
If during such periods, events occur which materially affect the value of such
securities, the securities will be valued at their fair market value as
determined by management and approved in good faith by the Directors.
For purposes of determining the net asset value per share of each Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars furnished by a pricing
service approved by the Directors.
A Fund's net asset value per share will be calculated separately from the
per share net asset value of the other funds of the Company. "Assets belonging
to" a fund consist of the consideration received upon the issuance of shares of
the particular fund together with all net investment income, earnings, profits,
realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of the Company not belonging to a particular series. Each Fund will be
charged with the direct liabilities of that Fund and with a share of the general
liabilities of the Company's Funds.
The Money Market Fund has elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act, which the Directors of the
Company believe fairly reflects the market-based net asset value per share This
involves valuing an instrument at its cost initially and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
This method may result in periods during which value, as determined by amortized
cost, is higher or lower than the price the Money Market Fund would receive if
it sold the instrument. The value of securities in the Money Market Fund can be
expected to vary inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Money Market Fund will maintain a dollar-weighted
average portfolio maturity appropriate to the Money Market Fund's objective of
maintaining a stable net asset value per share, provided that the Money Market
Fund will not purchase any security with a remaining maturity of more than 397
days (13 months) (securities subject to repurchase agreements may bear longer
maturities) nor maintain a dollar-weighted average portfolio maturity which
exceeds 90 days. The Company's Board of Directors has also undertaken to
establish procedures reasonably designed, taking into account current market
conditions and the investment objective of the Money Market Fund, to stabilize
the net asset value per share of the Money Market Fund for purposes of sales and
redemptions at $1.00; although the Fund seeks to maintain a net asset value per
share at $1.00, there can be no assurance that net asset value will not vary.
These procedures include review by the Directors, at such intervals as they deem
appropriate, to determine the extent, if any, to which the net asset value per
share of the Money Market Fund calculated by using available market quotations
deviates from $1.00 per Share. In the event such deviation exceeds one-half of
one percent, Rule 2a-7 requires that the Board of Directors promptly consider
what action, if any, should be initiated. If the Directors believe that the
extent of any deviation from the Money Market Fund's $1.00 amortized cost price
per Share may result in material dilution or other unfair results to new or
existing investors, they will take such steps as they consider appropriate to
eliminate or reduce, to the extent reasonably practicable, any such dilution or
unfair results. These steps may include selling portfolio instruments prior to
maturity, shortening the average portfolio maturity, withholding or reducing
dividends, reducing the number of the Money Market Fund's outstanding Shares
without monetary consideration, or utilizing a net asset value per share
determined by using available market quotations.
Valuation of the Other Funds.
- -----------------------------
Each security traded on a U.S. national securities exchange or quoted on the
Nasdaq National Market System ordinarily will be valued on the basis of its last
sale price on the date of valuation or, if there are no sales that day, at the
closing bid quotation. Securities traded on exchanges located outside of the
U.S. will be valued on the basis of the price as of the most recent close of
business on the exchange preceding the time of valuation. Debt securities
(other than short-term instruments are valued at prices furnished by a pricing
service. Securities and other assets for which quotations are not readily
available are valued at their fair value as determined in good faith under
consistently applied procedures established by and under the general supervision
of the Directors of the Company. Short-term securities are valued at either
amortized cost or original cost plus accrued interest, which approximates
current value.
ADDITIONAL PURCHASE, REDEMPTION, AND EXCHANGE INFORMATION
Purchases. Shares of the Funds are sold on a continuous basis by the
Distributor, and the Shares may be purchased either directly from the Funds or
through Banks or certain other institutions. Investors purchasing Shares of the
Funds may include officers, directors, or employees of the Advisers or their
correspondent or affiliated banks.
Customers of First National and FNC or their correspondent or affiliated
banks (collectively, the "Banks") may purchase shares in connection with the
requirements of their qualified accounts maintained at the Banks. In the case
of the Money Market Fund, these procedures may include instructions under which
a customer's account is "swept" automatically no less frequently than weekly and
amounts in excess of a minimum amount agreed upon by the Bank and the customer
are invested in shares of the Money Market Fund.
Shares of the Funds purchased through the Banks acting in a fiduciary,
advisory, custodial, or other similar capacity on behalf of customers will
normally be held of record by the Banks. With respect to shares of the Funds so
sold, it is the responsibility of the particular Bank to transmit purchase or
redemption orders to the Company and to deliver federal funds for purchase on a
timely basis. Beneficial ownership of shares will be recorded by the Banks and
reflected in the account statements provided by the Banks to customers. A Bank
will exercise voting authority for those shares for which it is granted
authority by the customer.
The Banks and other institutions may impose particular customer account
requirements in connection with investments in the Funds, such as minimum
account size or minimum account thresholds above which excess cash balances may
be invested in Fund shares. In addition, depending on the terms of the
particular account used to purchase shares of the Funds, the Banks or other
institutions may impose charges against the account. These charges could
include asset allocation fees, account maintenance fees, sweep fees,
compensatory balance requirements, transaction charges or other charges based
upon account transactions, assets or income. The charges will reduce the net
return on an investment in a Fund. Investors should contact their institutions
with respect to these fees and the particular institution's procedures for
purchasing or redeeming shares. This Prospectus should be read in conjunction
with any such information received from the Banks or the institutions.
Exchanges. If shares are purchased through a Bank or other institution, the
shares may be exchanged only in accordance with the instructions and procedures
pertaining to that account.
Redemptions. If a customer has agreed with a Bank to maintain a minimum
balance in his or her account with the Bank, and the balance in that account
falls below that minimum, the customer may be obligated to redeem, or the Bank
may redeem on behalf of the customer, all or part of the customer's shares of a
Fund to the extent necessary to maintain the required minimum balance. The
minimum balance required by any such Bank or other institution may be higher
than the minimum required by the Company.
The Transfer Agent reserves the right to reject any signature guarantee if:
(1) it has reason to believe that the signature is not genuine; (2) it has
reason to believe that the transaction would otherwise be improper; or (3) the
guarantor institution is a broker or dealer that is neither a member of a
clearing corporation nor maintains net capital of at least $100,000.
The Company may suspend the right of redemption or postpone the date of
payment for Shares of a Fund during any period when (a) trading on the New York
Stock Exchange is restricted by applicable rules and regulations of the
Commission, (b) the New York Stock Exchange is closed for other than customary
weekend and holiday closings, (c) the Commission has by order permitted such
suspension, or (d) an emergency exists as a result of which (i) disposal by the
Company of securities owned by it is not reasonably practical, or (ii) it is not
reasonably practical for the Company to determine the fair value of its net
assets.
The Company may redeem Shares of the Money Market Fund involuntarily if
redemption appears appropriate in light of the Company's responsibilities under
the 1940 Act. See "NET ASSET VALUE -Valuation of the Money Market Fund" in this
Statement of Additional Information.
MANAGEMENT OF THE COMPANY
Directors and Officers
- ----------------------
Overall responsibility for management of the Company rests with its Board of
Directors, which is elected by the Shareholders of the Company. The Company
will be managed by the Directors in accordance with the laws of Nebraska
governing corporations. The Directors elect the officers of the Company to
supervise actively its day-to-day operations.
The names of the Directors and officers of the Company, their addresses, and
principal occupations during the past five years are as follows:
Position(s) Held Principal Occupation(s)
Name, Address, and Age with the Company During Past 5 Years
- ----------------------- ---------------- -------------------------------
David P. Greer<F1> President and Trust Officer, First National
3623 South 107th Avenue Director Bank of Omaha (1987-1994);
Omaha, NE 68124 presently retired
Age: 69
Randy M. Pavlick Secretary Vice President - General
207 East Buffalo Street Counsel, Sunstone Financial
Suite 400 Group, Inc. (1993-present);
Milwaukee, WI 53202 previously in private law
Age: 39 practice with Foley & Lardner,
a law firm
Paul Schmanski Treasurer Administration Services
207 East Buffalo Street Manager, Sunstone Financial
Suite 400 Group, Inc. (1995-present);
Milwaukee, WI 53202 previously Staff Accountant,
Age: 29 PriceWaterhouse LLP (1991-1995)
Richard P. Snyder Vice President Client Services Group Manager,
207 East Buffalo Street Sunstone Financial Group, Inc.
Suite 400 (1993-present); previously
Milwaukee, WI 53202 Audit Manager, Sta-Rite
Age: 36 Industries, Inc. (1990-1993)
Joseph Caggiano Director Vice Chairman (1967-1993),
302 South 36th Street Chief Financial Officer
Omaha, NE 68131 (1967-1991) and Vice-Chairman
Age: 73 Emeritus (1993-present) of
Bozell Jacobs
Harry A. Koch, Jr.<F1> Director President and Treasurer, The
P.O. Box 6215 Harry A. Koch Co., insurance
Omaha, NE 68106 agents and brokers
Age: (1958-present)
Robert A. Reed Director President and Chief Executive
2600 Dodge Street Officer, Physicians Mutual
Omaha, NE 68131 Insurance Company and
Age: 59 Physicians Life Insurance
Company (1974-present)
Gary Witt Director President and Shareholder,
11837 Miracle Hills Drive Lutz & Company, P.C., Certified
Suite 100 Public Accountants
Omaha, NE 68154 (1987-present)
Age: 47
<F1> Denotes "interested directors" as defined in the 1940 Act.
The following table sets forth certain information concerning compensation
paid by the Company to its Directors and officers in the fiscal year ending
March 31, 1999.
Pension or
Retirement
Aggregate Benefits Accrued Estimated
Compensation as Part of Annual Total
Name and to be Paid Company Retirement Compensation
Position by Company Expenses Benefits From Company
- -------- ------------ --------------- ----------- ------------
David P. Greer
President and
Director $6,000 -0- -0- $6,000
Randy M. Pavlick
Secretary -0- -0- -0- -0-
Richard P. Snyder
Vice President -0- -0- -0- -0-
Paul Schmanski
Treasurer -0- -0- -0- -0-
Joseph Caggiano
Director $6,000 -0- -0- $6,000
Harry A. Koch, Jr.
Director $5,250 -0- -0- $5,250
Robert A. Reed
Director $6,000 -0- -0- $6,000
Gary Witt
Director $6,000 -0- -0- $6,000
As of April 30, 1999, the Company's officers and Directors, as a group,
owned less than 1% of each Fund's outstanding Shares. As of March 31, 1999, the
Funds were not aware of any entities that owned a controlling interest
(ownership of greater than 25%) or beneficially owned or owned of record 5% of
more of the outstanding shares of any Fund.
The officers of the Company receive no compensation directly from the
Company for performing the duties of their offices. The officers of the Company
may, from time to time, serve as officers of other investment companies.
Sunstone Financial Group, Inc. receives fees from each of the Funds for acting
as administrator and the Administrator or its affiliates may receive fees from
each of the Funds pursuant to the Distribution and Service Plan and the
Administrative Services Plan described below. Messrs. Pavlick, Schmanski, and
Snyder are employees of, and are compensated by, the Administrator.
Investment Advisers
- -------------------
Investment advisory services are provided to the Money Market Fund,
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund by First National Bank of Omaha, Omaha, Nebraska ("First
National"), pursuant to the Investment Advisory Agreement dated as of December
20, 1994 as amended as of December 5, 1995 and June 4, 1996 (the "Investment
Advisory Agreement"). First National is a wholly owned subsidiary of First
National of Nebraska, Inc., a Nebraska corporation.
Investment advisory services are provided to the Growth Fund by FNC Trust
Group, n.a. ("FNC") pursuant to the Investment Advisory Agreement dated as of
February 3, 1998 (the "Growth Fund Advisory Agreement"). FNC is a wholly owned
subsidiary of First National Colorado, Inc. which is a wholly owned subsidiary
of First National of Nebraska, Inc., a Nebraska corporation.
Under the Advisory Agreements, the Advisers have agreed to provide
investment advisory services as described in the Prospectus of the Funds. For
the services provided and expenses assumed pursuant to the Advisory Agreements,
Money Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced Fund,
Equity Fund and Small Cap Value Fund, pay the Advisers a fee equal to the lesser
of (a) a fee computed daily and paid monthly, at an annual rate of twenty-five
one-hundredths of one percent (.25%), fifty one-hundredths of one percent (.50%)
sixty one-hundredths of one percent (.60%), seventy-five one-hundredths of one
percent (.75%), seventy-five one-hundredths of one percent (.75%), seventy-five
one-hundredths of one percent (.75%), eighty-five one-hundredths of one percent
(.85%), respectively, of the average daily net assets of that Fund, or (b) such
other fee as may be agreed upon from time to time in writing by the Company and
the Advisers. The Advisers may periodically voluntarily reduce all or a portion
of their advisory fees with respect to any Fund, which reduction would increase
the net income of that Fund available for distribution as dividends.
Set forth below are the advisory fees, net of fee waivers, First National earned
for the three previous fiscal periods ended March 31.
Fiscal Year Ended March 31, 1997:
---------------------------------
Fund Advisory Fees Fee Waivers
-------------------- -----------
(net of fee waivers)
--------------------
Money Market $264,627 $0
Short/Intermediate $96,855 $10,762
Fixed Income $429,257 $39,046
Balanced $0 $25,234
Equity $1,838,101 $0
Small Cap Value $407 $25,647
Fiscal Year Ended March 31, 1998:
Fund Advisory Fees Fee Waivers
(net of fee waivers)
Money Market $275,046 $0
Short/Intermediate $89,772 $9,975
Fixed Income $422,736 $38,430
Balanced $68,635 $78,438
Equity $2,151,925 $0
Small Cap Value $33,894 $62,141
Fiscal Year Ended March 31, 1999:
Fund Advisory Fees Fee Waivers
(net of fee waivers)
Money Market $268,858 $0
Short/Intermediate $94,050 $10,450
Fixed Income $450,197 $40,927
Equity $140,350 $51,037
Balanced $2,111,587 $0
Small Cap Value $76,625 $53,638
Set forth below are the advisory fees, net of fee waivers, FNC earned during the
- --------------------------------------------------------------------------------
fiscal year ended March 31, 1999:
- ---------------------------------
Fund Advisory Fees Fee Waivers
-------------------- -----------
(net of fee waivers)
--------------------
Growth $61,210 $30,604
Unless otherwise terminated, the Advisory Agreements remain in effect from
year to year for successive annual periods ending on June 30 if, as to each
Fund, such continuance is approved at least annually by the Company's Board of
Directors or by vote of a majority of the outstanding Shares of that Fund (as
defined under "ADDITIONAL INFORMATION" in the Statement of Additional
Information), and a majority of the Directors who are not parties to the
Advisory Agreements or interested persons (as defined in the 1940 Act) of any
party to the Advisory Agreements by votes cast in person at a meeting called for
such purpose. The Advisory Agreements are terminable as to a Fund at any time
on 60 days written notice without penalty by the Directors, by vote of a
majority of the outstanding Shares of that Fund, or by the Advisers. The
Advisory Agreements also terminate automatically in the event of any assignment,
as defined in the 1940 Act.
The Advisory Agreements provide that the Advisers shall not be liable for
any error of judgement or mistake of law or for any loss suffered by a Fund in
connection with the performance of the Advisory Agreements, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of compen-
sation for services or a loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Advisers in the performance of their duties,
or from reckless disregard by the Advisers of their duties and obligations
thereunder.
First National also serves as the Funds' custodian as more fully discussed
under "Custodian" below.
Portfolio Transactions
- ----------------------
Pursuant to the Advisory Agreements, the Advisers determine, subject to the
general supervision of the Board of Directors of the Company and in accordance
with each Fund's investment objective and restrictions, which securities are to
be purchased and sold by a Fund, and which brokers are to be eligible to execute
such Fund's portfolio transactions. Purchases and sales of fixed income debt
securities acquired for the Money Market Fund, Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund usually are principal transactions in which portfolio
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. Purchases from underwriters of
other portfolio securities for the Funds generally include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers may include the spread between the bid and asked price.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally
principal transactions with dealers. With respect to the over-the-counter
market, the Company, where possible, will deal directly with dealers who make a
market in the securities involved except in those circumstances where better
price and execution are available elsewhere.
Allocation of transactions, including their frequency, to various brokers
and dealers is determined by the Advisers in their best judgment and in a manner
deemed fair and reasonable to Shareholders. The primary consideration is prompt
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, brokers and dealers who provide supplemental investment
research to the Advisers may receive orders for transactions on behalf of the
Funds. Information so received is in addition to and not in lieu of services
required to be performed by the Advisers and does not reduce the advisory fees
payable to the Advisers by the Funds. Such information may be useful to the
Advisers in serving a Fund and other clients and, conversely, supplemental
information obtained by the placement of business of other clients may be useful
to the Advisers in carrying out their obligations to each of the Funds. The
Advisers may authorize a Fund to pay a commission in excess of the commission
another broker-dealer would have charged if the Advisers determine in good faith
that such commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed either in terms of that
particular transaction or the Advisers' overall responsibilities to the accounts
they manage.
While the Advisers generally seek competitive commissions, the Company may
not necessarily pay the lowest commission available on each brokerage
transaction, for reasons discussed above. For the three previous fiscal years
ending on March 31, the Funds paid the following brokerage commissions on their
respective total transactions:
Fiscal Period Ended March 31, 1997
Fund Brokerage Commission Total Transactions
Balanced $8,952 $5,575,479
Equity $140,910 $101,527,949
Small Cap Value $17,770 $6,402,342
Fiscal Period Ended March 31, 1998
Fund Brokerage Commission Total Transactions
Balanced $11,362 $15,999,858
Equity $90,644 $168,119,274
Small Cap Value $18,033 $13,224,031
Fiscal Period Ended March 31, 1999
Fund Brokerage Commissions Total Transactions
Balanced $15,578 $19,848,197
Equity $245,701 $202,491,981
Growth $43,980 $32,671,469
Small Cap Value $22,005 $10,475,475
During the fiscal year ended March 31, 1999, the Funds did not direct
brokerage transactions to brokers because of research services provided.
Except as otherwise disclosed to the Shareholders of the Funds and as
permitted by applicable laws, rules and regulations, the Company will not, on
behalf of any of the Funds, execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Advisers, the Distributor,
or their affiliates, and will not give preference to the Advisers'
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
Investment decisions for each Fund are made independently from those for the
other Funds of the Company, any other investment company or account managed by
the Advisers. Any such other fund, investment company or account may also
invest in the same securities as the Company. When a purchase or sale of the
same security is made at substantially the same time on behalf of a Fund and
another investment company or account, the transaction will be averaged as to
price, and available investments will be allocated as to amount in a manner
which the Advisers believe to be equitable to the Fund and such other investment
company or account. In some instances, this investment procedure may adversely
affect the price paid or received by a Fund or the size of the position obtained
by a Fund. To the extent permitted by law, the Advisers may aggregate the
securities to be sold or purchased for a Fund with those to be sold or purchased
for the other investment companies or accounts in order to obtain best
execution. As provided by the Advisory Agreements, in making investment
recommendations for each of the Funds, the Advisers will not inquire or take
into consideration whether an issuer of securities proposed for purchase or sale
by the Company is a customer of the Advisers, their parent or subsidiaries or
affiliates and, in dealing with its customers, the Advisers, their parent,
subsidiaries, and affiliates will not inquire or take into consideration whether
securities of such customers are held by the Funds.
Glass-Steagall Act
- ------------------
In 1971, the United States Supreme Court held in Investment Company
Institute v. Camp that the Federal statutes commonly referred to as the Glass-
Steagall Act prohibit a national bank from operating a mutual fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
The Advisers believe that they possess the legal authority to perform the
services for each of the Funds contemplated by the Prospectus, this Statement of
Additional Information, the Advisory Agreements, the Custodian Agreement and the
Servicing Agreement without violation of applicable statutes and regulations.
The Advisers have been advised by their counsel that counsel believes that such
laws should not prevent the Advisers from providing the services required of
them under the Advisory Agreements, the Custodian Agreement, and the Servicing
Agreement. Future changes in either Federal or state statutes and regulations
relating to the permissible activities of banks or bank holding companies and
the subsidiaries or affiliates of those entities, as well as further judicial or
administrative decisions or interpretations of present and future statutes and
regulations, could prevent or restrict the Advisers from continuing to perform
such services for the Company. Depending upon the nature of any changes in the
services which could be provided by the Advisers, the Board of Directors of the
Company would review the Company's relationship with the Advisers and consider
taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit or
restrict the proposed activities of the Advisers and their affiliated and
correspondent banks in connection with Customer purchases of Shares of any of
the Funds, those banks might be required to alter materially or discontinue the
services offered by them to Customers. It is not anticipated, however, that any
change in the Company's method of operations would affect its net asset value
per share or result in financial losses to any Customer.
