GREAT PLAINS FUNDS
Great Plains Funds (the "Trust") is an open-end, management investment company.
The Trust has the following five separate investment portfolios or mutual funds
(each portfolio individually referred to as a "Fund" and collectively as the
"Funds"). Each Fund offers its own shares and has a distinct investment goal to
meet specific investor needs.
GREAT PLAINS EQUITY FUND
GREAT PLAINS INTERNATIONAL EQUITY FUND
GREAT PLAINS PREMIER FUND
GREAT PLAINS INTERMEDIATE BOND FUND
GREAT PLAINS TAX-FREE BOND FUND
This prospectus contains the information you should read and know before you
invest in any of the Funds. Keep this prospectus for future reference.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
ENDORSED OR GUARANTEED BY FIRST COMMERCE BANCSHARES, INC., NATIONAL BANK OF
COMMERCE, OR ANY OF THEIR OTHER BANKING SUBSIDIARIES OR AFFILIATES, AND THE
SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES
INVOLVES INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The Trust has also filed a Statement of Additional Information dated October 31,
1998, with the Securities and Exchange Commission ("SEC"). The information
contained in the Statement of Additional Information (together with any
supplement thereto) is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information, or a paper copy of
this prospectus if you have received your prospectus electronically, free of
charge, obtain other information, or make inquiries about the Funds by writing
to the Funds or calling 1-800-568-8257. The Statement of Additional Information,
material incorporated by reference into this document, and other information
regarding the Funds is maintained electronically with the SEC at its Internet
Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated October 31, 1998
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS 2
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SYNOPSIS 4
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Risk Factors 5
FUND OBJECTIVE AND POLICIES 6
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Great Plains Equity Fund 6
Great Plains International Equity
Fund 6
Great Plains Premier Fund 7
Great Plains Intermediate Bond
Fund 8
Great Plains Tax-Free Bond Fund 9
NET ASSET VALUE 10
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INVESTING IN THE FUNDS 10
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Share Purchases 10
Minimum Investment Required 11
Exchanging Securities for Fund
Shares 11
What Shares Cost 11
Sales Charge Waivers 12
Reducing the Sales Charge 13
Systematic Investment Program 14
Certificates and Confirmations 14
Dividends and Capital Gains 14
EXCHANGE PRIVILEGE 14
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Exchanging Shares 14
Exchange by Telephone 15
REDEEMING SHARES 15
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Systematic Withdrawal Program 17
Accounts with Low Balances 17
GREAT PLAINS FUNDS INFORMATION 17
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Management of the Trust 17
Brokerage Transactions 19
Distribution of Fund Shares 20
ADMINISTRATION OF THE TRUST 21
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Expenses of the Funds 21
SHAREHOLDER INFORMATION 21
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Voting Rights 21
PERFORMANCE INFORMATION 22
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Performance Information for
Predecessor Common Investment
Funds 22
PORTFOLIO INVESTMENTS AND STRATEGIES
23
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Additional Investment Risks 35
TAX INFORMATION 40
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Federal Income Tax 40
State and Local Taxes 41
Nebraska Taxes 41
APPENDIX 42
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ADDRESSES 46
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SUMMARY OF FUND EXPENSES
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<TABLE>
<CAPTION>
INTERNATIONAL INTERMEDIATE TAX-FREE
EQUITY EQUITY PREMIER BOND BOND
SHAREHOLDER TRANSACTION FUND FUND FUND FUND FUND
EXPENSES ------ ------------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases
(as a percentage of
offering price)............ 3.00% 3.00% 3.00% 3.00% 3.00%
Maximum Sales Charge Imposed
on Reinvested Dividends (as
a percentage of offering
price)..................... None None None None None
Contingent Deferred Sales
Charge (as a percentage
of original purchase price
or redemption proceeds,
as applicable)............. None None None None None
Redemption Fees (as a
percentage of amount
redeemed,
if applicable)............. None None None None None
Exchange Fee................ None None None None None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after
waiver, if applicable) (1). 0.75% 1.25% 0.80% 0.50% 0.50%
12b-1 Fees (2).............. 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses (after
waivers, if applicable)
(3)........................ 0.27% 0.43% 0.64% 0.29% 0.37%
Shareholder Servicing Agent
Fee (2)................... 0.00% 0.00% 0.00% 0.00% 0.00%
---- ---- ---- ---- ----
Total Fund Operating
Expenses (after waivers,
if applicable) (4)......... 1.02% 1.68% 1.44% 0.79% 0.87%
</TABLE>
(1) The management fee for the Premier Fund has been reduced to reflect the
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 1.00%. Additionally, the adviser has agreed to waive its management
fee on that portion of the assets of the Equity Fund invested in the
International Equity Fund. (The adviser is still entitled to receive its
management fee on the International Equity Fund assets.) This waiver cannot
be terminated absent a finding by the Trust's Board of Trustees that the
management fees charged on that portion of the Equity Fund assets are for
advisory services in addition to, rather than in duplication of, advisory
services provided to the International Equity Fund.
(2) For the fiscal year ended August 31, 1998, the Funds did not pay or accrue
12b-1 Fees or Shareholder Servicing Fees. The Funds can pay up to 0.25% of
average daily net assets as a 12b-1 Fee to the distributor, and pay up to
0.25% of average daily net assets for Shareholder Services Fees.
(3) Other Expenses are 0.84% for the Premier Fund, absent the voluntary waiver
by the administrator.
(4) The Total Fund Operating Expenses were 1.84% for the Premier Fund for fiscal
year ended August 31, 1998, absent voluntary waivers described above in
Notes 1 and 3.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Funds will bear either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Great Plains Funds Information," "Administration of the Trust"
and "Investing in the Funds."
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return; (2) redemption at the end of each time period; and (3) payment of
the maximum sales charge. As noted in the table above, the Funds charge no
redemption fees. <TABLE> <CAPTION>
INTERNATIONAL INTERMEDIATE TAX-FREE
EQUITY EQUITY PREMIER BOND BOND
FUND FUND FUND FUND FUND
------ ------------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
1 Year....................... $40 $46 $44 $38 $39
3 Years...................... $61 $80 $73 $54 $56
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS EXAMPLE
IS BASED ON DATA FOR THE FISCAL YEAR ENDED AUGUST 31, 1998. THE INTERNATIONAL
EQUITY FUND IS BASED ON PROJECTED DATA FOR FISCAL YEAR ENDING AUGUST 31, 1999.
GREAT PLAINS FUNDS
FINANCIAL HIGHLIGHTS
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(For a share outstanding throughout the period)
The following table has been audited by Deloitte & Touche LLP, the Funds'
independent auditors. Their report, dated October 9, 1998, on the Funds'
financial statements for the period ended August 31, 1998, and on the following
table for the period presented, is included in the Funds' Annual Report. The
Annual Report, which contains additional information about the Funds'
performance, is incorporated by reference into and accompanies the Statement of
Additional Information. They may be obtained from the Funds free of charge at
1-800-568-8257.
<TABLE>
<CAPTION>
NET REALIZED
AND DISTRIBUTIONS
UNREALIZED FROM NET DISTRIBUTIONS
GAIN/(LOSS) ON REALIZED GAIN IN EXCESS
NET ASSET INVESTMENTS DISTRIBUTIONS ON INVESTMENTS OF NET
VALUE, NET AND FOREIGN TOTAL FROM FROM NET AND FOREIGN REALIZED
PERIOD ENDED BEGINNING INVESTMENT CURRENCY INVESTMENT INVESTMENT CURRENCY GAIN ON
AUGUST 31, 1998(A) OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME TRANSACTIONS INVESTMENTS
- ------------------ --------- ---------- -------------- ---------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUND $10.00 0.07 (0.16) (0.09) (0.07) -- --
PREMIER FUND $10.00 0.01 (1.18) (1.17) (0.00)(d) -- --
INTERMEDIATE BOND FUND $10.00 0.54 0.36 0.90 (0.54) -- (0.00)(d)
TAX-FREE BOND FUND $10.00 0.39 0.13 0.52 (0.39) (0.00)(d) --
</TABLE>
* Computed on an annualized basis.
(a) For the period from September 29, 1997 (date of initial public investment)
to August 31, 1998.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Distributions less than one cent per share.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
NET ASSET ------------------------------
VALUE, NET NET ASSETS, PORTFOLIO
TOTAL END TOTAL INVESTMENT EXPENSE END OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN (B) EXPENSES INCOME WAIVER (C) (000 OMITTED) RATE
- ------------- --------- ---------- -------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.07) $ 9.84 (0.94%) 1.02%* 0.79%* 0.00%* $179,873 39%
(0.00) $ 8.83 (11.69%) 1.44%* 0.12%* 0.40%* $ 22,190 68%
(0.54) $10.36 9.23% 0.79%* 5.82%* 0.00%* $146,718 9%
(0.39) $10.13 5.29% 0.87%* 4.22%* 0.00%* $ 67,372 8%
</TABLE>
SYNOPSIS
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated July 1, 1997. The Declaration of Trust permits the Trust to offer
separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio or Fund may
be offered in separate classes. The Funds are designed for individuals and
institutions as a convenient means of participating in a professionally managed
portfolio of securities. First Commerce Investors, Inc. serves as investment
adviser (the "Adviser") to the Funds. The Adviser is a subsidiary of First
Commerce Bancshares, Inc.