Administrator/Fund Accountant
- -----------------------------
Sunstone Financial Group, Inc. serves as administrator and fund accountant
(the "Administrator") to each of the Funds pursuant to the Amended and Restated
Administration and Fund Accounting Agreement dated November 4, 1997 and amended
February 3, 1998 (the "Administration Agreement"). The Administrator and its
affiliates provide administration, distribution and fund accounting services to
other investment companies.
Under the Administration Agreement, the Administrator has agreed to provide
office space, facilities, equipment and personnel, compile data for and prepare
with respect to the Funds timely Notices to the Commission required pursuant to
Rule 24f-2 under the Act and semi-annual reports on Form N-SAR; prepare and file
all federal income and excise tax returns and state income tax returns (and such
other required tax filings as may be agreed to by the parties) other than those
required to be made by the Funds' custodian or transfer agent; prepare
compliance filings relating to the registration of the securities of the Funds
pursuant to state securities laws with the advice of Funds' counsel; perform
securities valuations; determine the income and expense accruals of the Funds;
calculate daily net asset values and income factors of the Funds; maintain all
general ledger accounts and related subledgers; prepare financial statements for
the Annual and Semi-Annual Reports required pursuant to Section 30(d) under the
Act; review the Registration Statement for the Funds (on Form N-1A or any
replacement therefor) and any amendments thereto, and proxy materials; prepare
and monitor each Fund's expense accruals and cause all appropriate expenses to
be paid from Fund assets on proper authorization from the Funds; assist in the
acquisition of First Omaha Funds' fidelity bond required by the Act, monitor the
amount of the bond and make the necessary Commission filings related thereto;
check each Fund's compliance with the policies and limitations relating to
portfolio investments as set forth in the Prospectus, Statement of Additional
Information and Articles of Incorporation and monitor each Fund's status as a
regulated investment company under Subchapter M of the Internal Revenue Code, as
amended; maintain, and/or coordinate with the other service providers the
maintenance of, the accounts, books and other documents required pursuant to
Rule 31a-1(a) and (b) under the Act; and generally assist in each Fund's
administrative operations.
The Administrator receives a fee from each Fund for its services as
administrator and fund accountant and expenses assumed pursuant to the
Administration Agreement, equal to the lesser of a fee calculated daily and paid
periodically, at the annual rate of twenty one-hundredths of one percent (.20%)
of that Fund's average daily net assets subject to a minimum fee of $300,000 for
the Money Market Fund, Short/Intermediate Fund, Fixed Income Fund and Equity
Fund in the aggregate and to a minimum fee of $50,000 for each of the Balanced
Fund, Growth Fund and Small Cap Value Fund or such other fee as may be agreed
upon in writing by the Company and the Administrator. The Administrator may
periodically voluntarily reduce all or a portion of its fee with respect to a
Fund in order to increase the net income of one or more of the Funds available
for distribution as dividends.
Unless otherwise terminated as provided therein, the Administration
Agreement remains in effect from year to year for successive annual periods
ending on April 10. The Administration Agreement is terminable with respect to
a particular Fund only upon mutual agreement of the parties to the Administra-
tion Agreement and on not less than 90 days' notice by the Company's Board of
Directors or by the Administrator.
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or any loss suffered by any
of the Funds in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or from the reckless
disregard by the Administrator of its obligations and duties thereunder. For
the fiscal period ended March 31, 1997, the Administrator earned $196,204,
$39,821, $144,475, $3,873, $453,766 and $4,513, net of fee waivers of $15,497,
$3,226, $11,626, $28,731, $36,394 and $35,762 for the Money Market Fund,
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund, respectively. For the fiscal period ended March 31, 1998, the
Administrator earned $183,788, $33,264, $127,827, $35,000, $477,003 and $30,000,
net of fee waivers of $36,249, $6,635, $25,895, $15,000, $96,844 and $20,000 for
the Money Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced
Fund, Equity Fund and Small Cap Value Fund, respectively.
For the fiscal period ended March 31, 1999, the Administrator earned $172,610,
$33,545, $131,378, $40,958, $451,890, $33,333 and $37,663 net of fee waivers of
$42,477, $8,255, $32,330, $10,079, $111,200, $16,667 and $12,337 for the Money
Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity
Fund, Growth Fund and Small Cap Value Fund, respectively.
Expenses
- --------
The Advisory Agreements provide that if total expenses borne by any of the
Funds in any fiscal year exceed expense limitations imposed by applicable state
securities regulations, the Advisers will reimburse that Fund by the amount of
such excess in proportion to its respective fees. As of the date of this
Statement of Additional Information, the Funds are not aware of any state
imposed expense limitation applicable to the Funds. Fees imposed upon customer
accounts by the Advisers or their affiliated or correspondent banks for cash
management services are not included within Fund expenses for purposes of any
such expense limitation.
The Advisers and the Administrator each bear all expenses in connection with
the performance of their services as investment advisers and administrator,
respectively, other than the cost of securities (including brokerage
commissions, and issue and transfer taxes, if any) purchased for a Fund. Each
Fund will bear the following expenses relating to its operations: organizational
expenses; taxes; interest; any brokerage fees and commissions; fees and expenses
of the Directors of the Company; Commission fees; state securities qualification
fees; costs of preparing and printing Prospectuses for regulatory purposes and
for distribution to its current Shareholders; outside auditing and legal
expenses; advisory and administration fees; fees and out-of-pocket expenses of
the Administrator, Custodian and Transfer Agent; costs for independent pricing
service; certain insurance premiums; costs of maintenance of the Company's
existence; costs of Shareholders' and Directors' reports and meetings;
distribution expenses incurred pursuant to the Distribution and Service Plan
described below; and any extraordinary expenses incurred in a Fund's operation.
Distributor
- -----------
Sunstone Distribution Services, LLC serves as agent for each of the Funds in the
distribution of its Shares pursuant to a Distribution Agreement dated January 1,
1997 and amended February 3, 1998 (the "Distribution Agreement"). Prior to that
date, Sunstone Financial Group, Inc., an affiliate of Sunstone Distribution
Services, served as agent for each of the Funds in the distribution of its
Shares. Unless otherwise terminated, the Distribution Agreement remains in
effect from year to year for successive annual periods ending on June 30 if
approved at least annually (a) by the Company's Board of Directors or by the
vote of a majority of the outstanding shares of the Company, and (b) by the vote
of a majority of the Directors of the Company who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of any
party to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement may be
terminated in the event of any assignment, as defined in the 1940 Act.
The Distributor solicits orders for the sale of Shares, advertises and pays
the costs of advertising, office space and the personnel involved in such
activities. The Distributor receives no compensation under the Distribution
Agreement with the Company, but may receive compensation under the Distribution
and Service Plan described below.
As described in the Prospectus, the Company has adopted a Distribution and
Service Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act under which
each Fund is authorized to make payments to banks, including the Advisers, other
institutions and broker-dealers, (with all of the foregoing organizations being
referred to as "Participating Organizations") for providing distribution or
shareholder service assistance. Payments to such Participating Organizations
may be made pursuant to agreements entered into upon the recommendation of the
Distributor. The Plan authorizes each Fund to make payments in an amount not in
excess, on an annual basis, of 0.25% of the average daily net assets of that
Fund.
Payments may be made by the Funds under the Plan for the purpose of
financing any activity primarily intended to result in the sales of shares of
the Funds as determined by the Board of Directors. Such activities typically
include advertising; compensation for sales and sales marketing activities of
financial services agents and others, such as dealers or distributors;
shareholder account servicing; production and dissemination of prospectuses and
sales and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the extent
any activity is one which the Funds may finance without a Plan, the Funds may
also make payments to finance such activity outside of the Plan and not subject
to its limitations. Payments under the Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.
For the fiscal period ended March 31, 1999, no 12b-1 payments were made under
the Plan.
As required by Rule 12b-1, the Plan was approved by the sole shareholder of
each of the Funds and by the Board of Directors, including a majority of the
Directors who are not interested persons of any of the Funds and who have no
direct or indirect financial interest in the operation of the Plan (the
"Independent Directors"). The Plan may be terminated as to a Fund by vote of a
majority of the Independent Directors, or by vote of majority of the outstanding
Shares of that Fund. Any change in the Plan that would materially increase the
distribution cost to a Fund requires Shareholder approval. The Directors review
quarterly a written report of such costs and the purposes for which such costs
have been incurred. The Plan may be amended by vote of the Directors including
a majority of the Independent Directors, cast in person at a meeting called for
that purpose. For so long as the Plan is in effect, selection and nomination of
those Directors who are not interested persons of the Company shall be committed
to the discretion of such disinterested persons. All agreements with any person
relating to the implementation of the Plan may be terminated at any time on 60
days' written notice without payment of any penalty, by vote of a majority of
the Independent Directors or by a vote of the majority of the outstanding Shares
of any of the Funds. The Plan will continue in effect for successive one-year
periods, provided that each such continuance is specifically approved (a) by the
vote of a majority of the Independent Directors, and (b) by a vote of a majority
of the entire Board of Directors cast in person at a meeting called for that
purpose. The Board of Directors has a duty to request and evaluate such
information as may be reasonably necessary for them to make an informed
determination of whether the Plan should be implemented or continued. In
addition, the Directors in approving the Plan must determine that there is a
reasonable likelihood that the Plan will benefit each Fund and its Shareholders.
The Board of Directors of the Company believes that the Plan is in the best
interests of each Fund since it encourages Fund growth. As a Fund grows in
size, certain expenses, and therefore total expenses, per Share, may be reduced
and overall performance per Share may be improved.
Administrative Services Plan
- ----------------------------
As described in the Prospectus, the Company has also adopted an
Administrative Services Plan (the "Services Plan") under which each Fund is
authorized to pay certain financial institutions, including First National, its
correspondent and affiliated banks, and the Distributor (a "Service
Organization"), to provide certain ministerial, recordkeeping, and
administrative support services to their customers who own of record or
beneficially Shares in a Fund, such as processing dividend and distribution
payments from the Funds on behalf of customers, providing periodic statements to
customers showing their positions in the shares of the Funds, providing sub-
accounting with respect to shares beneficially owned by such customers and
providing customers with a service that invests the assets of their accounts in
shares of the Funds pursuant to specific or pre-authorized instructions
Payments to such service organizations are made pursuant to Servicing Agreements
between the Company and the Service Organization. The Services Plan authorizes
each Fund to make payments to Service Organizations in an amount, on an annual
basis, of up to 0.25% of the average daily net assets of that Fund. The
Services Plan has been approved by the Board of Directors of the Company,
including a majority of the Directors who are not interested persons of the
Company (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the Services Plan or in any Servicing
Agreements thereunder (the "Disinterested Directors"). The Services Plan may be
terminated as to a Fund by a vote of a majority of the Disinterested Directors.
The Directors review quarterly a written report of the amounts expended pursuant
to the Services Plan and the purposes for which such expenditures were made.
The Services Plan may be amended by a vote of the Directors, provided that any
material amendments also require the vote of a majority of the Disinterested
Directors. For so long as the Services Plan is in effect, selection and
nomination of those Disinterested Directors shall be committed to the discretion
of the Company's Disinterested Directors. All Servicing Agreements may be
terminated at any time without the payment of any penalty by a vote of a
majority of the Disinterested Directors. The Services Plan will continue in
effect for successive one-year periods, provided that each such continuance is
specifically approved by a majority of the Board of Directors, including a
majority of the Disinterested Directors.
As authorized by the Services Plan, the Company has entered into a Servicing
Agreement with the First National pursuant to which First National has agreed to
provide certain administrative support services in connection with Shares of the
Funds owned of record or beneficially by its customers. Such administrative
support services may include, but are not limited to, (a) processing dividend
and distribution payments from a Fund on behalf of customers; (b) providing
periodic statements to its customers showing their positions in the Shares; (c)
arranging for bank wires; (d) responding to routine customer inquiries relating
to services performed by First National; (e) providing sub-accounting with
respect to the Shares beneficially owned by First National's customers or the
information necessary for sub-accounting; (f) if required by law, forwarding
shareholder communications from a Fund (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to its customers; (g) aggregating and processing purchase, exchange,
and redemption requests from customers and placing net purchase, exchange, and
redemption orders for customers; and (h) providing customers with a service that
invests the assets of their account in the Shares pursuant to specific or
preauthorized instructions. In consideration of such services, the Company, on
behalf of each Fund, except the Money Market Fund and the Growth Fund, may pay
First National a monthly fee, computed at the annual rate of .10% of the average
aggregate net asset value of Shares of that Fund held during the period by
customers for whom First National has provided services under the Servicing
Agreement. For the fiscal period ended March 31, 1997, First National earned
fees of $4,045, $15,740, $0, $49,214 and $0, net of fee waivers of $3,231,
$12,513, $2,354, $39,615 and $1,863 for the Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund, and Small Cap Value Fund, respectively.
For the fiscal period ended March 31, 1998, First National earned fees of
$9,126, $36,899, $8,360, $130,664 and $5,302, net of fee waivers of $9,125,
$36,900, $8,361, $130,685 and $5,302 for the Short/Intermediate Fund, Fixed
Income Fund, Equity Fund, Balanced Fund and Small Cap Value Fund, respectively.
For the fiscal period ended March 31, 1999, First National earned fees of
$9,325, $37,997, $10,276, $125,882 and $7,074, net of fee waivers of $9,332,
$38,004, $10,294, $125,905 and $7,077 for the Short/Intermediate Fund, Fixed
Income Fund, Balanced Fund, Equity Fund and Small Cap Value Fund, respectively.
In addition, the Company, on behalf of a Fund, may enter into, from time to
time, other Servicing Agreements with other service organizations pursuant to
which such Service Organizations will provide similar services as those
discussed above.
Custodian
- ---------
First National Bank of Omaha (the "Custodian"), One First National Center,
Omaha, Nebraska 68102, in addition to serving as an investment adviser and
Transfer Agent to the Funds, also serves as custodian to each of the Funds
pursuant to the Custodian Agreement dated December 20, 1994 and amended as of
December 5, 1995, June 4, 1996 and February 3, 1998 (the "Custodian Agreement").
The Custodian's responsibilities include safeguarding and controlling each
Fund's cash and securities, handling the receipt and delivery of securities, and
collecting interest on each Fund's investments. In consideration of such
services, each Fund pays the Custodian a fee, computed daily and paid monthly,
at the annual rate of .03% of such Fund's average daily net assets.
In the fiscal period ended March 31, 1997, the Custodian earned custody fees
of $31,694 for the Money Market Fund and earned and waived $6,457, $23,428,
$998, $73,360 and $915, for the Short/Intermediate Fund, Fixed Income Fund,
Balanced Fund, Equity Fund and Small Cap Value Fund, respectively. In the
fiscal period ended March 31, 1998, the Custodian earned custody fees of $33,005
for the Money Market Fund and earned and waived $5,986, $23,063, $5,874, $86,097
and $3,383, for the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund,
Equity Fund and Small Cap Value Fund, respectively. In the fiscal period ended
March 31, 1999, the Custodian earned Custody fees of $32,263 for the Money
Market Fund and earned and waived $6,270, $24,556, $7,655, $84,463, $3,673 and
$4,598 for the Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity
Fund, Growth Fund and Small Cap Value Fund, respectively.
In the opinion of the staff of the Commission, since the custodian is
serving as both an investment adviser and custodian of the Funds, the Funds and
the Custodian are subject to the requirements of Rule 17f-2 under the 1940 Act,
and therefore the Funds and the Custodian will comply with the requirements of
such rule.
Transfer Agency Services
- ------------------------
First National Bank of Omaha (the "Transfer Agent") serves as Transfer Agent
and dividend disbursing agent for the Company pursuant to the Transfer Agency
Agreement dated December 20, 1994 and amended as of December 5, 1995, June 4,
1996 and February 3, 1998. Pursuant to such Agreement, the Transfer Agent,
among other things, performs the following services in connection with each
Fund's shareholders of record: maintenance of shareholder records for each of
the Company's shareholders of record; processing shareholder purchase and
redemption orders; processing transfers and exchanges of shares of the Company
on the shareholder files and records; processing dividend payments and
reinvestments; and assistance in the mailing of shareholder reports and proxy
solicitation materials. For such services the Transfer Agent receives a fee
based on the number of shareholders of record. Pursuant to authority in the
Transfer Agency Agreement, the Transfer Agent has appointed as sub-transfer
agent DST Systems, Inc., 210 West 10th Street, Kansas City, Missouri 64105. DST
Systems, Inc. performs the principal services as transfer agent for the Funds
under such Agreement and receives a fee from the Transfer Agent for such
services.
In the fiscal period ended March 31, 1997, Transfer Agent fees of $24,000,
$24,000, $24,000, $4,800 (net of $6,000 of fee waivers), $29,235 and $5,400 (net
of $10,125 of fee waivers), were incurred by the Money Market Fund,
Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund and Small
Cap Value Fund, respectively. In the fiscal period ended March 31, 1998,
Transfer Agent fees of $24,948, $24,957, $24,970, $24,341, $32,300 and $24,354
were incurred by the Money Market Fund, Short/Intermediate Fund, Fixed Income
Fund, Balanced Fund, Equity Fund and Small Cap Value Fund, respectively. In the
fiscal period ended March 31, 1999, Transfer Agent fees of $27,391, $26,479,
$27,193, $26,512, $36,175, $17,237 and $26,434 were incurred by the Money Market
Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund, respectively.
Auditors
- --------
The financial statements of each Fund as of March 31, 1999 appearing in this
Statement of Additional Information have been audited by KPMG LLP, Two Central
Park Plaza, Suite 1501, Omaha, Nebraska 68102, as set forth in their report
appearing elsewhere herein, and are included in reliance upon such report and on
the authority of such firm as experts in auditing and accounting.
Legal Counsel
- -------------
Cline, Williams, Wright, Johnson & Oldfather, 1900 FirsTier Bank Building,
Lincoln, Nebraska 68508, is counsel to the Company.
ADDITIONAL INFORMATION
The Company was organized as a Nebraska corporation on October 12, 1994. The
Company and its Money Market Fund, Short/Intermediate Fund, Fixed Income Fund
and Equity Fund, were organized to acquire the assets and continue the business
of the corresponding substantially identical investment portfolios of The
Sessions Group, an Ohio business trust. On April 10, 1995 the Company acquired
approximately $326 million of assets from The Sessions Group in return for an
equivalent dollar amount of shares of the Company. The Small Cap Value Fund was
added and became effective on March 29, 1996. The Balanced Fund became
effective on July 29, 1996. The Growth Fund became effective on April 1, 1998.
Each Share of a Fund represents an equal proportionate interest in that Fund
with other shares of the same Fund, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared at the discretion of the Directors.
Organization and Capital Structure
- ----------------------------------
The Company is authorized to issue a total of 1,000,000,000 Shares of common
stock in series with a par value of $.00001 per share. Six Hundred million of
these Shares have been authorized by the Board of Directors to be issued in
series designated for the existing seven Funds. The Board of Directors may
authorize additional Shares in series, or may divide the Shares of any existing
or new series into two or more subseries or classes, all without shareholder
approval.
All Shares, when issued, will be fully paid and non-assessable and will be
redeemable and freely transferable. All Shares have equal voting rights. They
can be issued as full or fractional Shares. A fractional Share has pro rata the
same kind of rights and privileges as a full Share. The Shares possess no
preemptive or conversion rights.
Each Share of a Fund has one vote (with proportionate voting for fractional
shares) irrespective of the relative net asset value of the Shares. On some
issues, such as the election of directors, all Shares of the Fund vote together
as one series. Cumulative voting is authorized. This means that in a vote for
the election of directors, Shareholders may multiply the number of Shares they
own by the number of directorships being filled and then allocate such votes to
one or more directors. On issues affecting only a particular Fund, the Shares
of the affected Fund vote as a separate series. An example of such an issue
would be a fundamental investment restriction pertaining to only one Fund.
The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common shares relating to new
investment portfolios or to subdivide existing series of shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for
example, in the sales load, Rule 12b-1 fees or service plan fees applicable to
different classes of shares offered by a particular Fund. Such an arrangement
could enable the Company to tailor its marketing efforts to a broader segment of
the investing public with a goal of attracting additional investments in the
Funds.
While the Board of Directors of the Company has not created any such subseries
or classes, it could do so in the future without shareholder approval. However,
any such creation of classes would require compliance with regulations the
Commission has adopted under the 1940 Act.
Shareholder Meetings
- --------------------
It is possible that the Company will not hold annual or periodically
scheduled regular meetings of Shareholders. Annual meetings of Shareholders
will not be held unless called by the Shareholders pursuant to the Nebraska
Business Corporation Act or unless required by the Investment Company Act of
1940 and the rules and regulations promulgated thereunder. Special meetings of
the Shareholders may be held, however, at any time and for any purpose, if
called by (a) the Chairman of the Board, the President and two or more
directors, (b) by one or more Shareholders holding ten percent or more of the
Shares entitled to vote on matters presented to the meeting, or (c) if the
annual meeting is not held within any thirteen month period, the local district
court, upon application of any Shareholder, may summarily order that such
meeting be held. In addition, the 1940 Act requires a Shareholder vote for all
amendments to fundamental investment policies, investment advisory contracts and
amendments thereto.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the approval
of principal underwriting contracts, and the election of Directors may be
effectively acted upon by Shareholders of the Company voting without regard to
series.