As of the date of this prospectus, the Trust is comprised of the following
five Funds:
. GREAT PLAINS EQUITY FUND ("EQUITY FUND")--seeks total return (current
income and capital appreciation) over the long-term by investing in a
non-diversified portfolio of securities consisting primarily of domestic and
foreign common and preferred stocks selected on the basis of a value
approach to investing. The foreign securities investments may be pursued
directly or indirectly through an investment in the Great Plains
International Equity Fund;
. GREAT PLAINS INTERNATIONAL EQUITY FUND ("INTERNATIONAL EQUITY FUND")-- seeks
total return (current income and capital appreciation) over the long-term by
investing in a non-diversified portfolio of securities consisting primarily
of equity securities of non-U.S. issuers selected on the basis of a value
approach to investing;
. GREAT PLAINS PREMIER FUND ("PREMIER FUND")--seeks total return (current
income and capital appreciation) over the long-term by investing in a
non-diversified portfolio of securities emphasizing domestic and foreign
common and preferred stocks issued by companies whose market capitalizations
at the time of investment are under $1 billion, selected on the basis of a
value approach to investing;
. GREAT PLAINS INTERMEDIATE BOND FUND ("INTERMEDIATE BOND FUND")--seeks total
return (current income and capital appreciation) by investing in a
diversified portfolio of securities consisting primarily of
intermediate-term bonds and notes; and
. GREAT PLAINS TAX-FREE BOND FUND ("TAX-FREE BOND FUND")--as a primary
objective, seeks current income exempt from federal regular income tax and,
as a secondary objective, seeks current income exempt from personal income
taxes imposed by the State of Nebraska by investing in a non-diversified
portfolio of municipal securities that generate such income. The Tax-Free
Bond Fund is designed to offer Nebraska residents the additional advantage
of state (as well as federal) tax-free income to the extent it can purchase
suitable tax-free Nebraska municipal securities. However, because of the
Fund's tax-free nature, it may not be a suitable investment for retirement
plans.
Although certain of the Funds have been designated non-diversified under the
Investment Company Act of 1940 (the "1940 Act"), all of the Funds will comply
with the diversification requirements of Subchapter M of the Internal Revenue
Code. See "Portfolio Investments and Strategies--Additional Investment Risks--
Non-Diversification."
For information on how to purchase shares of any of the Funds, please refer to
"Investing in the Funds." A minimum initial investment of $1,000 is required for
each Fund. Subsequent investments in each Fund must be in amounts of at least
$100. Fund shares may be purchased for Individual Retirement Accounts ("IRA's")
with a minimum initial investment of $500, and subsequent investments of at
least $50. The Funds reserve the right to waive or reduce investment minimums
from time to time. Shares of each Fund are sold at net asset value plus any
applicable sales charge, and are redeemed at net asset value. Information on
redeeming shares may be found under "Redeeming Shares."
RISK FACTORS
Investors should be aware of the following general considerations relating to
the types of investments of one or more of the Funds. The market value of
fixed-income securities may vary inversely in response to changes in prevailing
interest rates. Domestic equity securities are subject to the volatility and
unpredictability of the U.S. stock market. The securities of smaller-capitalized
companies present special risks in that such securities have historically been
more volatile than stocks of larger companies. Foreign securities are subject to
certain risks (i.e., greater price volatility and illiquidity than U.S. equity
securities; greater political, legal and economic risks; currency exchange
fluctuations; different regulatory schemes with less publicly available
information) in addition to those inherent in U.S. investments. High yield
securities are typically subject to greater market fluctuations than investment
grade bonds. Asset-backed and mortgage-backed securities are subject to higher
prepayment risks than other types of debt instruments. The Tax-Free Bond Fund
emphasizes investments in Nebraska municipal securities, which makes it more
susceptible to factors affecting that state. The Funds may make other
investments and employ certain investment techniques that involve other risks,
including lending portfolio securities and entering into futures contracts and
related options as hedges. For a description of these investments, strategies
and other risks, please see "Fund Objective and Policies," "Portfolio
Investments and Strategies," and "Additional Investment Risks."
FUND OBJECTIVE AND POLICIES
- -------------------------------------------------------------------------------
The investment objective and policies of each Fund appear below. The investment
objective of a Fund may be changed by the Board of Trustees ("Trustees") without
shareholder approval. However, shareholders of a Fund will be notified before
any change is made to a Fund's investment objective. Although a Fund cannot
assure that it will achieve its investment objective, it attempts to do so by
following the investment policies described below.
Unless indicated otherwise, the investment policies of a Fund may be changed by
the Trustees without shareholder approval. However, shareholders would be
notified before any material change in these policies becomes effective.
Additional information about investments, investment limitations and strategies,
and certain investment policies appears in the "Portfolio Investments and
Strategies" section of this Prospectus and in the Statement of Additional
Information.
GREAT PLAINS EQUITY FUND
The investment objective of the Equity Fund is to achieve total return
(consisting of current income and capital appreciation) over the long-term. The
Fund pursues this objective through the application of a value-oriented approach
by investing primarily in a portfolio of common and preferred stocks of domestic
and foreign issuers as well as domestic and foreign securities convertible into
common and preferred stocks. Under normal market conditions, the Fund intends to
invest at least 65% of its total assets in these equity securities. The issuers
of these securities will consist primarily of medium to large capitalization
domestic and foreign companies. As described under the "Portfolio Investments
and Strategies--Securities of Other Investment Companies" section of this
Prospectus, the Equity Fund may seek its foreign securities component by
purchasing shares of the International Equity Fund. Depending on market
conditions, the Equity Fund anticipates investing between 0% and 35% of its net
assets in foreign securities either directly, or indirectly through an
investment in the International Equity Fund. Accordingly, investors in the
Equity Fund should also review the description of the International Equity
Fund's investment objective and strategies as well as the list below of
Acceptable Investments.
GREAT PLAINS INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to seek total
return (consisting of current income and capital appreciation) over the
long-term. Under normal market conditions, at least 65% of the Fund's total
assets will be invested in equity securities of issuers domiciled in at least
three different nations outside the United States. The Fund's foreign
investments will emphasize primarily Western European countries and secondarily
Asia and Latin America, and emphasize developed over emerging markets. However,
the Fund reserves the investment discretion to invest in other countries and
regions, subject to its 65% investment policy noted above. The Fund may also
invest up to 35% of its total assets in foreign and domestic debt securities,
warrants or rights to subscribe to or purchase equity securities, or debt
securities convertible into common or preferred stocks when, in the judgment of
the Fund's Adviser, such investments are consistent with the Fund's objective of
total return. Certain debt securities can provide the potential for capital
appreciation in addition to current income based on various factors such as
changes in interest rates, economic and market conditions, improvement in an
issuer's ability to repay principal and pay interest, and ratings upgrades. The
Fund may invest in foreign and domestic debt or preferred securities which have
equity features, such as conversion or exchange rights, or which carry warrants
to purchase common stock or other equity interests. Such equity features enable
the holder of the bond or preferred security to benefit from increases in the
market price of the underlying equity security. In selecting securities, the
Fund's Adviser uses a value-oriented approach to investing and attempts to
identify those companies in various countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average opportunities for capital appreciation.
GREAT PLAINS PREMIER FUND
The investment objective of the Premier Fund is to seek total return (consisting
of current income and capital appreciation) over the long-term. The Fund will
pursue this objective through the application of a value oriented approach by
investing primarily in a portfolio of common and preferred stocks of domestic
and foreign issuers as well as domestic and foreign securities convertible into
common and preferred stocks. The Fund's investments will emphasize common and
preferred stocks issued by companies whose market capitalizations at the time of
investment are under $1 billion (which includes small capitalization stocks). As
an operational policy, this Fund intends to limit its foreign investments to 35%
of its total assets. As described under the "Portfolio Investments and
Strategies--Securities of Other Investment Companies" section of this
Prospectus, the Premier Fund reserves the option of seeking its foreign
securities component by purchasing shares of the International Equity Fund,
although it presently intends to purchase foreign securities directly.
Accordingly, investors in the Premier Fund should also review the description of
the International Equity Fund's investment objective and strategies, as well as
the list below of Acceptable Investments.
THE STOCK FUNDS' ACCEPTABLE INVESTMENTS. The Equity Fund, International Equity
Fund and Premier Fund will sometimes collectively be referred to as the "Stock
Funds." The Stock Funds share the same value approach to investing. Subject to
their investment strategies described above, these Funds seek high quality
domestic and/or international companies that, in the opinion of the Adviser,
combine the qualitative and quantitative characteristics of companies with
compelling valuation levels, and offer significant investment potential.
Attractive company qualities include, but are not limited to: proven management,
businesses with identifiable franchises, earnings and shareholder growth
potential, increasing market share, cash flow which is intelligently reinvested,
high return on equity and assets, low debt, and operating margins which are high
or improving. In the Adviser's opinion, compelling valuations can be observed
by: asset values of businesses; low price/earnings, price/cash flow, and
price/sales ratios relative to growth potential; and attractive discounted
future valuation models. The Stock Funds may invest in the same types of
acceptable investments which include the following and are described in more
detail below under the "Portfolio Investments and Strategies" section of this
Prospectus: . common and preferred stocks of domestic (U.S.) companies that are
listed
on the New York or American Stock Exchange, or other domestic exchange,
or traded in over-the-counter markets;
. common and preferred stocks of foreign companies;
. convertible securities of domestic and foreign issuers that are rated in
the top two categories by a nationally recognized statistical rating
organization ("NRSRO") such as AA or better by Standard & Poor's ("S&P")
or Fitch IBCA, Inc. ("Fitch"), or Aa or better by Moody's Investors
Services, Inc. ("Moody's") or, if unrated, are of comparable quality as
determined by the Fund's Adviser;
. U.S. government securities;
. debt obligations (including bonds, notes and debentures) issued by U.S.
or foreign corporations and governments that are rated in the top two
categories by an NRSRO (such as AA or better by S&P or Fitch, or Aa or
better by Moody's) or, if unrated, are of comparable quality as
determined by the Fund's Adviser;
. American Depositary Receipts ("ADRs"), Global Depositary Receipts
("GDRs") and European Depositary Receipts ("EDRs") (collectively,
"Depositary Receipts");
. foreign currency transactions (including forward currency exchange
contracts, currency futures contracts, and options on currency and
currency futures contracts);
. Prime Commercial Paper;
. foreign and domestic Bank Instruments;
. warrants;
. repurchase agreements; and
. securities of other investment companies.
For additional information on other investment techniques and strategies of the
Stock Funds, see the "Portfolio Investments and Strategies" section of this
Prospectus.
GREAT PLAINS INTERMEDIATE BOND FUND
The investment objective of the Intermediate Bond Fund is to seek total return
(consisting of current income and capital appreciation). The Fund pursues this
objective by investing primarily in a diversified portfolio of investment grade
intermediate-term bonds and notes with an average dollar-weighted maturity of
three to ten years. The Fund will invest, under normal circumstances, at least
65% of the value of its total assets in bonds. For purposes of this investment
policy, "bonds" shall include all permitted types of debt instruments, including
debt held as collateral for repurchase agreements. Investment grade debt
obligations are rated in the top four categories by an NRSRO (such as BBB or
better by S&P or Fitch, or Baa or better by Moody's), or if unrated, are of
comparable quality as determined by the Adviser. See "Ratings" in the "Portfolio
Investments and Strategies" section of this Prospectus. The Fund reserves the
right to invest up to 35% (although it intends to operate with not more than
15%) of its total assets in debt obligations rated below investment grade but
not lower than BB by S&P or Fitch or Ba by Moody's, or which are of comparable
quality. Such debt obligations are sometimes referred to as high-yield debt
obligations or "junk bonds." For a description of these types of securities and
the additional risks associated with them, see "High-Yield Debt Obligations" in
the "Portfolio Investments and Strategies" section of this Prospectus.
THE INTERMEDIATE BOND FUND'S ACCEPTABLE INVESTMENTS. Acceptable investments
include the following and are described in more detail below under the
"Portfolio Investments and Strategies" section of this Prospectus:
. domestic and foreign issues of corporate debt obligations (including
bonds, notes and debentures);
. U.S. government securities;
. convertible securities and debentures;
. Prime Commercial Paper;
. domestic Bank Instruments;
. Mortgage-Backed Securities;
. Asset-Backed Securities;
. Zero Coupon Obligations;
. taxable municipal securities;
. repurchase agreements; and
. securities of other investment companies.
For additional information on other investment techniques and strategies of the
Fund, see the "Portfolio Investments and Strategies" section of this Prospectus.
GREAT PLAINS TAX-FREE BOND FUND
The primary investment objective of the Tax-Free Bond Fund is to seek current
income that is exempt from federal regular income tax. As a secondary investment
objective, the Fund seeks current income that is also exempt from the regular
income taxes imposed by the State of Nebraska. As an operational policy and not
an investment policy, the Fund will seek to maintain an average dollar-weighted
portfolio maturity of five to fifteen years.
THE TAX-FREE BOND FUND'S ACCEPTABLE INVESTMENTS. The Tax-Free Bond Fund pursues
its objective by investing in a non-diversified portfolio of debt obligations
issued by or on behalf of any state, territory or possession of the United
States, including the District of Columbia, or any of their political
subdivisions or financing authorities ("Municipal Securities"), with a portion
of the portfolio consisting of Municipal Securities issued by or on behalf of
the State of Nebraska, its political subdivisions or agencies ("Nebraska
Municipal Securities"). As a fundamental investment policy that cannot be
changed without shareholder approval, under normal market conditions, at least
80% of the Tax-Free Bond Fund's net assets will be invested in Municipal
Securities, the income from which is exempt from federal income tax (including
the federal alternative minimum tax). Interest income of the Tax-Free Bond Fund
that is exempt from federal income tax and the Nebraska state personal income
tax retains its tax-free status when distributed to shareholders. The Fund's
acceptable investments include the following and are described in more detail
below under the "Portfolio Investments and Strategies" section of this
Prospectus:
. investment grade Municipal Securities (rated in the top four categories
by an NRSRO such as BBB by S&P or Fitch, or Baa by Moody's or, if
unrated, of comparable quality as determined by the Fund's Adviser); and
. securities of other investment companies that have a similar objective
of tax-free income.
For additional information on the other investment techniques and strategies of
the Fund, see the "Portfolio Investments and Strategies" section of this
Prospectus. For investment risks associated with investments in Nebraska
Municipal Securities, see "Additional Investment Risks--Municipal Securities"
under the "Portfolio Investments and Strategies"
section of the Prospectus.
NET ASSET VALUE
- -------------------------------------------------------------------------------
The Funds' net asset value per share fluctuates. The net asset value per share
is determined by dividing the sum of the market value of all securities and all
other assets, less liabilities, by the number of shares outstanding.
The net asset value is determined as of the close of regular trading on the New
York Stock Exchange (normally 3:00 p.m., Central time), Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of a
Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; or (iii) the following holidays: New
Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUNDS
- -------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Fund shares may be purchased
through National Bank of Commerce ("NBC") in connection with qualified trust
accounts, through authorized broker/dealers, or directly from the Fund. All
purchases must be made in U.S. dollars and checks must be drawn on a United
States bank. In connection with the sale of Fund shares, Edgewood Services, Inc.
(the "Distributor") may, from time to time, offer certain items of nominal value
to any shareholder or investor. Each Fund reserves the right to reject any
purchase request.
BY TELEPHONE. New accounts cannot be established over the phone unless it is
through an authorized broker/dealer or through the Trust Division of NBC. All
other investors must submit a completed application by mail along with payment
for shares. See "By Mail" below. To place an order to purchase shares of the
Funds in an existing account, call Great Plains Funds Shareholder Services at
1-800-568-8257 to authorize payment via Automated Clearing House ("ACH") system
transfer. The order must be placed before the close of regular trading on the
New York Stock Exchange (normally 3:00 p.m. Central time) for shares to be
purchased at that day's price.
PAYMENT BY WIRE. If you have an existing account, you may purchase shares by
Federal Reserve Wire. Trust customers should contact their account officer. All
other customers should call Great Plains Funds Shareholder Services at 1-
800-568-8257. Wire orders will only be accepted on days on which the Funds, NBC
and the Federal Reserve Banks are open for business.
BY MAIL. To purchase Fund shares by mail, submit payment for Fund shares and a
completed account application (for new accounts) or additional investment form
(for existing accounts) to: Great Plains Funds Shareholder Services, P.O. Box
8612, Boston, MA 02266-8612. Your form of payment may be by a check payable to
the particular Fund or by authorization in your account application to withdraw
funds from your checking account at an ACH member bank. Orders by mail are
considered received on the day the Fund or its transfer agent receives a
properly completed application and method of payment, provided the check is
converted into federal funds. Purchases may not be made by third-party checks.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Funds is $1,000. Subsequent investments in
each Fund may be in amounts of $100 or more. The minimum initial investment in
the Funds for investors purchasing through an IRA account is $500; subsequent
investments may be in amounts of $50 or more. The Funds reserve the right to
waive or reduce investment minimums from time to time.
EXCHANGING SECURITIES FOR FUND SHARES
The Funds may accept securities in exchange for Fund shares. A Fund will allow
such exchanges only upon prior approval of a Fund and a determination by a Fund
and the Adviser that the securities to be exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies of a
Fund and must have a readily ascertainable market value. The market value of any
securities exchanged in an initial investment, plus any cash, must be at least
$25,000.
Securities accepted by a Fund will be valued in the same manner as a Fund values
its assets or as otherwise required by the 1940 Act. The basis of the exchange
will depend upon the net asset value of Fund shares on the day the securities
are valued. One share of a Fund will be issued for each equivalent amount of
securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription or other rights
attached to the securities become the property of a Fund, along with the
securities.
WHAT SHARES COST
Shares of the Funds are sold at their net asset value next determined after an
order is received, plus a sales charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE DEALER
SALES CHARGE AS % OF ALLOWANCE
AS % OF NET AMOUNT AS % OF
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED OFFERING PRICE
- --------------------- -------------- ------------ --------------
<S> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.55%
$100,000 but less than $250,000 2.50% 2.56% 2.12%
$250,000 but less than $500,000 2.00% 2.04% 1.70%
$500,000 but less than $1,000,000 1.50% 1.52% 1.27%
$1,000,000 or more 0.00% 0.00% 0.00%
</TABLE>
As described below, the sales charge may be waived or reduced for certain
investors and transactions.
DEALER ALLOWANCE. For sales of shares of the Funds, any authorized dealer will
normally receive up to 85% of the applicable sales charge. Any portion of the
sales charge which is not paid to authorized dealers will be retained by the
Distributor. The Distributor may, periodically, uniformly offer to pay
additional amounts in the form of cash or promotional incentives consisting of
trips to sales seminars at luxury resorts, tickets or other such items, to all
dealers selling shares of the Funds. Such payments, all or a portion of which
may be paid from the sales charge it normally retains or any other source
available to it, will be predicated upon the amount of shares of the Funds that
are sold by the dealer.
The sales charge for shares sold other than through authorized dealers will be
retained by the Distributor. The Distributor may pay fees to financial
institutions out of the sales charge in exchange for sales and/or administrative
services performed on behalf of the financial institution's customers in
connection with the initiation of customer accounts and purchases of a Fund's
shares.
SALES CHARGE WAIVERS
PURCHASES AT NET ASSET VALUE. Shares of the Funds may be purchased at net
asset value, without a sales charge:
. by or through the Trust Division of NBC, other affiliates or correspondent
financial depository institutions of First Commerce Bancshares for accounts
which are held in a fiduciary, agency, custodial, or similar capacity,
except for those customers whose only relationship is a custodial IRA;
. by current fiduciary customers of NBC, other affiliates, or
correspondent financial depository institutions of NBC;
. by trustees of the Trust, directors, and current and retired employees of
First Commerce Bancshares, Inc., NBC, the Adviser, the Distributor and their
affiliates, as well as the spouses and children under the age of 21 of such
trustees, directors and employees;
. by any shareholder of First Commerce Bancshares, Inc., the Adviser, the
Distributor and their affiliates with a position of at least 1,000
shares of First Commerce Bancshares, Inc.;
. by any account for which a current or retired employee of NBC, the
Adviser, the Distributor and their affiliates serves in a fiduciary,
agency, custodial or similar capacity;
. by any trust company or trust division of a non-affiliated financial
depository institution whose accounts own shares of the Funds with current
value greater than $1,000,000 or who demonstrate the intent of investing
$1,000,000 over a period of time in the Funds;
. by accounts transferred or distributed out of the Trust Division of NBC,
its correspondents or other affiliates into accounts maintained by NBC
as dealer;
. by financial depository institutions that have a current correspondent
relationship with NBC as fiduciary; and
. by investors who purchase shares through a wrap account or a no- transaction
fee program if the sponsor of the wrap account or no- transaction fee
program has entered into a sales agreement with the Distributor.