Ownership of Shares
- -------------------
As of June 30, 1999, the Advisers and their affiliates held of record
substantially all of the outstanding Shares of the Funds as agent, custodian,
trustee or investment adviser on behalf of their customers. At such date, First
National Bank of Omaha, One First National Center, Omaha, Nebraska 68102-1596,
and its affiliates held as beneficial owner five percent or more of the
outstanding Shares of the Funds because they possessed sole or shared voting or
investment power with respect to such Shares.
Vote of a Majority of the Outstanding Shares
- --------------------------------------------
As used in the Prospectus and this Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of a Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of Shareholders of such Fund present at a meeting at which the
holders of more than 50% of the votes attributable to Shareholders of record of
that Fund are represented in person or by proxy, or (b) the holders of more than
50% of the outstanding Shares of that Fund.
Additional Tax Information
- --------------------------
Each of the Funds of the Company is treated as a separate entity for federal
income tax purposes and each intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for so long as such qualification is in the best interest of such
Fund's Shareholders. Qualification as a regulated investment company under the
Code requires, among other things, that the regulated investment company
distribute to its Shareholders at least 90% of its investment company taxable
income. Each Fund contemplates declaring as dividends 100% of that Fund's
investment company taxable income (before deduction of dividends paid). Because
all of the Money Market Fund's net investment income is expected to be derived
from earned interest and short-term capital gains, it is anticipated that no
part of any distribution will be eligible for the dividends-received deduction
for corporations. The Money Market Fund does not expect to realize any long-
term capital gains and, therefore, does not foresee paying any "capital gains
dividends" as described in the Code. In order to avoid the imposition of an
excise tax, each Fund is required to distribute annually, prior to calendar year
end, 98% of taxable ordinary income on a calendar year basis, 98% of capital
gain net income realized in the 12 months preceding October 31, and the balance
of undistributed taxable ordinary income and capital gain net income from the
prior calendar year. If distributions during the calendar year are less than
the required amounts, that Fund would be subject to a nondeductible 4% excise
tax on the deficiency.
Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located, or
in which it is otherwise deemed to be conducting business, a Fund may be subject
to the tax laws of such states or localities. In addition, if for any taxable
year that Fund does not qualify for the special tax treatment afforded regulated
investment companies, all of its taxable income will be subject to federal tax
at regular corporate rates (without any deduction for distributions to its
Shareholders). In such event, dividend distributions would be taxable to
Shareholders to the extent of earnings and profits, and would be eligible for
the dividends received deduction for corporations.
Foreign taxes may be imposed on a Fund by foreign countries with respect to
its income from foreign securities. Since less than 50% in value of a Fund's
total assets at the end of its fiscal year are expected to be invested in stocks
or securities of foreign corporations, such Fund will not be entitled under the
Code to pass through to its Shareholders their pro rata share of the foreign
taxes paid by the Fund. These taxes will be taken as a deduction by such Fund.
Each Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends paid to any Shareholder who has
provided either an incorrect tax identification number or no number at all, or
who is subject to withholding by the Internal Revenue Service for failure
properly to include on their return payments of interest or dividends.
In addition, to the extent Shareholders receive distributions of income
attributable to investments in repurchase agreements by a Fund, such
distribution may also be subject to state or local taxes.
Information set forth in the Prospectus and this Statement of Additional
Information which relates to federal taxation is only a summary of some of the
important federal tax considerations generally affecting purchasers of Shares of
a Fund. No attempt has been made to present a detailed explanation of the
federal income tax treatment of a Fund or its Shareholders and this discussion
is not intended as a substitute for careful tax planning. Accordingly,
potential purchasers of Shares of a Fund are urged to consult their tax advisers
with specific reference to their own tax situation. In addition, the tax
discussion in the Prospectus and this Statement of Additional Information is
based on tax laws and regulations which are in effect on the date of the
Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action.
Yield of the Money Market Fund
- ------------------------------
For the seven-day period ended March 31, 1999, the yield and effective
yield, respectively, of the Money Market Fund were 4.22% and 4.31%. For the 30-
day period ended March 31, 1999, the yield for such Fund was 4.13%. In the
absence of fee waivers, the yields for the period ended March 31, 1999 would
have been 4.18%, 4.27% and 4.09%, respectively. The yield figures are based on
historical earnings and are not intended to indicate future performance. The
standardized seven-day yield for the Money Market Fund is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account in the Money Market Fund having a balance of
one Share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Shareholder accounts, and dividing the difference by
the value of the account at the beginning of the base period to obtain the base
period return, and then multiplying the base period return by (365/7). The net
change in the account value of the Money Market Fund includes the value of
additional Shares purchased with dividends from the original Share, dividends
declared on both the original Share and any such additional Shares, and all
fees, other than non-recurring account or sales charges, that are charged to all
Shareholder accounts in proportion to the length of the base period and assuming
the Money Market Fund's average account size. The capital changes to be
excluded from the calculation of the net change in account value are realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation. The 30-day yield and effective yield are calculated as described
above except that the base period is 30 days rather than seven days.
The effective yield for the Money Market Fund is computed by compounding the
base period return, as calculated above, by adding 1 to the base period return
raising the sum to a power equal to 365 divided by seven and subtracting 1 from
the result.
Yield of the Fixed Income Fund and the Short/Intermediate Fund
- --------------------------------------------------------------
As summarized in the Prospectus under the heading "The Funds," yield of each
of the Short/Intermediate Fund and Fixed Income Fund will be computed by
annualizing net investment income per share for a recent 30-day period and
dividing that amount by such Share's net asset value per share (reduced by any
undeclared earned income expected to be paid shortly as a dividend) on the last
trading day of that period. Net investment income will reflect amortization of
any market value, premium or discount of fixed income securities (except for
obligations backed by mortgages or other assets) and may include recognition of
a pro rata portion of the stated dividend rate of dividend paying portfolio
securities. The yield of each of the Short/Intermediate Fund and the Fixed
Income Fund will vary from time to time depending upon market conditions, the
composition of such Fund's portfolio and operating expenses of the Company
allocated to such Fund. These factors and possible differences in the methods
used in calculating yield, should be considered when comparing a Fund's yield to
yields published for other investment companies and other investment vehicles.
Yield should also be considered relative to changes in the value of a Fund's
shares and to the relative risks associated with the investment objective and
policies of each Fund.
For the 30-day period ended March 31, 1999, the yields for
Short/Intermediate Fund and the Fixed Income Fund were 4.98% and 5.28%,
respectively. In the absence of fee waivers, the yields for the
Short/Intermediate Fund and the Fixed Income Fund would have been 4.81% and
5.11%, respectively.
The yield figures are based on historical earnings and are not intended to
indicate future performance.
Calculation of Total Return
- ---------------------------
As summarized in the Prospectus under the headings "The Funds," average
annual total return is a measure of the change in value of an investment in a
Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in such Fund immediately rather than paid to the
investor in cash. Average annual total return will be calculated by: (a) adding
to the total number of Shares purchased by a hypothetical $10,000 investment in
that Fund all additional Shares which would have been purchased if all dividends
and distributions paid during the period had been immediately reinvested; (b)
calculating the value of the hypothetical initial investment of $10,000 as of
the end of the period by multiplying the total number of Shares owned at the end
of the period by the net asset value per share on the last trading day of the
period; (c) assuming redemption at the end of the period; and (d) dividing this
account value for the hypothetical investor by the initial $10,000 investment.
Aggregate total return is a measure of change in value of an investment in a
Fund over the relevant period and is similar to average annual total return
except that the result is not annualized.
The Funds may, when citing performance in marketing and sales literature,
include the performance of investment vehicles which were predecessors to the
Funds.
Distribution Rates
- ------------------
The Short/Intermediate Fund, Fixed Income Fund, Balanced Fund, Equity Fund,
Growth Fund and Small Cap Value Fund may from time to time advertise current
distribution rates which are calculated by dividing the distributions per share
made by a Fund over a 12-month period by the maximum offering price per share.
The calculation of income in the distribution rate includes both income and
capital gain dividends and does not reflect unrealized gains or losses, although
each Fund may also present a distribution rate excluding the effect of capital
gains. The distribution rate differs from the yield, because it includes
capital items which are often non-recurring in nature, whereas yield does not
include such items. Distribution rate information will be accompanied by the
standardized yield and total return data.
Performance Comparisons
- -----------------------
Investors may judge the performance of each of the Funds by comparing them
to the performance of other mutual funds with comparable investment objectives
and policies through various mutual fund or market indices such as those
prepared by Dow Jones & Co., Inc. and Standard & Poor's Corporation and to data
prepared by Lipper Analytical Services, Inc., a widely recognized independent
service which monitors the performance of mutual funds. Comparisons may also be
made to indices or data published in Donoghue's MONEY MARKET REPORT, a
nationally recognized money market fund reporting service, Money Magazine,
Forbes, Barron's, The Wall Street Journal, Morningstar, Inc., Ibbotson
Associates, CDA/Wiesenberger, The New York Times, Business Week, U.S.A. Today
and local periodicals. In addition to performance information, general
information about each of the Funds that appears in a publication such as those
mentioned above may be included in advertisements, sales literature and reports
to Shareholders.
From time to time, each of the Funds may include general comparative
information, such as statistical data regarding inflation, securities indices or
the features or performance of alternative investments, in advertisements, sales
literature and reports to Shareholders. A Fund may also include calculations,
such as hypothetical compounding examples, which describe hypothetical
investment results in such communications. Such performance examples will be
based on an express set of assumptions and are not indicative of performance of
any of the Funds.
Current yields or total return will fluctuate from time to time and are not
necessarily representative of future results. Accordingly, a Fund's yield or
total return may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and
total return are functions of a Fund's quality, composition and maturity, as
well as expenses allocated to such Fund. Fees imposed upon Customer accounts by
the Advisers or their affiliated or correspondent banks for cash management
services will reduce a Fund's effective yield and total return to Customers.
Miscellaneous
- -------------
The Prospectus and this Statement of Additional Information omit certain of
the information contained in the Registration Statement filed with the
Commission. Copies of such information may be obtained from the commission upon
payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
Financial Statements
- --------------------
The following audited financial statements are attached hereto:
Money Market Fund, Short/Intermediate Fund, Fixed Income Fund, Balanced
Fund, Equity Fund, Growth Fund and Small Cap Value Fund
1. Schedules of Portfolio Investments as of March 31, 1999
2. Statements of Assets and Liabilities as of March 31, 1999
3. Statements of Operations for the period ended March 31, 1999
4. Statements of Changes in Net Assets for the periods ended March 31,
1999 and 1998
5. Financial Highlights
6. Notes to Financial Statements
7. Independent Auditors' Report
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
March 31, 1999
SMALL CAP VALUE FUND
NUMBER
OF SHARES VALUE
- ------------- ---------
COMMON STOCKS 91.87%
AIRLINES 2.52%
11,250 Midwest Express Holdings, Inc.<F1> $ 330,469
----------
BUSINESS SERVICES 1.68%
24,400 Franklin Covey Co.<F1> 219,600
----------
CHEMICALS 11.83%
15,000 Dexter Corp. 472,500
36,500 Oil-Dri Corp. of America 531,531
18,800 WD-40 Co. 545,200
----------
1,549,231
----------
CONSUMER PRODUCTS 3.05%
82,000 Hartmarx Corp. 399,750
----------
ELECTRONICS 5.47%
10,000 Dallas Semiconductor Corp. 386,250
9,700 Teleflex, Inc. 330,406
----------
716,656
----------
ENVIRONMENTAL CONTROL 1.01%
25,400 Calgon Carbon Corp. 131,763
----------
FOOD 9.48%
20,000 Corn Products International, Inc. 478,750
48,000 Nash-Finch Co. 402,000
17,500 Universal Foods Corp. 360,938
----------
1,241,688
----------
HOME FURNISHINGS 3.73%
13,800 National Presto Industries, Inc. 489,038
----------
INSURANCE 6.66%
12,600 American Financial Group, Inc. 443,363
25,200 The Guarantee Life Companies, Inc. 428,400
----------
871,763
----------
MACHINERY & EQUIPMENT 9.73%
18,900 Lawson Products, Inc. 387,450
13,800 Modine Manufacturing Co. 387,262
9,800 Tecumseh Products Co., Class A 499,187
----------
1,273,899
----------
NUMBER
OF SHARES VALUE
- ------------- ---------
MANUFACTURING 2.46%
9,400 Tennant Co. $ 321,950
----------
METAL PRODUCTS 3.19%
25,900 Amcast Industrial Corp. 417,637
----------
MINING 2.52%
9,700 Cleveland-Cliffs, Inc. 330,406
----------
MOTOR VEHICLE PARTS & ACCESSORIES 4.22%
32,400 CLARCOR Inc. 552,825
----------
OIL & GAS 3.83%
22,200 Newfield Exploration Co.<F1> 502,275
----------
PACKAGING & CONTAINERS 3.06%
12,600 West Pharmaceutical Services, Inc. 400,838
----------
PAPER PRODUCTS 3.00%
35,100 P.H. Glatfelter Co. 392,681
----------
TEXTILE MANUFACTURING 3.27%
19,400 Kellwood Co. 428,012
----------
TIRE & RUBBER 2.49%
11,600 Bandag, Inc. 326,250
----------
TOBACCO 2.44%
12,500 Universal Corp. 319,531
----------
TRUCKING LEASING 3.61%
30,000 Werner Enterprises, Inc. 472,500
----------
UTILITIES - ELECTRIC SERVICES 2.62%
20,800 DPL Inc. 343,200
----------
Total Common Stocks (cost $14,287,800) 12,031,962
----------
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------- ---------
INVESTMENT COMPANIES 7.37%
350,354 Federated Treasury Obligations $ 350,354
614,345 Goldman Sachs ILA Treasury
Obligations Portfolio 614,345
---------
Total Investment Companies (cost $964,699) 964,699
---------
Total Investments (cost $15,252,499) 99.24% 12,996,661
Other Assets, less Liabilities 0.76% 99,461
---------
NET ASSETS 100.00% $13,096,122
===========
<F1> Non-income producing security
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
March 31, 1999
GROWTH FUND
NUMBER
OF SHARES VALUE
- ------------- ---------
COMMON STOCKS 93.59%
AEROSPACE 4.37%
9,000 Sundstrand Corp. $ 625,500
---------
AUTOMOTIVE PARTS 5.22%
15,000 Genuine Parts Co. 432,187
38,200 OEA Inc. 315,150
---------
747,337
---------
BEVERAGES 4.00%
16,000 Robert Mondavi Corp., Class A<F1> 572,000
---------
BUSINESS SERVICES 1.16%
4,000 Automatic Data Processing, Inc. 165,500
---------
CHEMICALS 4.45%
7,500 Air Products and Chemicals, Inc. 256,875
13,000 Sigma-Aldrich Corp. 380,250
---------
637,125
---------
COMMUNICATION SERVICES 7.07%
5,000 Level 3 Communications, Inc.<F1> 364,063
9,000 Qwest Communications International Inc.<F1> 648,844
---------
1,012,907
---------
COMPUTER SERVICES 10.66%
10,100 Adobe Systems, Inc. 573,175
14,600 BMC Software, Inc.<F1> 541,112
15,650 Oracle Corp.<F1> 412,769
---------
1,527,056
---------
CONSTRUCTION 2.55%
13,500 Fluor Corp. 364,500
---------
DIVERSIFIED 1.04%
3,500 Cooper Industries, Inc. 149,187
---------
ELECTRICAL PRODUCTS 0.81%
2,200 Emerson Electric Co. 116,462
---------
NUMBER
OF SHARES VALUE
- ------------- ---------
ELECTRONICS 3.96%
30,000 Sensormatic Electronics Corp.<F1> $ 285,000
7,500 Thomas & Betts Corp. 281,719
---------
566,719
---------
FINANCIAL SERVICES 10.09%
4,000 Charles Schwab Corp. 384,500
9,200 MBIA, Inc. 533,600
15,000 MGIC Investment Corp. 525,937
---------
1,444,037
---------
FOOD 2.70%
14,700 SYSCO Corp. 386,794
---------
HEALTH CARE SERVICES 7.71%
36,000 Cerner Corp.<F1> 578,250
10,000 United Healthcare Corp. 526,250
---------
1,104,500
---------
INDUSTRIAL 3.74%
13,000 PACCAR, Inc. 535,437
---------
MACHINERY & EQUIPMENT 2.50%
10,900 Dover Corp. 358,338
---------
MANUFACTURING 3.35%
4,200 Illinois Tool Works Inc. 259,875
5,000 Nucor Corp. 220,313
---------
480,188
---------
OIL & GAS 3.93%
3,000 Enron Corp. 192,750
10,300 NICOR Inc. 370,156
---------
562,906
---------
RETAIL 0.98%
5,600 Rite Aid Corp. 140,000
---------
TELECOMMUNICATIONS 4.32%
8,800 Century Telephone Enterprise 618,200
---------
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------- ---------
TRANSPORTATION 7.84%
20,000 Southwest Airlines Co. $ 605,000
20,000 Swift Transportation Co., Inc.<F1> 517,500
---------
1,122,500
---------
UTILITIES - ELECTRICAL 1.14%
4,800 New Century Energies, Inc. 163,500
---------
Total Common Stocks (cost $12,799,077) $13,400,693
-----------
NUMBER
OF SHARES VALUE
- ------------- ---------
INVESTMENT COMPANIES 0.59%
83,815 Goldman Sachs ILA Treasury
Obligations Portfolio $ 83,815
---------
Total Investment Companies (cost $83,815) 83,815
---------
REAL ESTATE INVESTMENT TRUSTS 5.61%
10,000 MGI Properties, Inc. 273,750
15,000 Spieker Properties, Inc. 528,750
---------
Total Real Estate Investment Trusts (cost $786,223) 802,500
---------
Total Investments (cost $13,669,115) 99.79% 14,287,008
Other Assets, less Liabilities 0.21% 30,526
---------
NET ASSETS 100.00% $14,317,534
===========
<F1> Non-income producing security
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
March 31, 1999
EQUITY FUND
NUMBER
OF SHARES VALUE
- ------------- ---------
COMMON STOCKS 91.27%
BANKING 2.27%
95,400 Banc One Corp. $5,252,963
----------
BUILDING PRODUCTS 2.29%
189,300 Lafarge Corp. 5,300,400
----------
COMMUNICATIONS EQUIPMENT 3.62%
114,300 Motorola, Inc. 8,372,475
----------
COMPUTERS & PERIPHERALS 2.25%
29,400 International Business Machines Corp. 5,211,150
----------
COSMETICS 2.83%
174,600 International Flavors & Fragrances, Inc. 6,558,413
----------
DATA PROCESSING 2.51%
136,000 First Data Corp. 5,814,000
----------
ELECTRICAL EQUIPMENT 4.59%
74,000 Emerson Electric Co. 3,917,375
196,300 Parker-Hannifin Corp. 6,723,275
----------
10,640,650
----------
ENVIRONMENTAL CONTROL 0.12%
55,600 Calgon Carbon Corp. 288,425
----------
FOOD 2.08%
58,900 BestFoods 2,768,300
85,500 Corn Products International, Inc. 2,046,656
----------
4,814,956
----------
FUNERAL SERVICES 2.35%
382,500 Service Corp. International 5,450,625
----------
GAMES & TOYS 2.35%
218,700 Mattel, Inc. 5,440,162
----------
GROCERY STORES 2.22%
242,890 Food Lion, Inc., Class A 2,235,347
322,540 Food Lion, Inc., Class B 2,902,860
----------
5,138,207
----------
NUMBER
OF SHARES VALUE
- ------------- ---------
INSURANCE 10.85%
235,600 American Financial Group, Inc. $8,290,175
46,300 American General Corp. 3,264,150
79,900 Marsh & McLennan Cos., Inc. 5,927,581
189,300 SAFECO Corp. 7,654,819
----------
25,136,725
----------
MACHINERY 3.70%
172,600 Ingersoll-Rand Co. 8,565,275
----------
MANUFACTURING 2.61%
239,800 Harsco Corp. 6,039,962
----------
MEDICAL SUPPLIES 1.53%
92,500 Becton, Dickinson & Co. 3,543,906
----------
MINING 2.66%
507,200 Cyprus Amax Minerals Co. 6,149,800
----------
MOTOR VEHICLE PARTS & ACCESSORIES 1.21%
163,600 CLARCOR Inc. 2,791,425
----------
OIL 9.80%
47,700 Exxon Corp. 3,365,831
133,200 Halliburton Co. 5,128,200
114,000 Texaco Inc. 6,469,500
210,300 Unocal Corp. 7,741,669
----------
22,705,200
----------
PACKAGING & CONTAINERS 2.11%
212,900 Sonoco Products Co. 4,896,700
----------
PHARMACEUTICALS 1.87%
67,300 Bristol-Myers Squibb Co. 4,328,231
----------
PHOTOGRAPHY 2.70%
97,900 Eastman Kodak Co. 6,253,363
----------
PUBLISHING 2.30%
165,500 R.R. Donnelley & Sons Co. 5,327,031
----------
RETAIL 5.22%
150,500 J.C. Penney Co., Inc. 6,095,250
239,700 Rite Aid Corp. 5,992,500
----------
12,087,750
----------
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------- ---------
SOAPS & CLEANING AGENTS 1.76%
44,200 Colgate-Palmolive Co. $4,066,400
----------
TELEPHONE 2.64%
101,100 GTE Corp. 6,116,550
----------
TEXTILE MANUFACTURING 3.10%
325,300 Kellwood Co. 7,176,931
----------
TOBACCO 2.32%
210,300 Universal Corp. 5,375,794
----------
TRANSPORTATION 2.01%
86,900 Union Pacific Corp. 4,643,719
----------
UTILITIES - ELECTRIC SERVICES 3.40%
300,800 DPL Inc. 4,963,200
70,100 Texas Utilities Co. 2,922,294
----------
7,885,494
----------
Total Common Stocks (cost $181,171,612) 211,372,682
----------
INVESTMENT COMPANIES 8.49%
10,690,808 Federated Trust for
U.S. Treasury Obligations 10,690,808
8,974,629 Goldman Sachs ILA Treasury
Obligations Portfolio 8,974,629
----------
Total Investment Companies (cost $19,665,437) 19,665,437
----------
Total Investments (cost $200,837,049) 99.76% 231,038,119
Other Assets, less Liabilities 0.24% 548,178
----------
NET ASSETS 100.00% $231,586,297
============
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
March 31, 1999
BALANCED FUND
NUMBER
OF SHARES VALUE
- ------------- ---------
COMMON STOCKS 55.07%
BANKING 1.38%
6,000 Banc One Corp. $330,375
----------
BUILDING PRODUCTS 1.23%
10,500 Lafarge Corp. 294,000
----------
COMMUNICATIONS EQUIPMENT 2.36%
7,700 Motorola, Inc. 564,025
----------
COMPUTERS & PERIPHERALS 1.86%
2,500 International Business Machines Corp. 443,125
----------
COSMETICS 1.57%
10,000 International Flavors & Fragrances, Inc. 375,625
----------
DATA PROCESSING 1.61%
9,000 First Data Corp. 384,750
----------
ELECTRICAL EQUIPMENT 2.61%
4,900 Emerson Electric Co. 259,394
10,600 Parker-Hannifin Corp. 363,050
----------
622,444
----------
ENVIRONMENTAL CONTROL 0.06%
2,800 Calgon Carbon Corp. 14,525
----------
FOOD 1.26%
3,300 BestFoods 155,100
6,100 Corn Products International, Inc. 146,019
----------
301,119
----------
FUNERAL SERVICES 1.50%
25,200 Service Corp. International 359,100
----------
GAMES & TOYS 1.46%
14,000 Mattel, Inc. 348,250
----------
GROCERY STORES 1.38%
14,000 Food Lion, Inc., Class A 128,844
22,270 Food Lion, Inc., Class B 200,430
----------
329,274
----------
INSURANCE 6.11%
13,000 American Financial Group, Inc. 457,437
3,000 American General Corp. 211,500
4,400 Marsh & McLennan Cos., Inc. 326,425
NUMBER
OF SHARES VALUE
- ------------- ---------
INSURANCE 6.11% (CONT'D.)