In addition, any Fund of the Trust may purchase shares of another Fund of the
Trust at net asset value without any sales charge.
REINVESTMENT PRIVILEGE. If shares in a Fund have been redeemed, the shareholder
has a one-time right, within 30 days, to reinvest the redemption proceeds at the
next-determined net asset value without any sales charge. Great Plains Funds
Shareholder Services must be notified of the reinvestment by the shareholder in
writing in order to eliminate the sales charge. If the shareholder redeems
shares in a Fund, there may be tax consequences.
REDUCING THE SALES CHARGE
The sales charge can be reduced on the purchase of a Fund's shares through:
. quantity discounts and accumulated purchases;
. signing a 13-month letter of intent; or
. concurrent purchases.
QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table under "What
Shares Cost," larger purchases reduce the sales charge paid. Each Fund will
combine purchases made on the same day by the investor, his or her spouse, and
his or her children under age 21, when calculating the sales charge. In
addition, the sales charge, if applicable, is reduced for purchases made at one
time by a trustee or fiduciary for a single trust estate or a single fiduciary
account.
If an additional purchase of Fund shares is made, each Fund will consider the
previous purchase(s) still invested in that Fund. For example, if a shareholder
already owns shares having a current value at the public offering price of
$90,000 and he or she purchases $10,000 more at the current public offering
price, the sales charge on the additional purchase according to the schedule now
in effect would be 2.50%, not 3.00%.
To receive the sales charge reduction, Great Plains Funds Shareholder Services
must be notified by the shareholder in writing at the time the purchase is made
that Fund shares are already owned or that purchases are being combined. Each
Fund will reduce the sales charge after it confirms the purchases.
LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
shares in the Funds over the next 13 months, the sales charge may be reduced by
signing a letter of intent to that effect. This letter includes a provision for
a sales charge adjustment depending on the amount actually purchased within the
13-month period and a provision for the custodian to hold in escrow (in shares)
3.00% of the total amount intended to be purchased until such purchase is
completed.
The shares held in escrow will be transferred to the shareholder's account at
the end of the 13-month period unless the amount specified in the letter of
intent is not purchased. In this event, an appropriate number of escrowed shares
may be redeemed in order to realize the difference in the sales charge.
This letter of intent will not obligate the shareholder to purchase shares, but
if he or she does, each purchase during the period will be at the sales charge
applicable to the total amount intended to be purchased. The current balance in
the shareholder's account will provide a purchase credit towards fulfillment of
the letter of intent. Prior trade prices will not be adjusted.
CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or
more Funds in the Trust, the purchase price
of which includes a sales charge. For example, if a shareholder concurrently
invested $30,000 in one of the Funds and $70,000 in another Fund, the sales
charge would be reduced.
To receive this sales charge reduction, Great Plains Funds Shareholder Services
must be notified by the shareholder in writing or by calling 1-800- 568-8257 at
the time the concurrent purchases are made. The Funds will reduce the sales
charge after they confirm the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, shareholders may add to their investment on a
regular basis in a minimum amount of $50. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account at
an Automated Clearing House ("ACH") member and invested in Fund shares. A
shareholder may apply for participation in this program by designating this
option in the Fund account application or by requesting the proper form by
calling Great Plains Funds Shareholder Services at 1-800-568-8257.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Funds, Federated Shareholder Services Company
maintains a share account for each shareholder of record. Share certificates are
not issued. Detailed confirmations of each purchase and redemption are sent to
each shareholder. Confirmations are also sent to report dividends paid.
DIVIDENDS AND CAPITAL GAINS
Dividends of the Equity Fund and Premier Fund are declared and paid monthly.
Dividends of the International Equity Fund are declared and paid annually.
Dividends of the Intermediate Bond Fund and Tax-Free Bond Fund are declared
daily and paid monthly. Only shareholders invested in a particular Fund on the
record date of the dividend declaration are paid that dividend except that
Intermediate Bond Fund and Tax-Free Bond Fund shareholders earn dividends only
on those shares for which the Fund has received payment in federal funds. Net
capital gains realized by a Fund will be distributed at least once every 12
months. Unless you request cash payments of dividends and capital gains on your
Fund application or subsequently by writing to your Fund, your dividends and
capital gains are automatically reinvested in additional shares of the
respective Fund on payment dates at the ex-dividend date net asset value
(without a sales charge).
EXCHANGE PRIVILEGE
- -------------------------------------------------------------------------------
EXCHANGING SHARES
Shareholders of any Fund in the Trust may exchange their Fund shares for the
shares of any other Fund in the Trust at net asset value without a sales charge,
subject to meeting any minimum investment requirements. The exchange privilege
is available to shareholders residing in any state in which the Fund shares
being acquired may legally be sold.
Upon receipt of proper instructions and all necessary supporting documents,
shares submitted for exchange will be redeemed at the next-determined net asset
value. If the exchanging shareholder does not have an account in the Fund whose
shares are being acquired, a new account will be established with the same
registration, dividend, and capital gain options as the account from which
shares are exchanged, unless otherwise specified by the shareholder. In the case
where the new account registration is not identical to that of the existing
account, a signature guarantee is required. (See "Redeeming
Shares--Signatures.") Exercise of this privilege is treated as a sale for
federal income tax purposes and, depending on the circumstances, a short or
long-term capital gain or loss may be realized. The exchange privilege may be
terminated at any time. Shareholders will be notified of the termination of the
exchange privilege. A shareholder may obtain further information on the exchange
privilege by calling Great Plains Funds Shareholder Services at 1-800-568-8257.
EXCHANGE BY TELEPHONE
Shareholders may provide instructions for exchanges between Funds by calling
Great Plains Funds Shareholder Services at 1-800-568-8257. In addition,
investors may exchange shares by calling their authorized broker directly.
It is recommended that investors request this telephone exchange privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information on this service can be obtained
through Great Plains Funds Shareholder Services or an authorized broker.
Shares may be exchanged by telephone only between Fund accounts having identical
shareholder registrations. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone instructions.
Telephone exchange instructions must be received by Great Plains Funds
Shareholder Services or an authorized broker and transmitted to Federated
Shareholder Services Company before the close of regular trading on the New York
Stock Exchange (normally 3:00 p.m. Central time) for shares to be exchanged the
same day.
Shareholders of the Funds may have difficulty in making exchanges by telephone
through banks, brokers, and other financial institutions during times of drastic
economic or market changes. If shareholders cannot contact Great Plains Funds
Shareholder Services or their authorized broker by telephone, it is recommended
that an exchange request be made in writing and sent by mail for next day
delivery.
REDEEMING SHARES
- -------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after a Fund
receives the redemption request. Redemptions will be made on days on which the
Funds compute their net asset value. Redemption requests cannot be executed on
days on which the New York Stock Exchange is closed or on Federal holidays when
wire transfers are restricted. Requests for redemption can be made by telephone
or by mail.
If a redemption order is received before the close of regular trading on the New
York Stock Exchange (normally 3:00 p.m. Central time), the redemption proceeds
will normally be paid through the ACH system to the shareholder's bank account
designated in the Fund account application, normally the second business day. In
the absence of a designated bank account, a check will be sent to the address of
record. Normally, a check for redemption proceeds is mailed within one business
day after receipt of a proper written redemption request. Redemption proceeds
will be wired upon request. In no event will redemption proceeds be sent more
than seven calendar days after a proper request for redemption has been
received, provided the Fund or its agents have received payment in federal funds
from the shareholder for the shares being redeemed.
BY TELEPHONE. Shareholders may redeem shares of a Fund by calling Great Plains
Funds Shareholder Services at 1-800-568-8257. The shareholder must designate the
telephone redemption option in the Fund account application or complete an
authorization form permitting the Funds to accept telephone requests.
Authorization forms and information on this service are available from Great
Plains Funds Shareholder Services. Telephone redemption instructions may be
recorded. If reasonable procedures are not followed by the Funds, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption should be utilized, such as transmitting a written request
by mail or next day delivery to Great Plains Funds Shareholder Services.
If at any time the Funds determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.
BY WIRE. To redeem shares and receive proceeds by Federal Reserve Wire, trust
customers should contact their account officer. All other customers should call
Great Plains Funds Shareholder Services at 1-800-568-8257. A $5.00 fee will be
imposed by the Funds for wire redemptions. Wire orders will only be accepted on
days on which the Funds, NBC and the Federal Reserve Banks are open for
business.
BY MAIL. Any shareholder may redeem a Fund's shares by sending a written request
to the Funds at: P.O. Box 8612, Boston, MA 02266-8612. The written request
should include the shareholder's name, the Fund name, the account number, and
the share or dollar amount requested, and should be signed exactly as the shares
are registered. Shareholders should call 1-800-568-8257 for assistance in
redeeming by mail.
SIGNATURES. A shareholder requesting a redemption of any amount to be sent to an
address other than the shareholder's address on record with the Funds, or a
redemption payable other than to the shareholder of record, must have each
signature on the written redemption request guaranteed by:
. a trust company or commercial bank whose deposits are insured by the
Bank Insurance Fund, which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
. a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
. a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund, which is administered by the FDIC;
or
. any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and Federated Shareholder Services Company have adopted standards for
accepting signature guarantees from the above institutions. The Funds may elect
in the future to limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Funds and Federated Shareholder
Services Company reserve the right to amend these standards at any time without
notice.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund shares
are redeemed to provide for periodic withdrawal payments in an amount directed
by the shareholder. Depending upon the amount of the withdrawal payments and the
amount of dividends paid with respect to Fund shares, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Funds. For this
reason, payments under this program should not be considered as yield or income
on the shareholder's investment in the Funds. To be eligible to participate in
this program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program by designating this
option on the Fund account application or by completing an authorization form,
which can be requested by calling Great Plains Funds Shareholder Services at
1-800-568-8257. Due to the fact that the Funds' shares are sold with a sales
charge, it is not advisable for shareholders to purchase shares of the Funds
while participating in this program.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Funds may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000 due to
shareholder redemptions. This redemption would not occur if the account balance
falls below $1,000 because of changes in the Funds' net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
balance requirement.
GREAT PLAINS FUNDS INFORMATION
- -------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trustees are responsible for managing the business
affairs of the Trust and for exercising all of the powers of the Trust except
those reserved for the shareholders.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
First Commerce Investors, Inc. serves as the investment adviser to, and makes
investment decisions for, each Fund, subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for each Fund
and is responsible for the purchase and sale of portfolio instruments, for which
it receives an advisory fee from the assets of each Fund.
The Adviser is solely responsible for making the determination as to whether the
purchase or sale of securities is consistent with the Funds' investment
objectives, policies and limitations, and is solely
responsible for evaluating the investment merits of the Funds' individual
security selections and executing purchases or sales of securities on behalf of
the Funds.
The Trust, the Adviser, and the Funds' Distributor have adopted strict codes of
ethics governing the conduct of all employees who manage the Trust and its
portfolio securities. These codes recognize that such persons owe a fiduciary
duty to the Trust's shareholders and must place the interests of shareholders
ahead of the employees' own interest. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
restrict personal transactions in securities being purchased or sold, or being
considered for purchase or sale, by the Trust; prohibit personal purchases of
securities in initial public offerings; and, in the case of the Trust and the
Distributor, prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
ADVISORY FEES. The Adviser is entitled to receive an investment advisory fee
equal to a percentage of each Fund's average daily net assets at the following
annual rates: 0.75% of Equity Fund; 1.25% of International Equity Fund; 1.00% of
Premier Fund and 0.50% of Intermediate Bond Fund and Tax-Free Bond Fund. The
Adviser can voluntarily waive its advisory fees or reimburse a Fund's expenses
in whole or in part from time to time at the Adviser's sole discretion. In that
regard, the Adviser has voluntarily undertaken to waive its investment advisory
fee on that portion of the Equity Fund's assets that are invested in the
International Equity Fund.
Investment recommendations and decisions for the Funds will be made
independently from those of any fiduciary or other accounts that may be managed
by the Adviser or its affiliates. If, however, such accounts, a Fund, or the
Adviser for its own account, are simultaneously engaged in transactions
involving the same securities, the transactions may be combined and allocated to
each account. Although this system may adversely affect the price the Funds pay
or receive, or the size of the position they obtain, it may also enable the
Funds to benefit from lower transaction costs.
ADVISER'S BACKGROUND. First Commerce Investors, Inc. is a registered investment
adviser and a wholly owned subsidiary of First Commerce Bancshares, Inc.
(hereinafter "FCB"), a multi-bank holding company organized as a Nebraska
corporation. FCB, through its subsidiaries and affiliates, provides a
comprehensive range of trust, commercial, consumer, correspondent and mortgage
banking services. At December 31, 1997, FCB had total assets of over $2 billion
with banking offices throughout Nebraska including: Lincoln, Grand Island,
Hastings, Kearney, West Point, McCook and North Platte. FCB's primary business
is the ownership and management of seven commercial bank subsidiaries, a
mortgage company, a computer company and an asset management company. The
Adviser, a Nebraska corporation, offers financial services that include, but are
not limited to: investment supervisory services including stock and bond
portfolio management, and asset allocation and individual security selection for
its clients, the Trust Division of the National Bank of Commerce and FCB. As of
December 31, 1997, the Adviser managed discretionary assets of over $1 billion.
Although the Adviser had not previously served as an investment adviser to a
mutual fund, it managed, on behalf of its trust clients, eight common and
collective investment funds having a market value of approximately $413 million
as of July 31, 1997, the assets of which were transferred into corresponding
Funds of the Trust.
As part of its regular banking operations, NBC may make loans to public
companies and municipalities. Thus, it may be possible, from time to time, for
the Funds to hold or acquire the securities of issuers which are also lending
clients of NBC. Because of the internal controls maintained by the Adviser and
NBC to restrict the flow of non-public information, Fund investments are
typically made without any knowledge of NBC's or its affiliates' lending
relationships with an issuer; therefore, the lending relationship will not be a
factor in the selection of securities.
PORTFOLIO MANAGERS' BACKGROUND. The Equity Fund, International Equity Fund and
the Premier Fund have been managed by H. Cameron Hinds since their respective
dates of inception. Mr. Hinds has been President and Chief Investment Officer
of the Adviser since January 1994 and has previously served as an equity
analyst and portfolio manager for the Adviser since June 1986. Mr. Hinds
received a B.S. in Business Administration and an M.A. in Business
Administration, with a concentration in Finance, from the University of
Nebraska. He received the designation of Chartered Financial Analyst in 1987.
The Intermediate Bond Fund and the Tax-Free Bond Fund are co-managed by H.
Cameron Hinds and Robert A. Campbell. Mr. Hinds has been involved with
managing the Funds since inception and Mr. Campbell has been a co-manager
since October 1998. Mr. Campbell is a Vice President of the Adviser and has
served as a portfolio manager and trader of fixed income securities for the
Adviser since October 1997. Prior to that, Mr. Campbell was a bond portfolio
manager for First Asset Management from February 1996 to October 1997,
FirsTier Bank from January 1995 to February 1996, and Arkwright Mutual
Insurance from April 1991 to January 1995. Mr. Campbell has over twenty years
of experience managing, trading and researching taxable and municipal fixed
income securities. Mr. Campbell received his B.A. and M.B.A. degrees from the
University of Iowa. He received his Chartered Financial Analyst designation in
1981.
BROKERAGE TRANSACTIONS
When selecting broker-dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
net price. In working with dealers, the Adviser will generally utilize those who
are recognized dealers in specific portfolio instruments, except when a better
price and execution of the order can be obtained elsewhere. When consistent with
these objectives, business may be placed with broker-dealers who furnish
investment research or services. This allows the Adviser to supplement its own
investment research activities and enables the Adviser to obtain views and
information of individuals and research staffs of many different securities
firms prior to making investment decisions. The Adviser has not entered into any
formal or informal agreements with any broker-dealers, nor does it maintain any
"formula" which must be followed in connection with the placement of the
client's transactions in exchange for research services provided to the Adviser,
except as noted below. However, the Adviser does maintain a formal list of
broker-dealers, which is used from time to time as a general guide in the
placement of the client's business. The Adviser may also give consideration to
those firms which have sold or are selling shares of the Funds and other funds
distributed by the Distributor. The Adviser will authorize payment of an amount
of commission for effecting a securities transaction in excess of the amount of
commission another broker-dealer would have been charged only if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the accounts to which it
exercises investment discretion.
The Adviser makes decisions on portfolio transactions and selects brokers and
dealers subject to review by the Trustees.
DISTRIBUTION OF FUND SHARES
Edgewood Services, Inc., a subsidiary of Federated Investors, Inc., is the
principal distributor for shares of the Funds and a number of other investment
companies. It is a New York corporation organized on October 26, 1993.
DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted in
accordance with Rule 12b-1 under the 1940 Act (the "Plan"), the Funds may pay to
the Distributor an amount computed at an annual rate of 0.25% of the average
daily net asset value of the Funds' shares to finance any activity which is
principally intended to result in the sale of the shares subject to the Plan.
The Distributor may, from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan.
The Glass-Steagall Act prohibits a bank holding company or its affiliate (such
as a commercial bank or a savings association) from being an underwriter or
distributor of most securities, but does not prohibit such entities from acting
in certain other capacities for, or providing certain other services to,
investment companies. In the event the Glass-Steagall Act is deemed to prohibit
such entities from acting in these capacities or providing these services or
should Congress relax current restrictions on such entities, the Trustees will
consider appropriate changes in the services any of these entities may provide
to the Trust or the Funds.
SHAREHOLDER SERVICING ARRANGEMENTS. The Funds may appoint a shareholder
servicing agent for the Funds. As such, the shareholder servicing agent would
provide shareholder services which include, but are not limited to: distributing
prospectuses and other information, providing shareholder assistance, and
communicating or facilitating purchases and redemptions of shares. The Funds may
pay the shareholder servicing agent a fee computed at an annual rate of up to
0.25% of the average daily net asset value of the Funds' shares for which the
shareholder servicing agent provides shareholder services.
ADMINISTRATIVE ARRANGEMENTS. The Adviser and/or Distributor may select brokers,
dealers and administrators (including depository or other institutions such as
commercial banks and savings associations) to provide distribution and/or
administrative services for which these institutions may receive fees based upon
shares owned by their clients or customers. These administrative services may
include distributing prospectuses and other information, providing account
assistance, and communicating or facilitating purchases and redemptions of the
Funds' shares. The fees are calculated as a percentage of the average aggregate
net asset value of shareholder accounts held during the period for which the
brokers, dealers, and administrators provide services. Any fees for these
services will be paid by the Adviser and/or Distributor but not the Funds.
ADMINISTRATION OF THE TRUST
- -------------------------------------------------------------------------------
Federated Services Company, a subsidiary of Federated Investors, Inc., provides
the Funds with certain administrative personnel and services necessary to
operate the Trust. Such services include certain shareholder servicing, legal
and accounting services. Federated Services Company provides these services to
the Trust at an annual rate as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY
MAXIMUM ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
- -------------------------- -----------------------------------
<S> <C>
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least $75,000
per Fund and $30,000 per class. Federated Services Company may choose
voluntarily to reimburse all or a portion of its fee at any time at its sole
discretion.