11,500 SAFECO Corp. $ 465,031
----------
1,460,393
----------
MACHINERY 2.22%
10,700 Ingersoll-Rand Co. 530,987
----------
MANUFACTURING 1.46%
13,800 Harsco Corp. 347,587
----------
MEDICAL SUPPLIES 0.82%
5,100 Becton, Dickinson & Co. 195,394
----------
MINING 1.60%
31,500 Cyprus Amax Minerals Co. 381,938
----------
MOTOR VEHICLE PARTS & ACCESSORIES 0.74%
10,350 CLARCOR Inc. 176,597
----------
OIL 6.04%
3,100 Exxon Corp. 218,744
8,500 Halliburton Co. 327,250
7,300 Texaco Inc. 414,275
13,100 Unocal Corp. 482,244
----------
1,442,513
----------
PACKAGING & CONTAINERS 1.14%
11,800 Sonoco Products Co. 271,400
----------
PHARMACEUTICALS 1.02%
3,800 Bristol-Myers Squibb Co. 244,387
----------
PHOTOGRAPHY 1.74%
6,500 Eastman Kodak Co. 415,188
----------
PUBLISHING 1.37%
10,200 R.R. Donnelley & Sons Co. 328,312
----------
RETAIL 3.21%
9,800 J.C. Penney Co., Inc. 396,900
14,800 Rite Aid Corp. 370,000
----------
766,900
----------
SOAPS & CLEANING AGENTS 0.92%
2,400 Colgate-Palmolive Co. 220,800
----------
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------- ---------
TELEPHONE 1.70%
6,700 GTE Corp. $ 405,350
----------
TEXTILE MANUFACTURING 1.94%
21,000 Kellwood Co. 463,313
----------
TOBACCO 1.46%
13,600 Universal Corp. 347,650
----------
TRANSPORTATION 1.23%
5,500 Union Pacific Corp. 293,906
----------
UTILITIES - ELECTRIC SERVICES 2.07%
18,600 DPL Inc. 306,900
4,500 Texas Utilities Co. 187,594
----------
494,494
----------
Total Common Stocks (cost $13,147,994) 13,153,721
----------
PRINCIPAL
AMOUNT
- -------------
CORPORATE BONDS 21.71%
FINANCIAL SERVICES 5.34%
$500,000 General Electric Capital Corp.,
6.90%, 9/15/15 520,800
750,000 Norwest Financial, Inc.,
6.375%, 12/1/07 754,733
----------
1,275,533
----------
FOOD PRODUCTS 2.18%
500,000 Anheuser-Busch Cos., Inc.,
6.75%, 8/1/03 519,515
----------
OIL 3.35%
750,000 Halliburton Co., Series A,
6.75%, 2/1/27 800,100
----------
RAIL CAR LEASING 2.28%
500,000 Union Tank Car Co.,
7.45%, 6/1/09 545,655
----------
UTILITIES - ELECTRIC SERVICES 2.10%
500,000 Tampa Electric Co.,
5.75%, 5/1/00 501,510
----------
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
UTILITIES - NATURAL GAS 6.46%
$ 750,000 Consolidated Natural Gas Co.,
6.625%, 12/1/08 $ 774,240
750,000 Laclede Gas Co.,
6.50%, 10/15/12 769,192
----------
1,543,432
----------
Total Corporate Bonds (cost $5,057,980) 5,185,745
----------
U.S. GOVERNMENT AGENCIES 2.14%
500,000 Federal National Mortgage Association,
7.27%, 8/24/05 509,920
----------
Total U.S. Government Agencies (cost $510,881) 509,920
----------
U.S. TREASURY NOTES 10.75%
200,000 6.75%, 5/31/99 200,648
500,000 6.625%, 6/30/01 516,595
750,000 5.875%, 2/15/04 772,327
500,000 6.50%, 8/15/05 530,640
500,000 7.00%, 7/15/06 547,000
----------
Total U.S. Treasury Notes (cost $2,452,904) 2,567,210
----------
U.S. TREASURY STRIPS 1.69%
850,000 2/15/12 402,543
----------
Total U.S. Treasury Strips (cost $356,386) 402,543
----------
NUMBER
OF SHARES
- -------------
INVESTMENT COMPANIES 8.00%
1,033,419 Federated Trust for
U.S. Treasury Obligations 1,033,419
877,167 Goldman Sachs ILA Treasury
Obligations Portfolio 877,167
----------
Total Investment Companies (cost $1,910,586) 1,910,586
----------
Total Investments (cost $23,436,731) 99.36% 23,729,725
Other Assets, less Liabilities 0.64% 153,355
----------
NET ASSETS 100.00% $23,883,080
===========
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
March 31, 1999
FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
CORPORATE BONDS 67.71%
CHEMICAL 3.04%
$2,500,000 Monsanto Co.,
6.00%, 7/1/00 $2,507,675
----------
COMMUNICATIONS EQUIPMENT 3.75%
3,000,000 Motorola, Inc.,
6.50%, 3/1/08 3,086,220
----------
CONSUMER GOODS 3.02%
2,500,000 Gillette Co.,
5.75%, 10/15/05 2,488,325
----------
DATA PROCESSING 3.69%
3,000,000 First Data Corp.,
6.375%, 12/15/07 3,041,100
----------
FINANCIAL SERVICES 10.46%
3,000,000 First Union National Bank,
6.18%, 2/15/36 2,997,210
2,500,000 General Electric Capital Corp.,
5.50%, 11/1/01 2,499,275
3,000,000 General Electric Capital Corp.,
6.90%, 9/15/15 3,124,800
----------
8,621,285
----------
FOREST PRODUCTS 3.17%
2,500,000 Kimberly-Clark Corp.,
6.875%, 2/15/14 2,616,050
----------
GROCERY STORES 2.46%
2,000,000 Albertson's, Inc.,
6.34%, 2/25/13 2,031,840
----------
INDUSTRIAL GOODS & SERVICES 6.35%
2,000,000 Air Products & Chemicals, Inc.,
6.25%, 6/15/03 2,018,220
3,000,000 PPG Industries, Inc.,
7.375%, 6/1/16 3,215,880
----------
5,234,100
----------
MACHINERY 3.70%
3,000,000 Ingersoll-Rand Co.,
6.443%, 11/15/27 3,048,300
----------
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
OIL 7.05%
$2,500,000 Amoco Canada Petroleum Co. Ltd.,
6.75%, 2/15/05 $2,611,300
3,000,000 Halliburton Co., Series A,
6.75%, 2/1/27 3,200,400
----------
5,811,700
----------
PHARMACEUTICALS 3.71%
3,000,000 Eli Lilly & Co.,
6.25%, 3/15/03 3,057,360
----------
RAILROADS 0.61%
500,000 Southern Railway Co.,
7.75%, 8/1/99 503,520
----------
SOAPS & CLEANING AGENTS 1.84%
1,500,000 Colgate-Palmolive Co.,
6.85%, 11/24/99 1,513,035
----------
UTILITIES - ELECTRIC SERVICES 6.29%
2,500,000 National Rural Utilities Cooperative
Finance Corp., 6.50%, 9/15/02 2,561,575
2,500,000 Union Electric Co.,
6.75%, 5/1/08 2,625,075
----------
5,186,650
----------
UTILITIES - ELECTRIC & OTHER SERVICES
COMBINED 4.82%
2,750,000 Citizens Utilities Co.,
7.60%, 6/1/06 2,960,870
1,000,000 Louisville Gas & Electric Co.,
7.50%, 7/1/02 1,010,490
----------
3,971,360
----------
UTILITIES - NATURAL GAS 3.75%
3,000,000 Laclede Gas Co.,
6.50%, 11/15/10 3,088,500
----------
Total Corporate Bonds (cost $54,691,793) 55,807,020
----------
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
U.S. GOVERNMENT AGENCIES 11.09%
$3,380,000 Federal Home Loan Bank,
5.875%, 2/2/06 $ 3,420,391
3,000,000 Federal Home Loan Bank,
6.41%, 11/13/12 3,118,740
2,500,000 Federal National Mortgage Association,
6.50%, 7/16/07 2,599,425
----------
Total U.S. Government Agencies (cost $9,417,079) 9,138,556
----------
U.S. GOVERNMENT AGENCY STRIPS 2.86%
5,300,000 Federal Home Loan Bank, 7/2/12 1,887,489
1,320,000 Federal Home Loan Bank, 7/2/12 470,078
----------
Total U.S. Government Agency Strips (cost $2,334,445) 2,357,567
----------
U.S. TREASURY BONDS 1.41%
1,000,000 9.125%, 5/15/09 1,158,670
----------
Total U.S. Treasury Bonds (cost $1,149,687) 1,158,670
----------
U.S. TREASURY STRIPS 9.81%
2,122,000 5/15/02 1,813,864
4,963,000 2/15/07 3,237,117
6,400,000 2/15/12 3,030,912
----------
Total U.S. Treasury Strips (cost $6,801,712) 8,081,893
----------
NUMBER
OF SHARES
- -------------
INVESTMENT COMPANIES 5.86%
977,508 Federated Trust for
U.S. Treasury Obligations 977,508
3,856,336 Goldman Sachs ILA Treasury
Obligations Portfolio 3,856,336
----------
Total Investment Companies (cost $4,833,844) 4,833,844
----------
Total Investments (cost $79,228,560) 98.74% 81,377,550
Other Assets, less Liabilities 1.26% 1,042,125
----------
NET ASSETS 100.00% $82,419,675
===========
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
March 31, 1999
SHORT/INTERMEDIATE FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
CORPORATE BONDS 66.79%
COMMUNICATIONS EQUIPMENT 7.18%
$750,000 AT&T Corp.,
6.75%, 4/1/04 $ 781,215
750,000 Motorola, Inc.,
6.50%, 3/1/08 771,555
----------
1,552,770
----------
DATA PROCESSING 3.35%
750,000 First Data Corp.,
5.80%, 12/15/08 724,313
----------
FINANCIAL SERVICES 13.92%
750,000 Ford Motor Credit Co.,
6.125%, 1/9/06 745,372
750,000 General Electric Capital Corp.,
6.875%, 4/15/00 761,242
750,000 LG&E Capital Corp.,
6.46%, 1/15/08 736,710
750,000 Merrill Lynch & Co.,
6.64%, 9/19/02 768,015
----------
3,011,339
----------
FOOD PRODUCTS 3.49%
750,000 Anheuser-Busch Cos., Inc.,
6.90%, 10/1/02 754,485
----------
PHARMACEUTICALS 10.71%
750,000 Eli Lilly & Co.,
8.125%, 12/1/01 795,615
750,000 SmithKline Beecham PLC,
6.625%, 10/1/05 769,268
750,000 Upjohn Co.,
5.875%, 4/15/00 752,527
----------
2,317,410
----------
RETAIL 7.13%
750,000 Sears Roebuck Acceptance Notes,
6.90%, 8/1/03 770,520
750,000 Wal-Mart Stores, Inc.,
6.50%, 6/1/03 772,755
----------
1,543,275
----------
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
UTILITIES - ELECTRIC SERVICES 10.58%
$ 750,000 Florida Power & Light Co.,
5.50%, 7/1/99 $ 750,848
750,000 Monongahela Power Co.,
5.625%, 4/1/00 751,020
750,000 Union Electric Co.,
6.875%, 8/1/04 787,988
----------
2,289,856
----------
UTILITIES - ELECTRIC & OTHER SERVICES
COMBINED 6.95%
750,000 Northern States Power Co.,
5.75%, 10/1/03 747,817
750,000 Potomac Electric Power Co.,
6.25%, 10/15/07 756,810
----------
1,504,627
----------
UTILITIES - TELECOMMUNICATIONS 3.48%
750,000 Chesapeake & Potomac Telephone
Co. of Maryland, 5.875%, 9/15/99 751,928
----------
Total Corporate Bonds (cost $14,307,600) 14,450,003
----------
U.S. GOVERNMENT AGENCIES 15.17%
750,000 Federal Farm Credit Bank,
5.72%, 4/13/05 752,632
1,000,000 Federal Home Loan Bank,
6.50%, 11/29/05 1,046,540
750,000 Federal Home Loan Bank,
5.45%, 1/12/09 722,415
750,000 Federal Home Loan Mortgage Corp.,
5.95%, 1/19/06 761,633
----------
Total U.S. Government Agencies (cost $3,286,404) 3,283,220
----------
U.S. TREASURY NOTES 1.19%
250,000 5.875%, 2/15/04 257,442
----------
Total U.S. Treasury Notes (cost $241,602) 257,442
----------
U.S. TREASURY STRIPS 13.02%
896,000 8/15/00 837,930
1,345,000 2/15/02 1,163,976
1,250,000 2/15/07 815,313
----------
Total U.S. Treasury Strips (cost $2,787,830) 2,817,219
----------
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------- ---------
INVESTMENT COMPANIES 2.17%
468,106 Goldman Sachs ILA Treasury
Obligations Portfolio $468,106
----------
Total Investment Companies (cost $468,106) 468,106
----------
Total Investments (cost $21,091,542) 98.34% 21,275,990
Other Assets, less Liabilities 1.66% 360,146
----------
NET ASSETS 100.00% $21,636,136
===========
Schedule of Portfolio Investments
March 31, 1999
U.S. GOVERNMENT OBLIGATIONS FUND
PRINCIPAL
AMOUNT VALUE
- ------------- ---------
U.S. TREASURY BILLS 33.45%
$ 5,000,000 4/1/99 $5,000,000
5,000,000 4/15/99 4,991,493
10,000,000 4/29/99 9,966,205
5,000,000 5/6/99 4,978,733
5,000,000 5/13/99 4,974,450
5,000,000 6/3/99 4,961,588
5,000,000 7/1/99 4,943,694
5,000,000 8/12/99 4,919,276
----------
Total U.S. Treasury Bills (cost $44,735,439) 44,735,439
----------
U.S. TREASURY NOTES 15.03%
10,000,000 5.875%, 8/31/99 10,049,636
10,000,000 5.75%, 9/30/99 10,055,138
----------
Total U.S. Treasury Notes (cost $20,104,774) 20,104,774
----------
REPURCHASE AGREEMENTS 51.78%
14,239,870 G.X. Clarke & Co., 4.95%, dated 3/31/99,
repurchase price $14,241,827, maturing
4/1/99 (collateralized by U.S. Treasury
Bills, 4.44%, 5/20/99 and U.S. Treasury Bills,
4.48%, 5/6/99) 14,239,870
25,000,000 Merrill Lynch, 4.75%, dated 3/31/99,
repurchase price $25,003,298, maturing
4/1/99 (collateralized by U.S. Treasury
Notes, 5.375%, 2/15/01) 25,000,000
30,000,000 Spear, Leeds & Kellogg, 4.875%, dated 3/31/99,
repurchase price $30,004,062, maturing
4/1/99 (collateralized by U.S. Treasury
Notes, 7.00%, 7/15/06) 30,000,000
----------
Total Repurchase Agreements (cost $69,239,870) 69,239,870
----------
Total Investments (cost $134,080,083) 100.26% 134,080,083
Liabilities, less Other Assets (0.26)% (349,782)
----------
NET ASSETS 100.00% $133,730,301
============
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
March 31, 1999
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost
$15,252,499, $13,669,115,
$200,837,049, $23,436,731,
$79,228,560, $21,091,542 and
$64,840,213, respectively) $12,996,661 $14,287,008 $231,038,119 $23,729,725 $81,377,550 $21,275,990 $64,840,213
- -----------------------------------
Repurchase agreements, at value
(cost $0, $0, $0, $0, $0, and
$69,239,870, respectively) _ _ _ _ _ _ 69,239,870
- -----------------------------------
Receivable for securities sold 81,706 _ 181,333 8,961 _ _ _
- -----------------------------------
Interest and dividends receivable 20,786 30,365 402,757 155,615 1,048,786 352,541 62,004
- -----------------------------------
Organizational expenses, net of
accumulated amortization 4,209 12,024 7,139 2,193 7,139 7,139 7,139
- -----------------------------------
Other assets 9,206 7,101 53,086 8,346 23,427 18,263 51,101
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Assets 13,112,568 14,336,498 231,682,434 23,904,840 82,456,902 21,653,933 134,200,327
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES:
Dividend payable _ _ _ _ _ _ 408,579
- -----------------------------------
Accrued expenses and other
liabilities 15,148 17,609 61,761 19,207 28,552 15,936 37,105
- -----------------------------------
Accrued investment advisory fee 1,298 1,355 34,376 2,553 8,675 1,861 24,342
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities 16,446 18,964 96,137 21,760 37,227 17,797 470,026
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS $13,096,122 $14,317,534 $231,586,297 $23,883,080 $82,419,675 $21,636,136 $133,730,301
- ----------------------------------- =========== =========== =========== =========== =========== =========== ===========
NET ASSETS CONSIST OF:
Capital stock 13 15 173 22 79 22 1,337
- -----------------------------------
Paid-in capital in excess of par 15,191,155 14,627,520 182,494,481 23,343,408 79,406,576 21,680,596 133,739,121
- -----------------------------------
Undistributed net investment income 7,063 _ 12,142 10,654 85,653 22,599 8,012
- -----------------------------------
Undistributed net realized gain
(loss) on investments 153,729 (927,894) 18,878,431 236,002 778,377 (251,529) (18,169)
- -----------------------------------
Net unrealized appreciation
(depreciation) on investments (2,255,838) 617,893 30,201,070 292,994 2,148,990 184,448 _
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets $13,096,122 $14,317,534 $231,586,297 $23,883,080 $82,419,675 $21,636,136 $133,730,301
- ----------------------------------- =========== =========== =========== =========== =========== =========== ===========
CAPITAL STOCK, $0.00001 PAR VALUE
Authorized 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 300,000,000
- -----------------------------------
Issued and outstanding 1,330,017 1,510,461 17,338,883 2,158,774 7,911,550 2,161,570 133,748,382
- -----------------------------------
NET ASSET VALUE, REDEMPTION PRICE,
AND OFFERING PRICE PER SHARE
(NET ASSETS/SHARES OUTSTANDING) $9.85 $9.48 $13.36 $11.06 $10.42 $10.01 $1.00
- ----------------------------------- ====== ====== ====== ====== ====== ====== ======
</TABLE>
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
Statements of Operations
For the Period from April 1, 1998 to March 31, 1999
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 56,644 $ 30,598 $ 1,524,690 $ 748,906 $5,448,870 $ 1,258,866 $5,445,405
Dividends 366,681 257,486 6,274,819 324,894 _ _ _
- ----------------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
423,325 288,084 7,799,509 1,073,800 5,448,870 1,258,866 5,445,405
----------- ----------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fees 130,263 91,814 2,111,587 191,387 491,124 104,500 268,858
- -----------------------------------
Fund administration and
accounting fees 50,000 50,000 563,090 51,037 163,708 41,800 215,087
- -----------------------------------
Shareholder servicing fees 28,663 18,813 75,382 30,112 38,180 29,238 41,278
- -----------------------------------
Federal and state registration fees 16,142 15,595 23,969 12,362 14,729 9,844 17,686
- -----------------------------------
Administrative services plan fees 14,151 _ 251,787 20,570 76,001 18,657 _
- -----------------------------------
Professional fees 10,731 10,797 30,593 10,997 15,106 10,878 12,468
- -----------------------------------
Custody fees 4,598 3,673 84,463 7,655 24,556 6,270 32,263
- -----------------------------------
Reports to shareholders 2,913 1,920 51,327 4,503 11,060 2,615 13,059
- -----------------------------------
Amortization of organization
expenses 1,924 3,003 6,946 935 6,946 6,946 6,946
- -----------------------------------
Pricing fees 1,322 1,882 1,755 3,749 4,307 3,332 374
- -----------------------------------
Directors' fees 836 531 15,674 1,383 4,538 1,188 6,178
- -----------------------------------
Insurance 394 _ 10,649 680 2,869 733 4,155
- -----------------------------------
Other expenses 534 763 4,841 684 1,565 465 1,234
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses before waiver 262,471 198,791 3,232,063 336,054 854,689 236,466 619,586
- -----------------------------------
Waiver of expenses (77,650) (50,944) (321,568) (79,065) (135,817) (34,307) (42,477)
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Expenses 184,821 147,847 2,910,495 256,989 718,872 202,159 577,109
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME 238,504 140,237 4,889,014 816,811 4,729,998 1,056,707 4,868,296
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on
investments 443,626 (972,963) 32,830,496 833,920 1,053,007 91,388 1,111
- -----------------------------------
Change in unrealized appreciation
(depreciation) on investments (4,312,605) 617,893 (64,096,533) (2,619,384) (1,136,109) (39,148) _
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Gain (Loss) on Investments (3,868,979) (355,070) (31,266,037) (1,785,464) (83,102) 52,240 1,111
- ----------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $(3,630,475) $(214,833) $(26,377,023) $(968,653) $4,646,896 $1,108,947 $4,869,407
- ----------------------------------- =========== =========== =========== =========== =========== =========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND GROWTH FUND EQUITY FUND
------------------------- ------------ -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1999 1998 1999 1999 1998
- --------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $238,504 $182,706 $140,237 $4,889,014 $5,431,047
- -----------------------------------
Net realized gain (loss)
on investments 443,626 576,625 (972,963) 32,830,496 15,146,102
- -----------------------------------
Change in unrealized appreciation
(depreciation) on investments (4,312,605) 1,932,576 617,893 (64,096,533) 51,301,415
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations (3,630,475) 2,691,907 (214,833) (26,377,023) 71,878,564
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (238,661) (181,609) (125,285) (4,882,142) (5,458,420)