EXPENSES OF THE FUNDS
Each Fund pays all of its own expenses and its allocable share of the Trust's
expenses. These expenses include, but are not limited to, the cost of:
organizing the Trust and continuing its existence; Trustees' fees; investment
advisory and administrative services; printing prospectuses and other Fund
documents for shareholders; registering the Trust, the Funds, and shares of each
Fund; taxes and commissions; issuing, purchasing, repurchasing, and redeeming
shares; fees for custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing, mailing, auditing, and
certain accounting and legal expenses; reports to shareholders; meetings of
Trustees and shareholders and proxy solicitations therefor; insurance premiums;
association membership dues; and such non-recurring and extraordinary items as
may arise.
In addition, to the extent a Fund invests in another Fund, the investing Fund
bears a proportionate share of the expenses borne by such underlying Fund.
Accordingly, a shareholder in such investing Fund also bears indirectly the
expenses of the underlying Fund, including any of its distribution expenses.
However, an investor would bear those expenses if it invested directly in the
underlying Fund, rather than indirectly as a shareholder of the investing Fund.
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one vote
in Trustee elections and other matters submitted to shareholders for vote. All
shares of each Fund in the Trust have equal voting rights, except that in
matters affecting only a particular Fund, only shareholders of that Fund are
entitled to vote. The Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's or a
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting shall be called by the Trustees upon the written request of
shareholders owning at least 10% of the outstanding shares of the Trust entitled
to vote.
As of October 9, 1998, Firlin and Company, a nominee of NBC, c/o NBC Trust
Division, Lincoln, Nebraska, owned of record approximately 93.72% of the Equity
Fund; 91.45% of the Premier Fund; 95.89% of the Intermediate Bond Fund; and
96.44% of the Tax-Free Bond Fund and Great Plains Equity Fund, Lincoln,
Nebraska, owned of record approximately 100% of the International Equity Fund;
and therefore, may, for certain purposes, be deemed to control each Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
PERFORMANCE INFORMATION
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From time to time, all of the Funds may advertise total return and yield, and
the Tax-Free Bond Fund may advertise its tax-equivalent yield.
Total return represents the change, over a specified period of time, in the
value of an investment in a Fund after reinvesting all income and capital gains
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield for a Fund is calculated by dividing the net investment income per
share (as defined by the SEC) earned by the Fund over a thirty-day period by the
offering price per share of the Fund on the last day of the period. This number
is then annualized using semi-annual compounding. The tax-equivalent yield is
calculated similarly to the yield, but is adjusted to reflect the taxable yield
that the Tax-Free Bond Fund would have had to earn to equal its actual yield,
assuming a specific tax rate. The yield and the tax-equivalent yield do not
necessarily reflect income actually earned by a Fund and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
From time to time, advertisements for the Funds may refer to ratings, rankings,
and other information in certain financial publications and/or compare their
performance to certain indices.
PERFORMANCE INFORMATION FOR PREDECESSOR COMMON INVESTMENT FUNDS
Each Fund (other than the International Equity Fund) emanates from a separate
common investment fund that was managed by the Adviser (the "Common Fund(s)").
The assets from each Common Fund were transferred to the corresponding Fund in
connection with each Fund's commencement of operations.
Set forth below are certain historical performance data for the Common Funds and
the first eleven months of performance for the corresponding Great Plains Funds.
This information is deemed relevant because each Common Fund was managed in a
manner that the Adviser believes is in all material respects equivalent to the
management of the corresponding Fund, and used substantially the same investment
objective, policies, strategies, and limitations as those of the corresponding
Funds. However, the past performance data shown below cannot be indicative of
future performance. Each Fund is actively managed, and its investments will vary
from time to time. No Fund's investments are identical to the past portfolio
investments of its predecessor Common Fund. In that regard, unlike the Funds,
the Common Funds were not registered investment companies under the 1940 Act and
therefore were not subject to certain investment restrictions and other rules
and regulations of the 1940 Act (which may have an impact on performance).
Further, the Common Funds were not subject to the various Internal Revenue Code
provisions applicable to registered investment companies. Moreover, the Common
Funds did not incur the same types or amount of expenses that correspond to the
advisory, administrative, and other fees to which each Fund is subject.
Accordingly, the past performance information for the Common Funds shown below
has been adjusted to reflect the current total expense ratios for each Fund.
This adjustment has the effect of lessening the actual performance for the
Common Funds. Because a sales charge was not imposed on the Common Funds, the
past performance figures for the Common Funds shown below have been further
adjusted in a separate column to reflect the effect of the maximum sales load
(i.e., 3.00% on each Fund) applicable to certain purchasers of each Fund. This
adjustment further reduces the actual performance of the Common Funds.
Corresponding performance figures which do not reflect the sales charge are also
provided.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
FOR THE PERIOD ENDED AUGUST 31, 1998**
REFLECTING LOAD/WITHOUT LOAD
PREDECESSOR COMMON FUNDS ----------------------------------------------------------
(CORRESPONDING GREAT PLAINS FUNDS) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------- ---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Value Plus Stock Fund "A" (0.13%)/2.96% 18.03%/19.23% 13.96%/14.66% 12.92%/13.26%
(GREAT PLAINS EQUITY FUND)
Premier Stock Fund "J" (11.40%)/(8.66%) 14.22%/15.83% 11.87%/12.55%
9.86%/10.20%*** (GREAT PLAINS PREMIER FUND) Income Bond Fund "B" 7.75%/11.09%
6.59%/7.68% 5.34%/5.99% 7.88%/8.21% (GREAT PLAINS INTERMEDIATE
BOND FUND)
Tax-Exempt Bond Fund "G" 3.10%/6.29% 4.12%/5.19% 3.93%/4.57% 5.59%/5.91%
(GREAT PLAINS TAX-FREE BOND
FUND)
</TABLE>
- --------
* The Average Annual Total Return for each period prior to September 29, 1997
represents the performance solely of the predecessor Common Fund. Each Fund
has elected to make the performance of its predecessor Common Fund
performance a part of that Fund's permanent performance record. Accordingly,
when performance information is listed for a Fund, it will include the
performance of its predecessor Common Fund.
** The Average Annual Total Return for each Common Fund has been adjusted to
reflect each corresponding Fund's expenses, net of voluntary waivers.
*** Since inception in October 1988.
PORTFOLIO INVESTMENTS AND STRATEGIES
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Following is a description of the various portfolio investments and strategies
that the Funds may utilize to achieve their investment objectives.
ASSET-BACKED SECURITIES. The Intermediate Bond Fund may invest in Asset-Backed
Securities. Asset-Backed Securities have structural characteristics similar to
Mortgage-Backed Securities (described below) but have underlying assets that
generally are not mortgage loans or interests in mortgage loans.
The Fund may invest in Asset-Backed Securities including, but not limited to,
interests in pools of receivables, such as motor vehicle installment purchase
obligations and credit card receivables, equipment leases, manufactured housing
(mobile home) leases, or home equity loans. These securities may be in the form
of pass-through instruments or asset-backed bonds. The securities are issued by
non-governmental entities and carry no direct or indirect government guarantee.
See also "Additional Investment Risks--Mortgage-Backed and Asset- Backed
Securities" section below.
BANK INSTRUMENTS. All of the Funds except the Tax-Free Bond Fund may invest in
domestic Bank Instruments, which are instruments (including time and savings
deposits, bankers' acceptances and certificates of deposit) of banks and savings
associations that have capital, surplus and undivided profits of over $100
million or for which the principal amount of the instrument is insured by the
Bank Insurance Fund or the Savings Association Insurance Fund, which are
administered by the Federal Deposit Insurance Corporation. In addition, the
Equity Fund, International Equity Fund and Premier Fund may purchase foreign
Bank Instruments, which include Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time Deposits
("ETDs"). ECDs are U.S. dollar-denominated certificates of deposit issued by
foreign branches of U.S. banks or foreign banks. Yankee CDs are U.S.
dollar-denominated certificates of deposit issued in the U.S. by branches and
agencies of foreign banks. ETDs are U.S. dollar-denominated deposits in foreign
branches of U.S. banks or foreign banks. The Funds will treat securities
credit-enhanced with a bank's irrevocable letter of credit or unconditional
guaranty as Bank Instruments.
BORROWING. Each of the Funds is permitted as a fundamental investment policy to
borrow money for temporary purposes from banks or through reverse repurchase
agreements (arrangements in which a Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set date) in
amounts of up to one-third of its total assets, and pledge some assets as
collateral.
COMMON AND PREFERRED STOCK. The Equity Fund, International Equity Fund and
Premier Fund may invest in common and preferred stock, which represent ownership
interests in the issuer of the stock. Generally, preferred stock pays a
specified dividend, and has priority over common stock as to dividend payments
by, and the rights to assets of, the issuer. However, common stock usually has
voting rights and preferred stock usually does not.
CONVERTIBLE SECURITIES. All of the Funds except the Tax-Free Bond Fund may
invest in convertible securities. Convertible securities are fixed income
securities which may be exchanged or converted into a predetermined number of
the issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of convertible
bonds, convertible preferred stock or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. The investment characteristics of each convertible security vary
widely, which allows convertible securities to be employed for different
investment objectives. In selecting a convertible security, the Fund's Adviser
evaluates the investment characteristics of the convertible security as a fixed
income instrument, and the investment potential of the underlying security for
capital appreciation.
Convertible bonds and convertible preferred stocks generally retain the
investment characteristics of fixed income securities until they have been
converted but also react to movements in the underlying equity securities. The
holder is entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to exercise the
conversion privilege. Usable bonds are corporate bonds that can be used in whole
or in part, customarily at full face value, in lieu of cash to purchase the
issuer's common stock. Convertible securities are senior to equity securities,
and therefore have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar nonconvertible securities of the same company.
The interest income and dividends from convertible bonds and preferred stocks
provide a stable stream of income with generally higher yields than common
stocks, but lower than nonconvertible securities of similar quality. The Equity
Fund, the International Equity Fund and the Premier Fund may exchange or convert
the convertible securities held in their portfolio into shares of the underlying
common stocks when, in the opinion of the Funds' Adviser, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objective. Otherwise, such Funds will hold or trade the
convertible securities.