- -----------------------------------
Net capital gains (451,358) (454,364) _ (20,488,813) (19,230,779)
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
Total distributions (690,019) (635,973) (125,285) (25,370,955) (24,689,199)
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 5,961,795 9,529,746 19,440,805 34,157,608 36,250,380
- -----------------------------------
Proceeds from reinvestment
of dividends 680,419 634,827 119,796 25,169,606 24,523,415
- -----------------------------------
Redemption of shares (6,245,000) (2,373,895) (4,902,949) (88,066,228) (55,089,677)
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) from share
transactions 397,214 7,790,678 14,657,652 (28,739,014) 5,684,118
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS (3,923,280) 9,846,612 14,317,534 (80,486,992) 52,873,483
- -----------------------------------
NET ASSETS:
Beginning of period 17,019,402 7,172,790 _ 312,073,289 259,199,806
- ----------------------------------- ----------- ----------- ----------- ----------- -----------
End of period $13,096,122 $17,019,402 $14,317,534 $231,586,297 $312,073,289
- ----------------------------------- =========== =========== =========== =========== ===========
Undistributed net investment income,
end of period $ 7,063 $ 5,296 $ _ $ 12,142 $ 3,256
- ----------------------------------- =========== =========== =========== =========== ===========
</TABLE>
<F1> Commencement of operations
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
SHORT/INTERMEDIATE U.S. GOVERNMENT
BALANCED FUND FIXED INCOME FUND FIXED INCOME FUND OBLIGATIONS FUND
------------------------ ------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31, MAR. 31,
1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $816,811 $662,106 $4,729,998 $4,422,924 $1,056,707 $1,108,779 $4,868,296 $5,327,594
- -----------------------
Net realized gain (loss)
on investments 833,920 247,580 1,053,007 (25,309) 91,388 10,043 1,111 _
- -----------------------
Change in unrealized
appreciation
(depreciation)
on investments (2,619,384) 2,925,211 (1,136,109) 4,616,812 (39,148) 476,475 _ _
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations (968,653) 3,834,897 4,646,896 9,014,427 1,108,947 1,595,297 4,869,407 5,327,594
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income (818,531) (657,708) (4,730,231) (4,427,433) (1,056,399) (1,112,789) (4,868,296) (5,327,594)
- -----------------------
Net capital gains (754,425) (134,164) (217,671) _ _ _ _ _
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total distributions (1,572,956) (791,872) (4,947,902) (4,427,433) (1,056,399) (1,112,789) (4,868,296) (5,327,594)
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale
of shares 8,207,537 14,375,680 16,794,091 11,070,510 7,845,847 3,159,589 394,777,417 378,648,091
- -----------------------
Proceeds from
reinvestment
of dividends 1,564,415 789,660 4,874,511 4,382,227 1,018,299 1,063,195 154,244 158,162
- -----------------------
Redemption of shares (9,038,833) (3,411,519) (16,619,283) (17,892,679) (6,789,605) (6,238,476) (361,699,190) (403,722,643)
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
from share transactions 733,119 11,753,821 5,049,319 (2,439,942) 2,074,541 (2,015,692) 33,232,471 (24,916,390)
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS (1,808,490) 14,796,846 4,748,313 2,147,052 2,127,089 (1,533,184) 33,233,582 (24,916,390)
- -----------------------
NET ASSETS:
Beginning of period $25,691,570 $10,894,724 77,671,362 75,524,310 19,509,047 21,042,231 100,496,719 125,413,109
- ----------------------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period $23,883,080 $25,691,570 $82,419,675 $77,671,362 $21,636,136 $19,509,047 $133,730,301 $100,496,719
- ----------------------- ========== =========== =========== =========== =========== =========== =========== ===========
Undistributed net
investment income,
end of period $10,654 $11,439 $85,653 $ 83,872 $ 22,599 $20,277 $8,012 $5,998
- ----------------------- ========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
<F1> Commencement of operations
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Financial Highlights<F1>
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND GROWTH FUND EQUITY FUND
---------------------------------------- ------------- -------------------------
YEAR ENDED YEAR ENDED JUNE 10, YEAR ENDED YEAR ENDED YEAR ENDED
MAR. 31, MAR. 31, 1996<F2> TO MAR. 31, MAR. 31, MAR. 31,
1999 1998 MAR. 31, 1997 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.94 $10.52 $10.00 $10.00 $16.19 $13.74
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.18 0.19 0.15 0.10 0.26 0.29
- ------------------------------------
Net realized and unrealized gains
(losses) on investments (2.73) 2.88 0.58 (0.53) (1.66) 3.50
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (2.55) 3.07 0.73 (0.43) (1.40) 3.79
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net
investment income 0.18 0.19 0.15 0.09 0.26 0.29
- ------------------------------------
Distributions from capital gains 0.36 0.46 0.06 _ 1.17 1.05
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total distributions 0.54 0.65 0.21 0.09 1.43 1.34
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $9.85 $12.94 $10.52 $ 9.48 $13.36 $16.19
- ------------------------------------ ========== ========== ========== ========== ========== ==========
TOTAL RETURN<F3> (20.18)% 29.60% 7.30% (4.28)% (9.20)% 28.89%
- ------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $13,096 $17,019 $7,173 $14,318 $231,586 $312,073
- ------------------------------------
Ratio of net expenses to average
net assets<F4> 1.21% 1.11% 1.34% 1.21% 1.03% 1.03%
- ------------------------------------
Ratio of net investment
income to average net assets<F4> 1.55% 1.62% 2.15% 1.15% 1.74% 1.89%
- ------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.71% 1.92% 3.76% 1.63% 1.15% 1.14%
- ------------------------------------
Ratio of net investment income
to average net assets<F4><F5> 1.05% 0.81% (0.27)% 0.73% 1.62% 1.78%
- ------------------------------------
Portfolio turnover rate<F3> 26.20% 16.54% 7.45% 71.80% 24.19% 15.87%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
Financial Highlights<F1>
<TABLE>
<CAPTION>
EQUITY FUND (CONT'D.) BALANCED FUND
---------------------------------------------------- ---------------------------------------
YEAR ENDED APRIL 10, 1995 JULY 1, 1994 YEAR ENDED YEAR ENDED YEAR ENDED AUG. 6,
MAR. 31, <F2> THROUGH TO JUNE 30, MAR. 31, MAR. 31, 1996 <F2> TO
1997 MAR. 31, 1996 APRIL 9, 1995 1994 1999 1998 MAR. 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.07 $11.39 $10.48 $10.55 $12.24 $10.41 $10.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.30 0.28 0.21 0.20 0.38 0.38 0.21
- ------------------------------------
Net realized and unrealized gains
(losses) on investments 1.63 2.13 1.48 0.15 (0.81) 1.90 0.40
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.93 2.41 1.69 0.35 (0.43) 2.28 0.61
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net
investment income 0.30 0.28 0.22 0.20 0.38 0.38 0.20
- ------------------------------------
Distributions from capital gains 0.96 0.45 0.56 0.22 0.37 0.07 _
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total distributions 1.26 0.73 0.78 0.42 0.75 0.45 0.20
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $13.74 $13.07 $11.39 $10.48 $11.06 $12.24 $10.41
- ------------------------------------ ========== ========== ========== ========== ========== ========== ==========
TOTAL RETURN<F3> 14.99% 21.52% 16.48% 3.34% (3.73)% 22.34% 6.14%%
- ------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $259,200 $224,169 $161,323 $129,381 $23,883 $25,692 $10,895
- ------------------------------------
Ratio of net expenses to average
net assets<F4> 1.04% 0.99% 1.03% 1.04% 1.01% 0.88% 1.16%
- ------------------------------------
Ratio of net investment
income to average net assets<F4> 2.17% 2.32% 2.50% 1.93% 3.20% 3.37% 3.25%
- ------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.10% 1.07% 1.62% 1.54% 1.32% 1.43% 3.04%
- ------------------------------------
Ratio of net investment income
to average net assets<F4><F5> 2.11% 2.24% 1.91% 1.43% 2.89% 2.82% 1.37%
- ------------------------------------
Portfolio turnover rate<F3> 25.66% 26.60% 14.36% 15.86% 33.17% 10.46% 5.92%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Financial Highlights<F1> (continued)
<TABLE>
<CAPTION>
FIXED INCOME FUND
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
MAR. 31, MAR. 31, MAR. 31, 1995<F2> TO TO JUNE 30,
1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.45 $ 9.84 $10.00 $ 9.63 $9.58 $10.49
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.61 0.59 0.45 0.59 0.51 0.67
- ------------------------------------
Net realized and unrealized gains
(losses) on investments _ 0.61 (0.15) 0.35 0.07 (0.88)
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.61 1.20 0.30 0.94 0.58 (0.21)
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net
investment income 0.61 0.59 0.46 0.57 0.53 0.67
- ------------------------------------
Distributions from capital gains 0.03 _ _ _ _ 0.03
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total distributions 0.64 0.59 0.46 0.57 0.53 0.70
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $10.42 $10.45 $ 9.84 $10.00 $9.63 $ 9.58
- ------------------------------------ ========== ========== ========== ========== ========== ==========
TOTAL RETURN<F3> 5.93% 12.50% 3.06% 9.79% 6.35% (2.29)%
- ------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $82,420 $77,671 $75,524 $76,342 $66,488 $61,714
- ------------------------------------
Ratio of net expenses to average
net assets<F4> 0.88% 0.89% 0.89% 0.83% 0.87% 0.86%
- ------------------------------------
Ratio of net investment
income to average net assets<F4> 5.78% 5.74% 4.48% 5.94% 6.98% 6.52%
- ------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.05% 1.05% 1.00% 0.96% 1.51% 1.41%
- ------------------------------------
Ratio of net investment income
to average net assets<F4><F5> 5.61% 5.58% 4.37% 5.81% 6.34% 5.97%
- ------------------------------------
Portfolio turnover rate<F3> 31.35% 19.03% 12.66% 37.35% 7.04% 13.09%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
Financial Highlights<F1> (continued)
<TABLE>
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME FUND
---------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
MAR. 31, MAR. 31, MAR. 31, 1995<F2> TO TO JUNE 30,
1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.97 $9.73 $9.85 $9.66 $9.62 $10.18
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.51 0.56 0.49 0.52 0.42 0.55
- ------------------------------------
Net realized and unrealized gains
(losses) on investments 0.04 0.24 (0.10) 0.17 0.05 (0.56)
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.55 0.80 0.39 0.69 0.47 (0.01)
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net
investment income 0.51 0.56 0.51 0.50 0.43 0.55
- ------------------------------------
Distributions from capital gains _ _ _ _ _ _
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total distributions 0.51 0.56 0.51 0.50 0.43 0.55
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $10.01 $9.97 $9.73 $9.85 $9.66 $ 9.62
- ------------------------------------ ========== ========== ========== ========== ========== ==========
TOTAL RETURN<F3> 5.61% 8.37% 4.00% 7.24% 5.05% (0.22)%
- ------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $21,636 $19,509 $21,042 $22,056 $22,130 $21,938
- ------------------------------------
Ratio of net expenses to average
net assets<F4> 0.97% 0.99% 0.97% 0.89% 0.88% 0.83%
- ------------------------------------
Ratio of net investment
income to average net assets<F4> 5.05% 5.54% 5.01% 5.34% 5.63% 5.44%
- ------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.13% 1.15% 1.08% 1.02% 1.51% 1.38%
- ------------------------------------
Ratio of net investment income
to average net assets<F4><F5> 4.89% 5.38% 4.90% 5.21% 5.00% 4.89%
- ------------------------------------
Portfolio turnover rate<F3> 21.36% 26.58% 4.73% 41.45% 9.93% 20.52%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Financial Highlights<F1> (continued)
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED APRIL 10, JULY 1, 1994 YEAR ENDED
MAR. 31, MAR. 31, MAR. 31, 1995<F2>TO TO JUNE 30,
1999 1998 1997 MAR. 31, 1996 APRIL 9, 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05 0.04 0.03
- ------------------------------------
Net realized and unrealized gains
(losses) on investments _ _ _ _ _ _
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.05 0.05 0.05 0.05 0.04 0.03
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net
investment income 0.05 0.05 0.05 0.05 0.04 0.03
- ------------------------------------
Distributions from capital gains _ _ _ _ _ _
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
Total distributions 0.05 0.05 0.05 0.05 0.04 0.03
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------ ========== ========== ========== ========== ========== ==========
TOTAL RETURN<F3> 4.63% 4.95% 4.76% 5.14% 3.51% 2.74%
- ------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $133,730 $100,497 $125,413 $87,715 $76,105 $89,195
- ------------------------------------
Ratio of net expenses to average
net assets<F4> 0.54% 0.55% 0.58% 0.54% 0.63% 0.60%
- ------------------------------------
Ratio of net investment
income to average net assets<F4> 4.52% 4.83% 4.66% 5.12% 4.46% 2.68%
- ------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 0.58% 0.58% 0.59% 0.59% 1.23% 1.13%
- ------------------------------------
Ratio of net investment income
to average net assets<F4><F5> 4.48% 4.80% 4.65% 5.07% 3.86% 2.15%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> Performance data for each Fund prior to April 10, 1995 relates to a
corresponding predecessor First Omaha Fund, the assets of which were
acquired on that date.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
Notes to Financial Statements
March 31, 1999
1.ORGANIZATION
First Omaha Funds, Inc. (the "Company") was organized in October, 1994 as a
Nebraska corporation and is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company
issuing its shares in series, each series representing a distinct portfolio with
its own investment objectives and policies. At March 31, 1999, the only series
presently authorized are the Small Cap Value Fund, the Growth Fund, the Equity
Fund, the Balanced Fund, the Fixed Income Fund, the Short/Intermediate Fixed
Income Fund and the U.S. Government Obligations Fund (individually referred to
as a "Fund" and collectively as the "Funds").
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
(A) INVESTMENT VALUATION
Securities traded over-the-counter or on a national securities exchange are
valued on the basis of market value in their principal and most representative
market. Securities where the principal and most representative market is a
national securities exchange are valued at the latest reported sale price on
such exchange. Exchange-traded securities for which there were no transactions
are valued at the latest reported bid price.
Securities traded on only over-the-counter markets are valued at the latest bid
price. Debt securities (other than short-term instruments) are valued at prices
furnished by a pricing service, subject to review by the respective Fund's
investment adviser, First National Bank of Omaha ("First National") or FNC Trust
Group, n.a. ("FNC;" collectively, the "Advisers"), and determination of the
appropriate price whenever a furnished price is significantly different from the
previous day's furnished price. Short-term obligations (maturing within 60
days) are valued on an amortized cost basis. Securities for which quotations are
not readily available and other assets are valued at fair value as determined in
good faith by the Adviser under the supervision of the Board of Directors.
Pursuant to Rule 2a-7 of the 1940 Act, investments of the U.S. Government
Obligations Fund are valued at either amortized cost, which approximates market
value, or at original cost, which combined with accrued interest, approximates
market value. Under the amortized cost valuation method, discount or premium is
amortized on a constant basis to the maturity of the security. In addition, the
Fund may not (i) purchase any instrument with a remaining maturity greater than
13 months unless such investment is subject to a demand feature, or (ii)
maintain a dollar-weighted average portfolio maturity which exceeds 90 days.
(B) REPURCHASE AGREEMENTS
The Funds may acquire repurchase agreements from financial institutions such as
banks and broker/dealers which the Advisers deem creditworthy under guidelines
approved by the Board of Directors, subject to the seller's agreement to
repurchase such securities at a mutually agreed-upon date and price. The
repurchase price generally equals the price paid by each Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller, under a
repurchase agreement, is required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). Securities subject to repurchase agreements are held by the
Funds' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to be
loans by the Funds under the 1940 Act.
(C) ORGANIZATION COSTS
Costs incurred by the Funds in connection with their organization, registration
and the initial public offering of shares have been deferred and will be
amortized on a straight-line basis over a period of five years from the date
upon which the
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
March 31, 1999
Funds commenced their investment activities. Organization costs have been
allocated equally among the respective Funds or by specific identification, as
applicable. If any of the original shares of a Fund are redeemed by any holder
thereof prior to the end of the amortization period, the redemption proceeds
will be reduced by the pro rata share of the unamortized expenses as of the date
of redemption. The pro rata share by which the proceeds are reduced will be
derived by dividing the number of original shares of the Fund being redeemed by
the total number of original shares outstanding at the time of redemption.
(D) EXPENSES
The Funds are charged for those expenses that are directly attributable to each
portfolio, such as advisory and custodian fees. Expenses that are not directly
attributable to a portfolio are typically allocated among the portfolios in
proportion to their respective net assets.
(E) DISTRIBUTIONS TO SHAREHOLDERS
The U.S. Government Obligations Fund declares dividends of net investment income
daily. The remaining Funds declare dividends monthly; all of the Funds pay
dividends of net investment income monthly. Distributions of net realized
capital gains, if any, will be declared at least annually. Distributions to
shareholders are recorded on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from the characterization for federal income
tax purposes due to differences in the recognition of income, expense or gain
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such differences that
are permanent in nature.
Accordingly, at March 31, 1999, reclassifications were recorded to increase
(decrease) undistributed net investment income by $1,924, $(14,952), $2,014,
$935, $2,014, $2,014 and $2,014; decrease undistributed net realized loss on
investments by $0, $45,069, $0,$0,$0,$0 and $0; and decrease paid-in capital in
excess of par by $1,924, $30,117, $2,014, $935, $2,014, $2,014 and $2,014 for
the Small Cap Value Fund, the Growth Fund, the Equity Fund, the Balanced Fund,
the Fixed Income Fund, the Short/Intermediate Fixed Income Fund and the U.S.
Government Obligations Fund, respectively.
(F) FEDERAL INCOME TAXES
Each Fund intends to comply with the requirements of the Internal Revenue Code
necessary to qualify as a regulated investment company and to make the requisite
distributions of the income to its shareholders which will be sufficient to
relieve it from all or substantially all federal income taxes.
As of March 31, 1999, each of the Growth Fund, Short/Intermediate Fixed Income
Fund and U.S. Government Obligations Fund had federal income tax capital loss
carryforwards of $267,823, $246,727 and $18,169, respectively. The $267,823
federal income tax loss carryforward for the Growth Fund expires in 2007. The
$246,727 federal income tax loss carryforward for the Short/Intermediate Fixed
Income Fund expires as follows: $81,532 in 2003, $109,194 in 2004 and $56,001 in
2005. The $18,169 federal income tax loss carryforward for the U.S. Government
Obligations Fund expires as follows: $14,927 in 2003 and $3,242 in 2006. It is
management's intention to make no distribution of any future realized capital
gains until the federal income tax loss carryforwards are exhausted.
(G) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported changes in net assets during the reporting
period. Actual results could differ from those estimates.
(H) OTHER
Investment transactions are accounted for on the trade date
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
plus one. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds. Dividend income is recognized on the ex-dividend date and
interest income is recognized on an accrual basis. Original issue discount is
amortized over the expected life of each applicable security.
3.INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have agreements with the respective Advisers to furnish investment
advisory services to the Funds. Under the terms of these agreements, the Funds
will pay a monthly fee at the annual rate of the following percentages on
average daily net assets: to First National, 0.85% for the Small Cap Value Fund,
0.75% for the Equity Fund, 0.75% for the Balanced Fund, 0.60% for the Fixed
Income Fund, 0.50% for the Short/Intermediate Fixed Income Fund and 0.25% for
the U.S. Government Obligations Fund; and to FNC, 0.75% for the Growth Fund. For
the year ended March 31, 1999, advisory fees of $53,638, $30,604, $51,037,
$40,927 and $10,450 were waived in the Small Cap Value Fund, the Growth Fund,
the Balanced Fund, the Fixed Income Fund and the Short/Intermediate Fixed Income
Fund, respectively.
First National also serves as custodian and transfer agent for each of the
Funds. The custodian receives compensation from each of the Funds for such
services in an amount equal to a fee, computed daily and payable monthly, at an
annual rate of 0.03% of each Fund's average daily net assets. For the year ended
March 31, 1999, custody fees of $4,598, $3,673, $84,463, $7,655, $24,556 and
$6,270 were waived in the Small Cap Value Fund, the Growth Fund, the Equity
Fund, the Balanced Fund, the Fixed Income Fund and the Short/Intermediate Fixed
Income Fund, respectively. The transfer agent also receives compensation from
each of the Funds for such services.
Sunstone Financial Group, Inc. (the "Administrator") acts as Administrator for
each of the Funds. As compensation for its administrative and fund accounting
services and the assumption of certain administrative expenses, the
Administrator is entitled to a fee, computed daily and payable monthly, at an
annual rate of 0.20% of each Fund's average daily net assets. The Small Cap
Value Fund and the Growth Fund are each subject to a $50,000 minimum annual fee.
For the year ended March 31, 1999, administrative fees of $12,337, $16,667,
$111,200, $10,079, $32,330, $8,255 and $42,477 were waived in the Small Cap
Value Fund, the Growth Fund, the Equity Fund, the Balanced Fund, the Fixed
Income Fund, the Short/Intermediate Fixed Income Fund and the U.S. Government
Obligations Fund, respectively.
The Advisers and the Administrator may periodically volunteer to reduce all or a
portion of their fees with respect to one or more Funds. These waivers may be
terminated at any time. The Advisers and the Administrator may not seek
reimbursement of such voluntarily reduced fees at a later date. The reduction of
such fees will cause the yield of that Fund to be higher than it would be in the
absence of such reduction.
Sunstone Distribution Services, LLC (the "Distributor") acts as Distributor for
each of the Funds. The Distributor receives no compensation from the Funds under
its Distribution Agreement with the Company, but may receive compensation under
the Distribution and Service Plan.
4.DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Company has adopted a
Distribution and Service Plan (the "Plan"), under which each Fund is authorized
to pay a periodic amount representing distribution expenses calculated at an
annual rate not to exceed 0.25% of the average daily net assets of that Fund.
Such amount may be used to pay banks, broker/dealers and other institutions,
which may include the Advisers, their correspondent and affiliated banks and the
Distributor (each a "Participating Organization") for distribution and/or
shareholder service assistance pursuant to an agreement between the Distributor
and the Participating Organization. As of March 31, 1999, there are no 12b-1
Agreements with any Participating Organizations.
5.ADMINISTRATIVE SERVICES PLAN
The Company has adopted an Administrative Services Plan pursuant to which each
Fund is authorized to pay compensa-
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
March 31, 1999
tion to banks and other financial institutions, which may include the Advisers,
their correspondent and affiliated banks and the Administrator (each a "Service
Organization"). Such Service Organizations agree to provide certain ministerial,
recordkeeping and/or administrative support services for their customers or
account holders who are the beneficial or record owner of shares of that Fund.
In consideration for such services, a Service Organization receives a fee from a
Fund, computed daily and paid monthly at an annual rate of up to 0.25% of the
average daily net asset value of shares of that Fund owned beneficially or of
record by such Service Organization's customers for whom the Service
Organization provides such services. Effective November 1, 1996, the Company
entered into an agreement under the Plan with First National at an annual rate
of 0.10% of the average daily net assets serviced for each of the Small Cap
Value Fund, the Equity Fund, the Balanced Fund, the Fixed Income Fund and the
Short/Intermediate Fixed Income Fund. For the year ended March 31, 1999, fees of
$14,151, $251,787, $20,570, $76,001 and $18,657 were accrued under this
agreement, respectively, and fees of $7,077, $125,905, $10,294, $38,004 and
$9,332 were waived by First National, respectively.
6.CAPITAL STOCK
The Company is authorized to issue a total of 1,000,000,000 shares of common
stock in series with a par value of $0.00001 per share. The Board of Directors
is empowered to issue other series of the Company's shares without share-
holder approval.
Each share of stock will have a pro rata interest in the assets of the Fund to
which the stock of that series relates and will have no interest in the assets
of any other Fund.
Transactions in shares of the Funds for the year ended March 31, 1999 were as
follows:
<TABLE>
<CAPTION> SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 524,972 2,004,652 2,294,411 696,332 1,576,999 774,357 394,777,417
- ------------------------------------
Shares issued to holders in
reinvestment of dividends 61,549 12,688 1,743,861 133,981 459,506 100,822 154,244
- ------------------------------------
Shares redeemed (571,580) (506,879) (5,972,650) (770,810) (1,555,867) (671,178) (361,699,190)
- ------------------------------------ ---------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 14,941 1,510,461 (1,934,378) 59,503 480,638 204,001 33,232,471
- ------------------------------------ ========== =========== =========== =========== =========== =========== ===========
</TABLE>
Transactions in shares of the Funds for the year ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 781,847 _ 2,375,188 1,284,222 1,077,720 317,106 378,648,091
- ------------------------------------
Shares issued to holders in
reinvestment of dividends 51,971 _ 1,679,612 68,840 427,624 107,312 158,162
- ------------------------------------
Shares redeemed (200,574) _ (3,648,325) (300,447) (1,747,925) (628,537) (403,722,643)
- ------------------------------------ ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 633,244 _ 406,475 1,052,615 (242,581) (204,119) (24,916,390)
- ------------------------------------ ========== =========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
FIRST OMAHA FUNDS - Annual Report
- --------------------------------------------------------------------------------
7.INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the year ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Purchases
U.S. Government _ _ _ $ 253,672 $ 9,417,079 $2,300,848 _
Other $4,337,596 $22,564,868 $60,222,316 7,692,416 15,809,039 3,857,040 _
- ------------------------------------------------------------------------------------------------------------------------------------
Sales
U.S. Government _ _ _ 1,813,891 10,365,125 2,524,946 _
Other 3,691,922 8,006,604 92,853,344 7,338,214 14,350,575 1,750,000 _
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of March 31, 1999, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $15,279,336,
$13,709,928, $201,052,673, $23,469,482, $79,228,560, $21,091,542 and
$134,080,083, were as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Appreciation $448,244 $1,867,644 $ 43,459,432 $1,656,057 $2,698,849 $322,669 _
- ------------------------------------
(Depreciation) (2,730,919) (1,290,564) (13,473,986) (1,395,814) (549,859) (138,221) _
- ----------------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net appreciation (depreciation)
on investments $(2,282,675) $577,080 $29,985,446 $260,243 $2,148,990 $184,448 _
- ------------------------------------=========== =========== =========== =========== =========== =========== ===========
</TABLE>
For the period ended March 31, 1999, 100%, 100%, 100% and 36% of dividends paid
from net investment income, excluding short-term capital gains, qualifies for
the dividends received deduction available to corporate shareholders of the
Small Cap Value Fund, the Growth Fund, the Equity Fund and the Balanced Fund,
respectively.
<PAGE>
Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Independent Auditors' Report
To the Shareholders and
Board of Directors of
First Omaha Funds, Inc.
We have audited the accompanying statements of assets and liabilities of First
Omaha Funds, Inc. (comprised, respectively, of the Small Cap Value Fund, the
Growth Fund, the Equity Fund, the Balanced Fund, the Fixed Income Fund, the
Short/Intermediate Fixed Income Fund and the U.S. Government Obligations Fund;
collectively, the "Funds"), including the schedules of portfolio investments as
of March 31, 1999, and the related statements of operations and changes in net
assets and the financial highlights for each of the periods indicated herein.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of March 31, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of March 31, 1999, and the results of their operations, changes in
their net assets and the financial highlights for each of the periods indicated
herein, in conformity with generally accepted accounting principles.
KPMG LLP
Omaha, Nebraska
April 16, 1999
<PAGE>
APPENDIX
Commercial Paper Ratings. Commercial paper ratings of Standard & Poor's
Corporation ("S&P") are current assessments of the likelihood of timely payment
of debt considered short-term in the relevant market. Commercial paper rated
A-1 by S&P indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted A-l+. Commercial paper rated A-2 by S&P indicates
that capacity for timely payment on issues is satisfactory. However, the
relative degree of safety is not as high as for issues designated A-1.
Commercial paper rated A-3 by S&P indicates adequate capacity for timely
payment. Such paper is, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
Commercial paper rated B by S&P is regarded as having only speculative capacity
for timely payment. Commercial paper rated C by S&P is regarded as short-term
obligations with a doubtful capacity for payment. Commercial paper rated D by
S&P is in payment default. The D rating category is used when interest payments
or principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during such grace period.
Moody's Investors Service, Inc.'s ("Moody's") commercial paper rating are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. The rating Prime-1 is
the highest commercial paper rating assigned by Moody's. Issuers rated Prime-1
(or supporting institutions) are considered to have a superior capacity for
repayment of senior short-term debt obligations. Prime-1 repayment ability will
often be evidenced by many of the following characteristics: leading market
positions in well established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
A-1
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics of Prime-1 rated issuers, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variations. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained. Issuers rated Prime-3 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. The effects of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained. Issuers rated Not Prime
do not fall within any of the Prime rating categories.
Commercial paper rated F-l+ by Fitch Investors Service ("Fitch") is
regarded as having the strongest degree of assurance for timely payments.
Commercial paper rated F-1 by Fitch is regarded as having an assurance of timely
payment only slightly less than the strongest rating, i.e., F-l+. Commercial
paper rated F-2 by Fitch is regarded as having a satisfactory degree of
assurance of timely payment, but the margin of safety is not as great as for
issues assigned F-l+ or F-1 ratings. Commercial paper rated F-3 by Fitch is
regarded as having characteristics suggesting that the degree of assurance for
timely payment is adequate, however, near-term adverse changes could cause these
securities to be rated below investment grade. Commercial paper rated F-S by
Fitch is regarded as having characteristics suggesting a minimal degree of
assurance for timely payment and is vulnerable to near term adverse changes in
financial and economic conditions. Commercial paper rated D by Fitch is in
actual or imminent payment default.
The description of the three highest short-term debt ratings by Duff &
Phelps, Inc. ("Duff") (Duff incorporates gradations of "1+" (one plus) and "1-"
A-2
(one minus) to assist investors in recognizing quality differences within the
highest rating category) are as follows. Duff 1+ is regarded as having the
highest certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is outstanding,
and safety is just below risk-free U.S. Treasury short-term obligations. Duff 1
is regarded as having a very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are minor. Duff 1- is regarded as having a high certainty of timely
payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are minor. Duff 2 is regarded as having a good
certainty of timely payment. Liquidity factors and company fundamentals are
sound. Although ongoing funding needs may enlarge total financing requirements,
access to capital markets is good. Risk factors are small. Duff 3 is regarded
as having a satisfactory liquidity and other protection factors qualify issue as
to investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected. Duff 4 is considered as having
speculative investment characteristics. Liquidity is not sufficient to insure
against disruption in debt service. Operating factors and market access may be
subject to a high degree of variation. Duff 5 indicates that the issuer has
failed to meet scheduled principal and/or interest payments.
Commercial paper rated A1 by IBCA Limited and its affiliate, IBCA Inc.
(collectively "IBCA") is regarded by IBCA as obligations supported by the
highest capacity for timely repayment. Where issues possess a particularly
strong credit feature, a rating of Al+ is assigned. Obligations rated A2 are
supported by a good capacity for timely repayment. Obligations rated A3 are
supported by a satisfactory capacity for timely repayment. Obligations rated B
are those for which there is an uncertainty as to the capacity to ensure timely
repayment. Obligations rated C are those for which there is a high risk of
default or which are currently in default.
A-3
The following summarizes the description of the three highest short-term
ratings of Thomson BankWatch, Inc. ("Thomson"). TBW-1 is the highest category
and indicates a very high likelihood that principal and interest will be paid on
a timely basis. TBW-2 is the second highest category indicating that while the
degree of safety regarding timely repayment of principal and interest is strong,
the relative degree of safety is not as high as for issues rated "TBW-1." TBW-3
is the lowest investment grade category and indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate. TBW-4 is the lowest rating category and
is regarded as non-investment grade and therefore speculative.
The plus (+) sign is used after a rating symbol to designate the relative
position of an issuer within the rating category.
Corporate Debt Ratings. A S&P corporate debt rating is a current
assessment of the credit-worthiness of an obligor with respect to a specific
obligation. Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong. Debt rated AA has a very
strong capacity to pay interest and to repay principal and differs from the
highest rated issues only in small degree. Debt rated A has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.
The following summarizes the four highest ratings used by Moody's for
corporate debt. Bonds that are rated Aaa by Moody's are judged to be of the
best quality. They carry the smallest degree of investment risk and are
A-4
generally referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues. Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Bonds that are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment some time in the
future. Bonds that are rated Baa by Moody's are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Moody's applies numerical modifiers (1, 2, and 3) with respect to bonds
rated Aa through Baa. The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
The following summarizes the four highest long-term debt ratings by Duff.
Debt rated AAA has the highest credit quality. The risk factors are negligible
being only slightly more than for risk-free U.S. Treasury debt. Debt rated AA
has a high credit quality and protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions. Debt rated
A-5
A has protection factors that are average but adequate. However, risk factors
are more variable and greater in periods of economic stress. Debt rated BBB has
below average protection factors but is still considered sufficient for prudent
investment. However, there is considerable variability in risk during economic
cycles.
To provide more detailed indications of credit quality, the ratings from AA
to BBB may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.
The following summarizes the four highest long-term debt ratings by Fitch
(except for AAA ratings, plus or minus signs are used with a rating symbol to
indicate the relative position of the credit within the rating category). Bonds
rated AAA are considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events. Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated "F-1+". Bonds rated as A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Bonds
rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore, impair timely payment. The likelihood that the ratings for these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
A-6
The following summarizes IBCA's four highest long-term debt ratings.
Obligations rated AAA are those for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly. Obligations
rated AA are those for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic, or financial conditions may increase investment
risk albeit not very significantly. Obligations rated A are those for which
there is a low expectation of investment risk. Capacity for timely repayment of
principal and interest is strong, although adverse changes in business, economic
or financial conditions may lead to increased investment risk. Obligations
rated BBB are those for which there is currently a low expectation of investment
risk. Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic, or financial conditions are more
likely to lead to increased investment risk than for obligations in other
categories.
The following summarizes Thomson's description of its four highest
long-term debt ratings (Thomson may include a plus (+) or minus (-) designation
to indicate where within the respective category the issue is placed). AAA is
the highest category and indicates that the ability to repay principal and
interest on a timely basis is very high. AA is the second highest category and
indicates a superior ability to repay principal and interest on a timely basis
with limited incremental risk versus issues rated in the highest category. A is
the third highest category and indicates the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
BBB is the lowest investment grade category and indicates an acceptable capacity
to repay principal and interest. Issues rated BBB are, however, more vulnerable
A-7
to adverse developments (both internal and external) than obligations with
higher ratings.
Municipal Obligations Ratings
The following summarizes the three highest ratings used by Moody's for
state and municipal short-term obligations. Obligations bearing MIG-1 or VMIG-1
designations are of the best quality, enjoying strong protection by established
cash flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing. Obligations rated MIG-2 or VMIG-2 denote high quality
with ample margins of protection although not so large as in the preceding
rating group. Obligations bearing MIG-3 or VMIG-3 denote favorable quality.
All security elements are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.
S&P SP-1, SP-2, and SP-3 municipal note ratings (the three highest ratings
assigned) are described as follows:
"SP-1": Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
"SP-2": Satisfactory capacity to pay principal and interest.
"SP-3": Speculative capacity to pay principal and interest.
The following summarizes the four highest ratings used by Moody's for state
and municipal bonds:
"Aaa": Bonds judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edge."
A-8
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such
issues.
"Aa": Bonds judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger
than in Aaa securities.
"A": Bonds which possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
"Baa": Bonds which are considered as medium grade obligations, i.e,
they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
The following summarizes the four highest ratings used by S&P for state and
municipal bonds:
A-9
"AAA": Debt which has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
"AA": Debt which has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small
degree.
"A": Debt which has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
"BBB": Debt which has adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
Definitions of Certain Money Market Instruments
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return.
A-10
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange, normally
drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity.
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. government.
U.S. Government Agency and Instrumentality Obligations
Obligations of the U.S. government include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of agencies and instrumentalities of
the U.S. government, such as the Government National Mortgage Association, the
Tennessee Valley Authority, the Farmers Home Administration, the Federal Home
Loan Banks, the Federal Intermediate Credit Banks, the Federal Farm Credit
Banks, the Federal Land Banks, the Federal Housing Administration, the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation, and
the Student Loan Marketing Association. Some of these obligations, such as
those of the Government National Mortgage Association, are supported by the full
faith and credit of the U.S. Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the Student Loan Marketing
Association, are supported by the discretionary authority of the U.S. government
A-11
to purchase the agency's obligations; still others, such as those of the Federal
Farm Credit Banks, are supported only by the credit of the instrumentality. No
assurance can be given that the U. S. government would provide financial support
to U.S. government-sponsored instrumentalities if it is not obligated to do so
by law.