CREDIT ENHANCEMENT. Certain of a Fund's acceptable investments may have been
credit-enhanced by a guaranty, letter of credit, or insurance. The Fund's
evaluation of an acceptable investment may include the credit quality and
ratings of credit-enhanced securities based upon the financial condition and
ratings of the party providing the credit enhancement (the "credit enhancer").
However, credit-enhanced securities will not be treated as having been issued by
the credit enhancer for diversification purposes, unless the Fund has invested
more than 10% of its assets in securities issued, guaranteed or otherwise
credit-enhanced by the credit enhancer, in which case the securities will be
treated as having been issued both by the issuer and the credit enhancer. The
bankruptcy, receivership or default of the credit enhancer will adversely affect
the quality and marketability of the underlying security.
DEBT OBLIGATIONS. The Funds may invest in debt obligations, including bonds,
notes, and debentures of corporate issuers or governments, which may have
floating or fixed rates of interest.
FIXED RATE DEBT OBLIGATIONS. The Funds may invest in fixed rate debt
obligations, including fixed rate debt securities with short-term
characteristics. Fixed rate securities with short-term characteristics are
long-term debt obligations but are treated in the market as having short
maturities because call features of the securities may make them callable
within a short period of time. A fixed rate security with short-term
characteristics would include a fixed income security priced close to call or
redemption price or fixed income security approaching maturity, where the
expectation of call or redemption is high.
Fixed rate securities exhibit more price volatility during times of rising or
falling interest rates than securities with floating rates of interest. This
is because floating rate securities, as described below, behave like
short-term instruments in that the rate of interest they pay is subject to
periodic adjustments based on a designated interest rate index. Fixed rate
securities pay a fixed rate of interest and are more sensitive to fluctuating
interest rates. In periods of rising interest rates the value of a fixed rate
security is likely to fall. Fixed rate securities with short-term
characteristics are not subject to the same price volatility as fixed rate
securities without such characteristics. Therefore, they behave more like
floating rate securities with respect to price volatility.
FLOATING RATE DEBT OBLIGATIONS. The Funds may invest in floating rate debt
obligations, including increasing rate securities. Floating rate securities
are generally offered at an initial interest rate which is at or above
prevailing market rates. The interest rate paid on these securities is then
reset periodically (commonly every 90 days) to an increment over some
predetermined interest rate index. Commonly utilized indices include the
three-month Treasury bill rate, the 180-day Treasury bill rate, the one-month
or three-month London Interbank Offered Rate (LIBOR), the prime rate of a
bank, the commercial paper rates, or the longer-term rates on U.S. Treasury
securities. Increasing rate securities' rates are reset periodically at
different levels on a predetermined scale. These levels of interest are
ordinarily set at progressively higher increments over time. Some increasing
rate securities may, by agreement, revert to a fixed rate status. These
securities may also contain features which allow the issuer the option to
convert the increasing rate of interest to a fixed rate under such terms,
conditions, and limitations as are described in each issuer's prospectus.
DEMAND FEATURES. Each of the Funds may acquire securities that are subject to
puts and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed period
(usually seven days following a demand by a Fund). The demand feature may be
issued by the issuer of the underlying securities, a dealer in the securities or
by another third party, and may not be transferred separately from the
underlying security. A Fund uses these arrangements to provide it with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.
DEMAND MASTER NOTES. Each of the Funds may invest in variable amount demand
master notes. Demand master notes are short-term borrowing arrangements between
a corporation or government agency and an institutional lender (such as the
Fund(s)) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. Generally, master notes give a Fund the option of increasing or
decreasing the principal amount of the master note on a daily or weekly basis
within certain limits. Demand master notes usually provide for floating or
variable rates of interest.
DEPOSITARY RECEIPTS. The Equity Fund, the International Equity Fund and the
Premier Fund may invest in foreign issuers by purchasing Depositary Receipts
(sponsored or unsponsored ADRs, GDRs and EDRs). ADRs are typically issued by a
U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs and GDRs are typically issued by foreign
banks or trust companies, although they also may be issued by U.S. banks or
trust companies, and evidence ownership of underlying securities issued by
either a foreign or a United States corporation. Generally, Depositary Receipts
in registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. Ownership of unsponsored Depositary Receipts may not entitle a
Fund to financial or other reports from the issuer of the underlying security,
to which it would be entitled as the owner of sponsored Depositary Receipts.
Depositary Receipts also involve the risks of other investments in foreign
securities.
DIVERSIFICATION. The Intermediate Bond Fund is a diversified Fund under the 1940
Act. As such, with respect to 75% of the value of its total assets, the
Intermediate Bond Fund will not invest more than 5% in securities of any one
issuer, other than cash, cash items, securities of investment companies or
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by U.S.
government securities, nor will the Intermediate Bond Fund acquire more than 10%
of the outstanding voting securities of any one issuer (for which purposes all
indebtedness of an issuer shall be deemed a single class and all preferred stock
of an issuer shall be deemed a single class, except that futures or option
contracts and securities of mutual funds shall not be subject to this
restriction). This policy cannot be changed without the approval of holders of a
majority of the Fund's shares. All of the other Funds are non-diversified Funds
under the 1940 Act, although they comply with the diversification requirements
of Subchapter M of the Internal Revenue Code. For a description of the
associated risks, see "Additional Investment Risks--Non- Diversification."
FOREIGN CURRENCY TRANSACTIONS. The Equity Fund, the International Equity Fund
and the Premier Fund may enter into foreign currency transactions to obtain the
necessary currencies to settle securities transactions. Currency transactions
may be conducted either on a spot or cash basis at prevailing rates or through
forward foreign currency exchange contracts, futures contracts, or options on
foreign currencies and futures contracts, as described below.
The Equity Fund, the International Equity Fund and the Premier Fund may also
enter into foreign currency transactions to protect their assets against adverse
changes in foreign currency exchange rates or exchange control regulations. Such
changes could unfavorably affect the value of Fund assets which are denominated
in foreign currencies, such as foreign securities or funds deposited in foreign
banks, as measured in U.S. dollars. Although foreign currency exchanges may be
used by the Funds to protect against a decline in the value of one or more
currencies, such efforts may also limit any potential gain that might result
from a relative increase in the value of such currencies and might, in certain
cases, result in losses to the Funds. Further, the Funds may be affected either
unfavorably or favorably by fluctuations in the relative rates of exchange
between the currencies of different nations. Cross-hedging transactions by the
Funds involve the risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in the value of the
currency or other asset or liability that is the subject of the hedge.
The Equity Fund, the International Equity Fund and the Premier Fund may enter
into a forward foreign currency exchange contract ("forward contract"), which is
an obligation to purchase or sell an amount of a particular currency at a
specific price and on a future date agreed upon by the parties.
Generally, no commission charges or deposits are involved. At the time that a
Fund enters into a forward contract, Fund assets with a value equal to the
Fund's obligation under the forward contract are segregated on the Fund's
records and are maintained until the contract has been settled. The Funds
generally will not enter into a forward contract with a term of more than one
year. The Funds will generally enter into a forward contract to provide the
proper currency to settle a securities transaction at the time the transaction
occurs ("trade date"). The period between trade date and settlement date will
vary between twenty-four hours and thirty days, depending upon local custom.
The Funds may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of their assets denominated in that
currency ("hedging"). The success of this type of short-term hedging strategy is
highly uncertain due to the difficulties of predicting short-term currency
market movements and of precisely matching forward contract amounts and the
constantly changing value of the securities involved. Although the Adviser will
consider the likelihood of changes in currency values when making investment
decisions, the Adviser believes that it is important to be able to enter into
forward contracts when it believes the interests of the Funds will be served.
The Funds will not enter into forward contracts for hedging purposes in a
particular currency in an amount in excess of their assets denominated in that
currency.
The Equity Fund, the International Equity Fund and the Premier Fund may purchase
put options on foreign currencies for the purpose of protecting against declines
in the U.S. dollar value of foreign currency-denominated portfolio securities
and against increases in the U.S. dollar cost of such securities to be acquired.
As in the case of other kinds of options, however, the writing of an option on a
foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and the Funds could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an effective hedge
against fluctuations in exchange rates although, in the event of rate movements
adverse to the Funds' position, they may forfeit the entire amount of the
premium plus related transaction costs. Options on foreign currencies to be
written or purchased by the Funds may be traded on U.S. and foreign exchanges or
over-the-counter.
The Equity Fund, the International Equity Fund and the Premier Fund may invest
in currency futures transactions for bona fide hedging purposes. A futures
contract on a foreign currency is an agreement to buy or sell a specified amount
of a currency for a set price on a future date. When the Fund enters into a
futures contract, it must make an initial deposit, known as "initial margin," as
a partial guarantee of its performance under the contract. As the value of the
currency fluctuates, either party to the contract is required to make additional
margin payments, known as "variation margin," to cover any additional obligation
it may have under the contract. In addition, when the Fund enters into a futures
contract, it will segregate assets to "cover" its position in accordance with
the 1940 Act. See "Policies and Acceptable Investments--Foreign Currency Hedging
Transactions" in the Statement of Additional Information for additional
information on these transactions.
FORWARD COMMITMENTS, WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Funds
may enter into forward commitments and purchase portfolio securities on a
when-issued and delayed delivery basis. These transactions are arrangements in
which a Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause a
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
The Funds may dispose of a commitment prior to settlement if the Adviser deems
it appropriate to do so. In addition, a Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
HIGH-YIELD DEBT OBLIGATIONS. The Intermediate Bond Fund may invest up to 35%
(although it intends to operate with not more than 15%) of its total assets in
debt securities that are rated below investment-grade but not lower than BB or
Ba by an NRSRO (or, if unrated, are determined by the Adviser to be of
comparable quality). Some of these securities may involve equity
characteristics. The Fund may invest in equity securities, including unit
offerings which combine fixed rate securities and common stock or common stock
equivalents such as warrants, rights and options. Securities which are rated BB
or Ba are considered speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligations. These
securities are commonly referred to as "junk bonds." Debt obligations that are
not determined to be investment grade are high-yield, high-risk bonds, typically
subject to greater market fluctuations and greater risk of loss of income and
principal due to an issuer's default. To a greater extent than investment-grade
bonds, lower-rated bonds tend to reflect short-term corporate, economic and
market developments, as well as investor perceptions of the issuer's credit
quality. In addition, lower-rated bonds may be more difficult to dispose of or
to value than higher-rated, lower-yielding bonds. A description of the rating
categories for the permissible investments are contained in the Appendix to this
Prospectus. See also "Additional Investment Risks--High Yield Debt Obligations."