A-12
PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
OTHER INFORMATION
ITEM 23. EXHIBITS
a-1 Articles of Incorporation (incorporated by reference to exhibit 1.1
to PEA No. 5 on Form N-1A Registration Statement filed July 23,
1996)
a-2 Amendment to Articles of Incorporation, dated December 19, 1994
(incorporated by reference to exhibit 1.2 to PEA No. 5 on Form N-1A
Registration Statement filed July 23, 1996)
a-3 Amendment to Articles of Incorporation, dated January 31, 1996
(incorporated by reference to exhibit 1.3 to PEA No. 5 on Form N-1A
Registration Statement filed July 23, 1996)
a-4 Amendment to Articles of Incorporation, dated July 29, 1996
(incorporated by reference to exhibit 1.4 to PEA No.6 on Form N-1A
Registration Statement filed December 10, 1996)
b. Bylaws (incorporated by reference to exhibit 2 to PEA No. 5 on Form
N-1A Registration Statement filed July 23, 1996
c. Not applicable.
d-1 Investment Advisory Agreement, as amended (incorporated by reference
to exhibit 5.1 to PEA No. 5 on Form N-1A Registration Statement
filed July 23, 1996)
d-2 Investment Advisory Agreement relating to the First Omaha Growth
Fund (incorporated by reference to exhibit 5.2 to PEA No. 8 on Form
N-1A Registration Statement filed January 9, 1998)
e-1 Distribution Agreement (incorporated by references to exhibit 6 to
original Form N-1A Registration Statement filed November 1, 1994)
(superceded)
e-2 Amended Schedule A to the Distribution Agreement by and between
First Omaha Funds, Inc. and Sunstone Financial Group, Inc.
(incorporated by reference to exhibit 6.2 to PEA No. 5 on Form N-1A
Registration Statement filed July 23, 1996) (superceded)
e-3 Distribution Agreement by and between First Omaha Funds, Inc. and
Sunstone Distribution Services, LLC (incorporated by reference to
exhibit 6.3 to PEA No. 7 on Form N-1A Registration Statement filed
July 22, 1997)
e-4 Amended and Restated Schedule A to the Distribution Agreement by and
between the Registrant and Sunstone Distribution Services, LLC
(incorporated by reference to exhibit 6.4 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
f. Not applicable
g-1 Custodian Agreement, as amended (incorporated by reference to
exhibit 8.1 to PEA No. 5 on Form N-1A Registration Statement filed
July 23, 1996)
g-2 Amended Schedule A to the Custodian Agreement (incorporated by
reference to exhibit 8.2 to PEA No. 8 on Form N-1A Registration
Statement filed January 9, 1998)
h-1 Administration and Fund Accounting Agreement (incorporated by
reference to exhibit 9.1 to PEA No. 7 on Form N-1A Registration
Statement filed July 22, 1997)
h-2 Form of Amended and Restated Schedule A to the Administration and
Fund Accounting Agreement by and between First Omaha Funds, Inc. and
Sunstone Financial Group, Inc. (incorporated by reference to exhibit
9.2 to PEA No. 5 on Form N-1A Registration Statement filed July 23,
1996)
h-3 Administrative Services Plan and Servicing Agreement (incorporated
by reference to exhibit 9.3 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996)
h-4 Transfer Agency Agreement, as amended (incorporated by reference to
exhibit 9.4 to PEA No. 5 on Form N-1A Registration Statement filed
July 23, 1996)
h-5 Form of Amended and Restated Schedule A to the Transfer Agency
Agreement by and between First Omaha Funds, Inc. and First National
Bank of Omaha (incorporated by reference to exhibit 9.5 to PEA No. 5
on Form N-1A Registration Statement filed July 23, 1996)
h-6 Form of Amended and Restated Servicing Agreement to Administrative
Services Plan (incorporated by reference to exhibit 9.6 to PEA No. 6
on Form N-1A Registration Statement filed December 10, 1996)
h-7 Amended and Restated Administration and Fund Accounting Agreement by
and between the Registrant and Sunstone Financial Group, Inc.
(incorporated by reference to exhibit 9.7 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
h-8 Amended and Restated Schedule A to the Transfer Agency Agreement by
and between the Registrant and First National Bank of Omaha
(incorporated by reference to exhibit 9.8 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
h-9 Amended Appendix A to the Servicing Agreement to Administrative
Services Plan (incorporated by reference to exhibit 9.9 to PEA No. 8
on Form N-1A Registration Statement filed January 9, 1998)
i. Opinion and Consent of Messrs. Cline, Williams, Wright, Johnson &
Oldfather
j. Consent of Independent Certified Public Accountants
k. Not applicable
l. Subscription Agreement of Miriam M. Allison (incorporated by
reference to exhibit 13 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996)
m. Distribution and Service Plan and Related Agreement, as amended
n. Financial Data Schedules (7)
o. Not applicable
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
Section 21-2004 (15) of Nebraska Business Corporation Act allows
indemnification of officers and directors of the Registrant under circumstances
set forth therein. The Registrant has made such indemnification mandatory.
Reference is made to Article 8-D of the Articles of Incorporation (Exhibit 1),
Article XIII of the Bylaws of Registrant (Exhibit 2).
The general effect of such provision is to require indemnification of
persons who are in an official capacity with the corporation against judgments,
penalties, fines and reasonable expenses including attorneys' fees incurred by
said person if: (1) the person has not been indemnified by another organization
for the same judgments, penalties, fines and expenses for the same acts or
omissions; (2) the person acted in good faith; (3) the person received no
improper personal benefit; (4) in the case of a criminal proceeding, the person
had no reasonable cause to believe the conduct was unlawful; and (5) in the
case of directors, officers and employees of the corporation, such persons
reasonably believed that the conduct was in the best interest of the
corporation, or in the case of directors, officers or employees serving at the
request of the corporation for another organization, such person reasonably
believed that the conduct was not opposed to the best interests of the
corporation. A corporation is permitted to maintain insurance on behalf of any
officer, director, employee or agent of the corporation, or any person serving
as such at the request of the corporation, against any liability of such person.
Nevertheless, Article 8-D of the Articles of Incorporation prohibits any
indemnification which would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereafter amended and Article XIII of the
Fund's Bylaws prohibits any indemnification inconsistent with the guidelines set
forth in Investment Company Act Releases No. 7221 (June 9, 1972) and No. 11330
(September 2, 1980). Such Releases prohibit indemnification in cases involving
willful misfeasance, bad faith, gross negligence and reckless disregard of duty
and establish procedures for the determination of entitlement to indemnification
and expense advances.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification by the Registrant is against public policy as expressed in the
Act and, therefore, may be unenforceable. In the event that a claim for such
indemnification (except insofar as it provides for the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person and the Securities
and Exchange Commission is still of the same opinion, 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 of whether
or not such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
In addition to the indemnification provisions contained in the Registrant's
Articles and Bylaws, there are also indemnification and hold harmless provisions
contained in the Investment Advisory Agreement, Distribution Agreement,
Administration and Fund Accounting Agreement and Custodian Agreement. Finally,
the Registrant has also included in its Articles of Incorporation (See Article X
of the Articles of Incorporation (Exhibit 1)) a provision which eliminates the
liability of outside directors to monetary damages for breach of fiduciary duty
by such directors. Pursuant to Neb. Rev. Stat. Section 21-2035 (2), such
limitation of liability does not eliminate or limit liability of such directors
for any act or omission not in good faith which involves intentional misconduct
or a knowing violation of law, any transaction from which such director derived
an improper direct or indirect financial benefit, for paying a dividend or
approving a stock repurchase which was in violation of the Nebraska Business
Corporation Act and for any act or omission which violates a declaratory or
injunctive order obtained by the Registrant or its shareholders.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
First National Bank of Omaha ("First National") is the investment adviser
for First Omaha Small Cap Value Fund, First Omaha Equity Fund, First Omaha
Balanced Fund, First Omaha Fixed Income Fund, First Omaha Short/Intermediate
Fixed Income Fund and first Omaha U.S. Government Obligations Fund. FNC Trust
Group, n.a. ("FNC"), a subsidiary of First National Colorado, Inc. is the
investment adviser for the First Omaha Growth Fund. Both First National and
First National Colorado, Inc. are subsidiaries of First National of Nebraska,
Inc., a Nebraska corporation with total assets of approximately $8.2 billion as
of December 31, 1998. The advisers provide a full range of financial and trust
services to businesses, individuals, and government entities. The Advisers
serve Nebraska, as well as other areas of the Midwest. As of December 31, 1998,
First National's Trust Division had approximately $8.4 billion of assets under
administration, including approximately $3.4 billion under management. As of
December 31, 1998, FNC had $31.8 million of assets under administration,
including approximately $30.1 million under management.
To the knowledge of Registrant, none of the directors or officers of the
Adviser is or has been at any time during the past two fiscal years engaged in
any other business, profession, vocation or employment of a substantial nature,
except that certain officers and directors of the Adviser also hold positions
with the Adviser's parent, First National of Nebraska, Inc., or its subsidiaries
or affiliates.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Sunstone Distribution Services, LLC currently serves as distributor of
the shares of Haven Capital Management Trust, Green Century Funds, The
JohnsonFamily Funds, the Marsico Investment Fund and Northern Funds
Trust.
(b) To the best of Registrant's knowledge, the directors and executive
officers of Sunstone Distribution Services, LLC, distributor for
Registrant, are as follows:
- --------------------------------------------------------------------------------
NAME AND PRINCIPAL POSITIONS AND POSITIONS AND
BUSINESS ADDRESS OFFICES WITH OFFICES WITH
UNDERWRITER REGISTRANT
- --------------------------------------------------------------------------------
Miriam M. Allison President and Member None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
- --------------------------------------------------------------------------------
Daniel S. Allison Secretary and Member None
1241 N. Franklin Place
Milwaukee, WI 53202
- --------------------------------------------------------------------------------
Peter Hammond Vice President None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
- --------------------------------------------------------------------------------
Terry Ladwig Vice President None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
- --------------------------------------------------------------------------------
(c) Commissions and other compensation received, directly or indirectly,
from the Registrant during the fiscal year ended March 31, 1999 by
Registrant's principal underwriter:
- --------------------------------------------------------------------------------
Name of Net Compensation Brokerage Other
Principal Underwriting on Redemption Commission Compensation
Underwriter Discounts and and Repurchase
Commissions
- -------------------------------------------------------------------------------
Sunstone
Distribution
Services, LLC $0 $0 $0 $0 $0
- --------------------------------------------------------------------------------
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Records relating to Sunstone Financial Group, Inc.' s functions as fund
accountant and administrator for the Registrant are located at 207 E. Buffalo
Street, Suite 400, Milwaukee, WI 53202. All other accounts, books and other
documents required to be maintained under section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder are in the physical
possession of First National, One First National Center, Omaha, Nebraska 68102,
FNC, 1701 23rd Avenue, Greeley, Colorado 80632, or DST Systems, Inc., 210 W.
10th Street, Kansas City, Missouri 64105.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
The Registrant undertakes to provide a copy of its Annual Report to
Shareholders upon request and without charge to each person to whom the
Prospectus of the Funds has been delivered.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it has duly caused this Post-
Effective Amendment to the Registration Statement on Form N-1A to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Omaha
and the State of Nebraska, on the 21st day of May, 1999.
FIRST OMAHA FUNDS, INC.
By: /s/ David P. Greer<F1>
---------------------------
David P. Greer, President
By Marc M. Diehl, attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on May 21, 1999.
Signature Title
--------- -----
/s/ David P. Greer<F1>
President, Principal
--------------------- Executive, Financial
David P. Greer & Accounting Officer
& Director
/s/ Joseph Caggiano<F1>
--------------------- Director
Joseph Caggiano
/s/ Robert A. Reed<F1> <F1>/s/ Marc M. Diehl
--------------------- Director ----------------------------------
Robert A. Reed by Marc M. Diehl, attorney-in-fact
/s/ Harry A. Koch, Jr.<F1>
--------------------- Director
Harry A. Koch, Jr.
/s/ Gary Witt<F1>
--------------------- Director
Gary Witt
As adopted by the Board of Directors of First Omaha Funds, Inc. on August 26,
1997.
Power of Attorney
RESOLVED, that the Directors and officers of First Omaha Funds, Inc. who
may be required to execute any amendment to the Registration Statement of First
Omaha Funds, Inc. be, and each of them hereby is, authorized to execute a power
of Attorney appointing David P. Greer, Richard P. Snyder, Marc M. Diehl and each
of them, their true and lawful attorney or attorneys, to execute in their name,
place and stead, in their capacity as Director or officer, or both, of the First
Omaha Funds, Inc. any and all amendments to said Registration Statement, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission.
FIRST OMAHA FUNDS, INC.
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, David Greer, hereby
constitutes and appoints, Richard Snyder and Marc Diehl and each of them, his
true and lawful attorney, to execute in his name, place and stead, in his
capacity as Director and Officer of First Omaha Funds, Inc., the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.
DATED: August 26, 1997
/s/ David Greer
-------------------
David Greer
FIRST OMAHA FUNDS, INC.
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Joseph Caggiano,
hereby constitutes and appoints, David Greer, Richard Snyder and Marc Diehl and
each of them, his true and lawful attorney, to execute in his name, place and
stead, in his capacity as Director of First Omaha Funds, Inc., the Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.
DATED: August 26, 1997
/s/ Joseph Caggiano
-------------------
Joseph Caggiano
FIRST OMAHA FUNDS, INC.
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Robert Reed, hereby
constitutes and appoints, David Greer, Richard Snyder and Marc Diehl and each of
them, his true and lawful attorney, to execute in his name, place and stead, in
his capacity as Director of First Omaha Funds, Inc., the Registration Statement
and any amendments thereto and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.
DATED: August 26, 1997
/s/ Robert Reed
-------------------
Robert Reed
FIRST OMAHA FUNDS, INC.
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Harry Koch, hereby
constitutes and appoints, David Greer, Richard Snyder and Marc Diehl and each of
them, his true and lawful attorney, to execute in his name, place and stead, in
his capacity as Director of First Omaha Funds, Inc., the Registration Statement
and any amendments thereto and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.
DATED: August 26, 1997
/s/ Harry Koch
-------------------
Harry Koch
FIRST OMAHA FUNDS, INC.
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, Gary Witt, hereby
constitutes and appoints, David Greer, Richard Snyder and Marc Diehl and each of
them, his true and lawful attorney, to execute in his name, place and stead, in
his capacity as Director of First Omaha Funds, Inc., the Registration Statement
and any amendments thereto and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission and with the states; and said attorney shall have full power of
substitution and resubstitution.
DATED: August 26, 1997
/s/ Gary Witt
-------------------
Gary Witt
EXHIBIT INDEX
a-1 Articles of Incorporation (incorporated by reference to exhibit 1.1 to
PEA No. 5 on Form N-1A Registration Statement filed July 23, 1996)
a-2 Amendment to Articles of Incorporation, dated December 19, 1994
(incorporated by reference to exhibit 1.2 to PEA No. 5 on Form N-1A
Registration Statement filed July 23, 1996)
a-3 Amendment to Articles of Incorporation, dated January 31, 1996
(incorporated by reference to exhibit 1.3 to PEA No. 5 on Form N-1A
Registration Statement filed July 23, 1996)
a-4 Amendment to Articles of Incorporation, dated July 29, 1996
(incorporated by reference to exhibit 1.4 to PEA No.6 on Form N-1A
Registration Statement filed December 10, 1996)
laws (incorporated by reference to exhibit 2) to PEA No. 5 on Form
1A Registrat
ion Statement filed July 23, 1996
c. Not applicable
d-1 Investment Advisory Agreement, as amended (incorporated by reference
to exhibit 5.1 to PEA No. 5 on Form N-1A Registration Statement filed
July 23, 1996)
d-2 Investment Advisory Agreement relating to the First Omaha Growth Fund
(incorporated by reference to exhibit 5.2 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
e-1 Distribution Agreement (incorporated by references to exhibit 6 to
original Form N-1A Registration Statement filed November 1, 1994)
(superceded)
e-2 Amended Schedule A to the Distribution Agreement by and between First
Omaha Funds, Inc. and Sunstone Financial Group, Inc. (incorporated by
reference to exhibit 6.2 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996) (superceded)
e-3 Distribution Agreement by and between First Omaha Funds, Inc. and
Sunstone Distribution Services, LLC (incorporated by reference to
exhibit 6.3 to PEA No. 7 on Form N-1A Registration Statement filed
July 22, 1997)
e-4 Amended and Restated Schedule A to the Distribution Agreement by and
between the Registrant and Sunstone Distribution Services, LLC
(incorporated by reference to exhibit 6.4 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
f. Not applicable
g-1 Custodian Agreement, as amended (incorporated by reference to exhibit
8.1 to PEA No. 5 on Form N-1A Registration Statement filed July 23,
1996)
g-2 Amended Schedule A to the Custodian Agreement (incorporated by
reference to exhibit 8.2 to PEA No. 8 on Form N-1A Registration
Statement filed January 9, 1998)
h-1 Administration and Fund Accounting Agreement (incorporated by
reference to exhibit 9.1 to PEA No. 7 on Form N-1A Registration
Statement filed July 22, 1997)
h-2 Form of Amended and Restated Schedule A to the Administration and Fund
Accounting Agreement by and between First Omaha Funds, Inc. and
Sunstone Financial Group, Inc. (incorporated by reference to exhibit
9.2 to PEA No. 5 on Form N-1A Registration Statement filed July 23,
1996)
h-3 Administrative Services Plan and Servicing Agreement (incorporated by
reference to exhibit 9.3 to PEA No. 5 on Form N-1A Registration
Statement filed July 23, 1996)
h-4 Transfer Agency Agreement, as amended (incorporated by reference to
exhibit 9.4 to PEA No. 5 on Form N-1A Registration Statement filed
July 23, 1996)
h-5 Form of Amended and Restated Schedule A to the Transfer Agency
Agreement by and between First Omaha Funds, Inc. and First National
Bank of Omaha (incorporated by reference to exhibit 9.5 to PEA No. 5
on Form N-1A Registration Statement filed July 23, 1996)
h-6 Form of Amended and Restated Servicing Agreement to Administrative
Services Plan (incorporated by reference to exhibit 9.6 to PEA No. 6
on Form N-1A Registration Statement filed December 10, 1996)
h-7 Amended and Restated Administration and Fund Accounting Agreement by
and between the Registrant and Sunstone Financial Group, Inc.
(incorporated by reference to exhibit 9.7 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
h-8 Amended and Restated Schedule A to the Transfer Agency Agreement by
and between the Registrant and First National Bank of Omaha
(incorporated by reference to exhibit 9.8 to PEA No. 8 on Form N-1A
Registration Statement filed January 9, 1998)
h-9 Amended Appendix A to the Servicing Agreement to Administrative
Services Plan (incorporated by reference to exhibit 9.9 to PEA No. 8
on Form N-1A Registration Statement filed January 9, 1998)
i. Opinion and Consent of Messrs. Cline, Williams, Wright, Johnson &
Oldfather
j. Consent of Independent Certified Public Accountants
k. Not applicable
l. Subscription Agreement of Miriam M. Allison (incorporated by reference
to exhibit 13 to PEA No. 5 on Form N-1A Registration Statement filed
July 23, 1996)
m. Distribution and Service Plan and Related Agreement as amended
n. Financial Data Schedules (7)
o. Not applicable
[CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER LETTERHEAD]
May 25, 1999
Board of Directors
First Omaha Funds, Inc.
One First National Center
Omaha, NE 68102
RE: AMENDED REGISTRATION STATEMENT ON FORM N-1A
Gentlemen:
Our opinion has been requested with respect to the shares of common stock
designated First Omaha U.S. Government Money Market Fund, First Omaha
Short/Intermediate Fixed Income Fund, First Omaha Fixed Income Fund, First Omaha
Balanced Fund, First Omaha Equity Fund, First Omaha Growth Fund and First Omaha
Small Cap Value Fund shares, $.00001 par value per share (the "shares"), of
First Omaha Funds, Inc. (the "Fund"), which are being registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
by an Amended Registration Statement on Form N-1A.
We have examined the Fund's Articles of Incorporation and Bylaws, reviewed
certain minutes of corporate proceedings, the Amended Registration Statement on
Form N-1A and have made such additional factual and legal inquiry as we deemed
necessary under the circumstances. Based upon the foregoing, it is our opinion
that:
1.The Fund is a duly and validly organized corporation presently existing
in good standing under the laws of the state of Nebraska.
2.The issuance and sale of the shares have been duly and validly
authorized by the necessary corporate action; and said shares will, upon
delivery against payment as contemplated in the Amended Registration
Statement, be duly authorized, validly issued and outstanding, fully
paid, and nonassessable shares of common stock of the Fund.
We consent to the use of this opinion as an exhibit to the Fund's Amended
Registration Statement on Form N-1A and further consent to the reference of our
firm in the Prospectus and Statement of Additional Information forming a part
thereof.
Very truly yours,
/s/ Donald F. Burt
DONALD F. BURT
For the Firm
INDEPENDENT AUDITORS' CONSENT
To the Shareholders and Board of Directors
First Omaha Funds, Inc.
We consent to the use of our report dated April 16, 1999 incorporated herein and
to the reference to our firm under the heading "Independent Auditors" in the
Statement of Additional Information.
/s/ KPMG LLP
Omaha, Nebraska
May 24, 1999
FIRST OMAHA FUNDS, INC.
DISTRIBUTION AND SERVICE PLAN<F1>
This Distribution and Service Plan (the "Plan") has been adopted by the
Board of Directors of First Omaha Funds, Inc, ("Omaha Funds") in accordance with
Rule 12b-1 under the Investment Company Act of 1940 (the "Act").
Section 1. Upon the recommendation of Sunstone Financial Group, Inc.
("Sunstone"), the distributor and administrator of Omaha Funds, any officer of
Omaha Funds is authorized to execute and deliver, in the name and on behalf of
Omaha Funds, written agreements based on the form attached hereto as Appendix A
or any other form duly approved by the Board of Directors ("Agreements") with
securities dealers, financial institutions and other industry professionals that
are shareholders of, or dealers of record of, or which have a servicing
relationship with the beneficial owners of, Shares of Omaha Funds ("Shareholder
Organizations"). Pursuant to such Agreements, Shareholder Organizations shall
provide distribution services or distribution and support services as set forth
therein to their clients who acquire and beneficially own Shares of any Fund
offered by Omaha Funds in consideration of a fee, computed monthly in the manner
set forth in the Agreements, at an annual rate of up to .25% of the average
daily net asset value of the Shares beneficially owned by such clients. First
National Bank of Omaha and its affiliates are eligible to become Shareholder
Organizations and to receive fees under this Plan.
Section 2. Sunstone shall monitor the arrangements pertaining to Omaha
Funds' Agreements with Shareholder Organizations in accordance with the terms of
Sunstone's administration agreement with Omaha Funds. Sunstone shall not,
however, be obliged by this Plan to recommend, and Omaha Funds shall not be
obliged to execute any Agreement with any qualifying Shareholder Organization.
Section 3. So long as this Plan is in effect, Sunstone shall provide to
Omaha Funds' Board of Directors, and the Directors shall review, at least
quarterly, a written report of the amounts expended pursuant to thus Plan and
the purposes for which such expenditures were made.
Section 4. This Plan shall become effective on June 30, 1995 with respect
to each particular Fund, upon the approval of the Plan (and the form of
Agreement attached hereto) by (a) a majority of the Board of Directors,
including a majority of the Directors who are not "interested persons," as
defined in the Act, of Omaha Funds and have no direct or indirect financial
interest in the operation of this Plan or in any Agreement related to this Plan
(the "Disinterested Directors"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of this Plan (and form of
Agreement), and (b) a majority (as defined in the Act) of the outstanding Shares
of such Fund.
<F1> As amended May 12, 1999
Section 5. Unless sooner terminated, this Plan shall continue until June
30, 1996 and thereafter shall continue automatically for successive annual
periods provided such continuance is approved at least annually in the manner
set forth in Section 4(a).
Section 6. This Plan may be amended at any time with respect to any Fund
by the Board of Directors, provided that (a) any amendment to increase
materially the costs (whether for distribution or any other purpose) which such
Fund may bear pursuant to this Plan shall be effective only upon the favorable
vote of a majority (as defined in the Act) of the outstanding Shares of such
Fund, and (b) any material amendment of the terms of this Plan shall become
effective only upon the approvals set forth in Section 4(a).
Section 7. This Plan is terminable at any time with respect
to any Fund by (a) vote of a majority of the Disinterested Directors, or (b)
vote of a majority (as defined in the Act) of the Shares of such Fund.
Section 8. The selection and nomination of those Directors who are not
"interested persons" (as defined in the Act) of Omaha Funds shall be committed
to the discretion of such non-interested Directors.
Section 9. All expenses incurred by Omaha Funds with respect to the
Shares of a particular Fund in connection with Agreements and the implementation
of this Plan shall be borne entirely by such Fund.
Section 10. This Plan was originally adopted by Omaha Funds as of April
10, 1995 and amended as of May 12, 1999.
FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
DEALER AGREEMENT
Gentlemen:
We wish to enter into this Dealer Agreement ("Agreement") with you concerning
the provision of distribution [and support services]<F1> to your clients
("Clients") who may from time to time acquire and beneficially own shares of
Common Stock ("Shares") of one or more our seven separate portfolios, and such
other portfolios as we may add in the future (the "Funds"). This Agreement has
been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act") by us on behalf of the Funds under a Distribution and
Service Plan (the "Plan") adopted pursuant to said Rule, and is subject to the
provisions of said Rule, as well as any other applicable rules or regulations
promulgated by the Securities and Exchange Commission. This Agreement relates to
the services to be provided by you and for which you may be entitled to receive
payments pursuant to the Plan.
The terms and conditions of this agreement are as follows:
1. To the extent that you provide distribution assistance [and support
services]<F1> in accordance with the Plan, this Agreement and all applicable
laws, rules and regulations, to those of your customers who may from time to
time directly or beneficially own shares of the Funds, you shall be entitled to
a fee periodically pursuant to the Plan.
2. The fee paid with respect to each applicable Fund will be computed daily
and paid quarterly at an annual rate of up to 0.25% of the average daily net
asset value of the shares of such Fund beneficially owned by your Clients for
whom you are the dealer of record or holder of record or with whom you have a
servicing relationship (the "Client Shares"). For purposes of determining the
fees payable under this Agreement, the average daily net asset value of the
Client Shares will be computed in the manner specified in the Funds'
Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of shares for purposes of
purchases and redemptions. The fee rate may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you. All
fees payable by us under this Agreement with respect to the Shares of a
particular Fund shall be borne and be payable entirely out of the assets
allocable to said Shares; and no other class of Shares of any other Fund offered
by us shall be responsible for such fees. You shall be responsible for your own
costs and expenses in providing your services hereunder.
3. The total of the fees calculated for each respective Fund for any period
with respect to which such calculations are made will be paid within 45 days
after the close of such period. We reserve the right at any time to impose
minimum fee payment requirements before any periodic payments will be made to
you hereunder.
- -------------------------------
<F1> Delete when not applicable
4. In our discretion payment may be withheld with respect to the Client Shares
purchased by you and redeemed or repurchased by the Fund within seven (7)
business days after the date of the confirmation of such purchase. Further, we
may, in our discretion and without notice, suspend or withdraw the sale of
Shares, including the sale of Shares to you for the account of any Client or
Clients.
5. You shall furnish us and our designees with such information as we shall
reasonably request with respect to the services provided and the fees paid to
you pursuant to this Agreement, including but not limited to periodic
certifications confirming the provision to Clients of the services under this
Agreement and blue sky sales reports. You and your employees will, upon request,
be available during normal business hours to consult with us or our designees
concerning the performance of your responsibilities under this Agreement. We or
our designee shall furnish our directors, for their review on a quarterly basis,
a written report of the amounts expended under the Plan by us and the purposes
for which such expenditures were made.
6. Orders shall be placed either directly with our Transfer Agent in
accordance with such procedures as may be established by us or the Transfer
Agent, or with our Transfer Agent through the facilities of the National
Securities Clearing Corporation ("NSCC"), if available, in accordance with the
rules of the NSCC.
7. For all purposes of this Agreement you will be deemed to be an independent
contractor and neither you nor any of your employees or agents shall have any
authority to act in any matter or in any respect as agent for us or for our
Distributor. Neither you nor any of your employees or agents are authorized to
make any representation concerning shares of the Funds except those contained in
the then current Prospectus for the Funds. By your written acceptance of this
Agreement, you agree to and do release, indemnify and hold us, our distributor
and our agents harmless from and against any and all liabilities or losses
resulting from requests, directions, actions or inactions of or by you or your
officers, employees or agents regarding your responsibilities hereunder or the
offer, purchase, redemption, transfer or registration of shares of the Funds (or
orders relating to the same) by you or your Clients, or from your breach of any
of the terms of this Agreement. Notwithstanding anything herein to the contrary,
the foregoing indemnity and hold harmless agreement shall indefinitely survive
the termination of this Agreement.
8. We may enter into other similar agreements with any other person or persons
without your consent.
9. You represent that you are a member of the NASD and agree to maintain
membership in the NASD. You agree to abide by all the rules and regulations of
the Securities and Exchange Commission and the NASD which are applicable to the
distribution of the securities of open-end investment companies, including
without limitation, Section 2830 of the NASD Conduct Rules, all of which are
incorporated herein as if set forth in full. You shall also comply with all
other applicable state and Federal laws and regulations and the rules and
regulations of authorized regulatory agencies. You will not sell or offer for
sale shares of any Fund in any state or other jurisdiction where (i) you are not
qualified to act as a dealer or (ii) the shares are not qualified for sale under
the Blue Sky laws and regulations for such state or similar securities laws of
the jurisdiction. You agree to notify us immediately if your license or
registration to act as a broker-dealer is revoked or suspended by any Federal,
self-regulatory or state or other agency.
10. This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty, upon notice to the other party, by us or by the
vote of a majority of our directors who are not interested persons of that Fund
or by a vote of a majority of the Fund's outstanding shares. It will be
terminated, without notice, by any act which terminates the Distribution and
Service Plan, upon your expulsion or suspension from the NASD, and in any event,
it shall terminate automatically in the event of its assignment as that term is
defined in the 1940 Act. We may in our sole discretion modify or amend this
Agreement upon written notice to you of such modification or amendment, which
shall be effective on the date stated in such notice.
11. All notices and other communications to either you or us will be duly given
if mailed, telegraphed, telexed, or transmitted by similar telecommunications
device including facsimile to the appropriate address stated below.
12. By your written acceptance of this Agreement, you represent, warrant and
agree that: (i) the compensation payable to you hereunder, together with any
other compensation you receive from Clients for services contemplated by this
Agreement, will not be excessive or unreasonable under the laws and instruments
governing your relationships with Clients; and (ii) you will provide to Clients
a schedule of any fees that you may charge to them relating to the investment of
their assets in Shares.
13. This Agreement shall be construed in accordance with the laws of the State
of Wisconsin.
14. This Agreement shall become effective upon acceptance and execution by us.
Unless sooner terminated as provided herein, this Agreement shall continue in
full force and effect as long as the continuance of the Plan and this Agreement
are approved at least annually by a vote of our directors, including a majority
of those directors who are not "interested persons" (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of the
Distribution and Service Plan adopted by us or in any agreement related thereto,
cast in person at a meeting called for the purpose of voting thereon.
- ---------------------------- FIRST OMAHA FUNDS, INC.
Name of Dealer c/o 207 East Buffalo Street, Suite 400
(Please Print or Type)<F1> Milwaukee, Wisconsin 53202
- ----------------------------
Address of Dealer
- ----------------------------
By: By:
------------------------- -------------------------
Authorized Officer Authorized Officer
------------------------- -------------------------
Print Name Print Name
Date: Date:
------------------------- -------------------------
Phone:
------------------------
Fax:
--------------------------
<F1> NOTE: Please sign and return both copies of this Agreement to First Omaha
Funds, Attention________________________. Upon acceptance, one
countersigned copy will be returned to you for your files.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000932381
<NAME> FIRST OMAHA FUNDS INC.
<SERIES>
<NUMBER> 1
<NAME> U.S. GOVERNMENT OBLIGATIONS FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 134080083
<INVESTMENTS-AT-VALUE> 134080083
<RECEIVABLES> 62004
<ASSETS-OTHER> 58240
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 134200327
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 470026
<TOTAL-LIABILITIES> 470026
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 133740458
<SHARES-COMMON-STOCK> 133748382
<SHARES-COMMON-PRIOR> 100515911
<ACCUMULATED-NII-CURRENT> 8012
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18169)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 133730301
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5445405
<OTHER-INCOME> 0
<EXPENSES-NET> (577109)
<NET-INVESTMENT-INCOME> 4868296
<REALIZED-GAINS-CURRENT> 1111
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4869407
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4868296)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 394777417
<NUMBER-OF-SHARES-REDEEMED> 361699190
<SHARES-REINVESTED> 154244
<NET-CHANGE-IN-ASSETS> 33233582
<ACCUMULATED-NII-PRIOR> 5998
<ACCUMULATED-GAINS-PRIOR> (19280)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 268858
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 619586
<AVERAGE-NET-ASSETS> 107615237
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .54
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SHORT/INTERMEDIATE FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 21091542
<INVESTMENTS-AT-VALUE> 21275990
<RECEIVABLES> 352541
<ASSETS-OTHER> 25402
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21653933
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17797
<TOTAL-LIABILITIES> 17797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21680618
<SHARES-COMMON-STOCK> 2161570
<SHARES-COMMON-PRIOR> 1957569
<ACCUMULATED-NII-CURRENT> 22599
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (251529)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 184448
<NET-ASSETS> 21636136
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1258866
<OTHER-INCOME> 0
<EXPENSES-NET> (202159)
<NET-INVESTMENT-INCOME> 1056707
<REALIZED-GAINS-CURRENT> 91388
<APPREC-INCREASE-CURRENT> (39148)
<NET-CHANGE-FROM-OPS> 1108947
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1056399)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 774357
<NUMBER-OF-SHARES-REDEEMED> 671178
<SHARES-REINVESTED> 100822
<NET-CHANGE-IN-ASSETS> 2127089
<ACCUMULATED-NII-PRIOR> 20277
<ACCUMULATED-GAINS-PRIOR> (342917)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 104500
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 236466
<AVERAGE-NET-ASSETS> 20901932
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> .51
<PER-SHARE-GAIN-APPREC> .04
<PER-SHARE-DIVIDEND> (.51)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.01
<EXPENSE-RATIO> .97
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 79228560
<INVESTMENTS-AT-VALUE> 81377550
<RECEIVABLES> 1048786
<ASSETS-OTHER> 30566
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82456902
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37227
<TOTAL-LIABILITIES> 37227
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 79406655
<SHARES-COMMON-STOCK> 7911550
<SHARES-COMMON-PRIOR> 7430912
<ACCUMULATED-NII-CURRENT> 85653
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 778377
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2148990
<NET-ASSETS> 82419675
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5448870
<OTHER-INCOME> 0
<EXPENSES-NET> (718872)
<NET-INVESTMENT-INCOME> 4729998
<REALIZED-GAINS-CURRENT> 1053007
<APPREC-INCREASE-CURRENT> (1136109)
<NET-CHANGE-FROM-OPS> 4646896
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4730231)
<DISTRIBUTIONS-OF-GAINS> (217671)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1576999
<NUMBER-OF-SHARES-REDEEMED> 1555867
<SHARES-REINVESTED> 459506
<NET-CHANGE-IN-ASSETS> 4748313
<ACCUMULATED-NII-PRIOR> 83872
<ACCUMULATED-GAINS-PRIOR> (56959)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 491124
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 854689
<AVERAGE-NET-ASSETS> 81855493
<PER-SHARE-NAV-BEGIN> 10.45
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.61)
<PER-SHARE-DISTRIBUTIONS> (.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.42
<EXPENSE-RATIO> .88
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 200837049
<INVESTMENTS-AT-VALUE> 231038119
<RECEIVABLES> 584090
<ASSETS-OTHER> 60225
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 231682434
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 96137
<TOTAL-LIABILITIES> 96137
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 182494654
<SHARES-COMMON-STOCK> 17338883
<SHARES-COMMON-PRIOR> 19273261
<ACCUMULATED-NII-CURRENT> 12142
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18878431
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 30201070
<NET-ASSETS> 231586297
<DIVIDEND-INCOME> 6274819
<INTEREST-INCOME> 1524690
<OTHER-INCOME> 0
<EXPENSES-NET> (2910495)
<NET-INVESTMENT-INCOME> 4889014
<REALIZED-GAINS-CURRENT> 32830496
<APPREC-INCREASE-CURRENT> (64096533)
<NET-CHANGE-FROM-OPS> (26377023)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4882142)
<DISTRIBUTIONS-OF-GAINS> (20488813)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2294411
<NUMBER-OF-SHARES-REDEEMED> 5972650
<SHARES-REINVESTED> 1743861
<NET-CHANGE-IN-ASSETS> (80486992)
<ACCUMULATED-NII-PRIOR> 3256
<ACCUMULATED-GAINS-PRIOR> 6536748
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2111587
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3232063
<AVERAGE-NET-ASSETS> 281407699
<PER-SHARE-NAV-BEGIN> 16.19
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> (1.66)
<PER-SHARE-DIVIDEND> (.26)
<PER-SHARE-DISTRIBUTIONS> (1.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.36
<EXPENSE-RATIO> 1.03
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> SMALL CAP VALUE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 15252499
<INVESTMENTS-AT-VALUE> 12996661
<RECEIVABLES> 102492
<ASSETS-OTHER> 13415
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13112568
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16446
<TOTAL-LIABILITIES> 16446
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15191168
<SHARES-COMMON-STOCK> 1330017
<SHARES-COMMON-PRIOR> 1315076
<ACCUMULATED-NII-CURRENT> 7063
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 153729
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2255838)
<NET-ASSETS> 13096122
<DIVIDEND-INCOME> 366681
<INTEREST-INCOME> 56644
<OTHER-INCOME> 0
<EXPENSES-NET> (184821)
<NET-INVESTMENT-INCOME> 238504
<REALIZED-GAINS-CURRENT> 443626
<APPREC-INCREASE-CURRENT> (4312605)
<NET-CHANGE-FROM-OPS> (3630475)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (238661)
<DISTRIBUTIONS-OF-GAINS> (451358)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 524972
<NUMBER-OF-SHARES-REDEEMED> 571580
<SHARES-REINVESTED> 61549
<NET-CHANGE-IN-ASSETS> (3923280)
<ACCUMULATED-NII-PRIOR> 5296
<ACCUMULATED-GAINS-PRIOR> 161461
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 130263
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 262471
<AVERAGE-NET-ASSETS> 15318900
<PER-SHARE-NAV-BEGIN> 12.94
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> (2.73)
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.36)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> 1.21
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 23436731
<INVESTMENTS-AT-VALUE> 23729725
<RECEIVABLES> 164576
<ASSETS-OTHER> 10539
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23904840
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21760
<TOTAL-LIABILITIES> 21760
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22343430
<SHARES-COMMON-STOCK> 2158774
<SHARES-COMMON-PRIOR> 2099271
<ACCUMULATED-NII-CURRENT> 10654
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 236002
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 292994
<NET-ASSETS> 23883080
<DIVIDEND-INCOME> 324894
<INTEREST-INCOME> 748906
<OTHER-INCOME> 0
<EXPENSES-NET> (256989)
<NET-INVESTMENT-INCOME> 816811
<REALIZED-GAINS-CURRENT> 833920
<APPREC-INCREASE-CURRENT> (2619384)
<NET-CHANGE-FROM-OPS> (968653)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (818531)
<DISTRIBUTIONS-OF-GAINS> (754425)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 696332
<NUMBER-OF-SHARES-REDEEMED> 770810
<SHARES-REINVESTED> 133981
<NET-CHANGE-IN-ASSETS> (1808490)
<ACCUMULATED-NII-PRIOR> 11439
<ACCUMULATED-GAINS-PRIOR> 156507
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 191387
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 336054
<AVERAGE-NET-ASSETS> 25513835
<PER-SHARE-NAV-BEGIN> 12.24
<PER-SHARE-NII> .38
<PER-SHARE-GAIN-APPREC> (.81)
<PER-SHARE-DIVIDEND> (.38)
<PER-SHARE-DISTRIBUTIONS> (.37)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 1.01
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 13669115
<INVESTMENTS-AT-VALUE> 14287008
<RECEIVABLES> 30365
<ASSETS-OTHER> 19125
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14336498
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18964
<TOTAL-LIABILITIES> 18964
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14627535
<SHARES-COMMON-STOCK> 1510461
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (927894)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 617893
<NET-ASSETS> 14317534
<DIVIDEND-INCOME> 257486
<INTEREST-INCOME> 30598
<OTHER-INCOME> 0
<EXPENSES-NET> (147847)
<NET-INVESTMENT-INCOME> 140237
<REALIZED-GAINS-CURRENT> (972963)
<APPREC-INCREASE-CURRENT> 617893
<NET-CHANGE-FROM-OPS> (214833)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (125285)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2004652
<NUMBER-OF-SHARES-REDEEMED> 506879
<SHARES-REINVESTED> 12688
<NET-CHANGE-IN-ASSETS> 14317534
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 91814
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 198791
<AVERAGE-NET-ASSETS> 12247579
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> (.53)
<PER-SHARE-DIVIDEND> (.09)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.48
<EXPENSE-RATIO> 1.21
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