ILLIQUID AND RESTRICTED SECURITIES. Each of the Funds may invest in illiquid and
restricted securities. Illiquid securities are any securities a Fund owns which
it may not be able to sell quickly (within seven days) at a fair price.
Restricted securities are any securities in which a Fund may otherwise invest
pursuant to its investment objective and policies, but which are subject to
restriction on resale under federal securities laws. To the extent restricted
securities are deemed to be illiquid, a Fund will limit its purchases, together
with other securities considered to be illiquid, to 15% of its net assets.
LENDING PORTFOLIO SECURITIES. In order to generate additional income, each of
the Funds is permitted as a fundamental investment policy to lend portfolio
securities on a short-term or long-term basis, or both, up to one-third of the
value of its respective total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Funds will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the Adviser
has determined are creditworthy under guidelines established by the Trustees and
will receive collateral in the form of cash or U.S. government securities equal
to at least 100% of the value of the securities loaned. Collateral received in
the form of cash may be invested in highly liquid investments, including
repurchase agreements and other money market instruments. There is the risk that
when lending portfolio securities, the securities may not be available to a Fund
on a timely basis and the Fund may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event that a borrower of
securities would file for bankruptcy or become insolvent, disposition of the
securities may be delayed pending court action.
MORTGAGE-BACKED SECURITIES. The Intermediate Bond Fund may invest in
mortgage-backed securities rated at the time of purchase investment grade (BBB
or Baa or better) by an NRSRO, or which are of comparable quality in the
judgment of the Adviser. Mortgage-backed securities are securities that directly
or indirectly represent a participation in, or are secured by and payable from,
mortgage loans on real property. There are currently four basic types of
mortgage-backed securities: (i) those issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities, such as the Government
National Mortgage Association ("Ginnie Mae"), Federal National Mortgage
Association ("Fannie Mae"), and Federal Home Loan Mortgage Corporation ("Freddie
Mac"); (ii) those issued by private issuers that represent an interest in or are
collateralized by mortgage-backed securities issued or guaranteed by the U.S.
government or one of its agencies or instrumentalities; (iii) those issued by
private issuers that represent an interest in or are collateralized by whole
loans or mortgage-backed securities without a government guarantee but usually
having some form of private credit enhancement; and (iv) privately issued
securities which are collateralized by pools of mortgages in which each mortgage
is guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government.
The privately issued mortgage-related securities provide for a periodic payment
consisting of both interest and/or principal. The interest portion of these
payments will be distributed by the Fund as income, and the capital portion will
be reinvested.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). The Intermediate Bond Fund may
invest in CMOs. CMOs are debt obligations collateralized by mortgage loans or
mortgage pass-through securities. Typically, CMOs are collateralized by Ginnie
Mae, Fannie Mae or Freddie Mac certificates, but may be collateralized by
whole loans or private pass-through securities. CMOs may have fixed or
floating rates of interest.
The Intermediate Bond Fund may also invest in certain CMOs which are issued by
private entities such as investment banking firms and companies related to the
construction industry. The CMOs in which the Fund may invest may be: (i)
securities which are collateralized by pools of mortgages in which each
mortgage is guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (ii) securities which are
collateralized by pools of mortgages in which payment of principal and
interest is guaranteed by the issuer and such guarantee is collateralized by
U.S. government securities; (iii) collateralized by pools of mortgages in
which payment of principal and interest is dependent upon the underlying pool
of mortgages with no U.S. government guarantee; or (iv) other securities in
which the proceeds of the issuance are invested in mortgage-backed securities
and payment of the principal and interest is supported by the credit of an
agency or instrumentality of the U.S. government.
PAC BONDS AND PARALLEL PAY CMOS. The Intermediate Bond Fund may invest in
parallel pay CMOs and Planned Amortization Class CMOs ("PAC Bonds"). Parallel
pay CMOs are structured to provide payments of principal on each payment date
to more than one class. These simultaneous payments are taken into account in
calculating the stated maturity date or final distribution date of each class,
which, as with other CMO structures, must be retired by its stated maturity
date or final distribution date but may be retired earlier. PAC Bonds
generally require payments of a specified amount of principal on each payment
date. PAC Bonds are always parallel pay CMOs with the required principal
payment on such securities having the highest priority after interest has been
paid to all classes.
REAL ESTATE MORTGAGE INVESTMENT CONDUITS. The Intermediate Bond Fund may
invest in real estate mortgage investment conduits ("REMICs") which are
offerings of multiple class real estate Mortgage-Backed Securities which
qualify and elect treatment as such under provisions of the Internal Revenue
Code. Issuers of REMICs may take several forms, such as trusts, partnerships,
corporations, associations or a segregated pool of mortgages. Once REMIC
status is elected and obtained, the entity is not subject to federal income
taxation. Instead, income is passed through the entity and is taxed to the
person or persons who hold interests in the REMIC. A REMIC interest must
consist of one or more classes of "regular interests," some of which may offer
adjustable rates, and a single class of "residual interests." To qualify as a
REMIC, substantially all of the assets of the entity must be in assets
directly or indirectly secured principally by real property.
MUNICIPAL SECURITIES. The Intermediate Bond Fund and the Tax-Free Bond Fund may
invest in Municipal Securities which are generally issued to finance public
works such as airports, bridges, highways, housing, hospitals, mass
transportation projects, schools, streets, and water and sewer works. They are
also issued to repay outstanding obligations, to raise funds for general
operating expenses, and to make loans to other public institutions and
facilities. The Tax-Free Bond Fund will, to the extent available and consistent
with its investment objectives, invest in Nebraska Municipal Securities. While
the Tax-Free Bond Fund will purchase Municipal Securities that pay tax-free
income, the Intermediate Bond Fund will generally purchase taxable Municipal
Securities. A significant portion of the Municipal Securities held by the
Intermediate Bond Fund and the Tax-Free Bond Fund may be covered by insurance.
See "Portfolio Investments and Strategies--Credit Enhancement."
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
MUNICIPAL LEASES. The Intermediate Bond Fund and the Tax-Free Bond Fund may
purchase municipal leases, which are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation interest in any of these.
PARTICIPATION INTERESTS. The Intermediate Bond Fund and the Tax-Free Bond Fund
may purchase interests in Municipal Securities from financial institutions
such as commercial and investment banks, savings associations and insurance
companies. These interests may take the form of participations, beneficial
interests in a trust, partnership interests or any other form of indirect
ownership that allows the Fund to treat the income from the investment as
exempt from federal income tax. The financial institutions from which the Fund
purchases participation interests frequently provide or obtain irrevocable
letters of credit or guarantees to attempt to assure that the participation
interests are of acceptable quality. The Funds invest in these participation
interests in order to obtain credit enhancement or demand features that would
not be available through direct ownership of the underlying Municipal
Securities.
NEBRASKA MUNICIPAL SECURITIES. Historically, many of the Municipal Securities
offered by Nebraska issuers have been unrated. This is in part due to the
relatively small size of many offerings, the cost and conditions of obtaining
a rating and the historical willingness of the capital markets to purchase
Municipal Securities offered by Nebraska issuers without insurance or ratings.
As a result, it is likely that a portion of the Nebraska Municipal Securities
that the Tax-Free Bond Fund will purchase will be uninsured or unrated. The
Fund will only purchase unrated securities if they are of comparable quality
to the rated Municipal Securities that the Fund is allowed to purchase. In
determining whether unrated Municipal Securities are of comparable quality,
the Adviser will perform a credit analysis of each issuer of such unrated
securities pursuant to its policies and procedures.
The Tax-Free Bond Fund's investment emphasis on securities issued by Nebraska
municipalities and political subdivisions involves somewhat greater risks than
a fund broadly invested in securities issued by municipalities and political
subdivisions in many states. The credit quality of the issuers of the Nebraska
Municipal Securities will depend on the future financial strength of the
Nebraska economy and the financial condition of the Nebraska municipalities
and political subdivisions issuing such securities. While most Nebraska
municipalities and political subdivisions are predominantly reliant on
independent revenue sources, such as property and sales taxes, they are not
immune to budget shortfalls caused by cutbacks in state aid. While many
observers believe the Nebraska economy has been generally immune from national
recessionary forces, the state economy is agriculturally based and can be
significantly impacted by down trends in the commodity markets and cutbacks in
federal agricultural programs. See the Statement of Additional Information for
information about the Nebraska economy.
PRIME COMMERCIAL PAPER. Each of the Funds except the Tax-Free Bond Fund may
purchase Prime Commercial Paper, which is a short-term debt obligation that
matures in 270 days or less, is issued by banks, corporations or other
institutions, and is rated one of the two highest rating categories for
short-term obligations by an NRSRO or, if unrated, is of comparable quality to
securities having such ratings, as determined by the Adviser.
PORTFOLIO TURNOVER. Although none of the Funds intends to invest for the purpose
of seeking short-term profits, securities will be sold whenever the Fund's
Adviser believes it is appropriate to do so in light of the Fund's investment
objective, without regard to the length of time a particular security may have
been held. The Adviser does not presently expect the portfolio turnover rate of
the Funds to exceed 100%.
RATINGS. Securities rated in the fourth highest investment grade category (Baa
by Moody's, or BBB by S&P or Fitch) have speculative characteristics and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than higher rated
securities. The Appendix to this Prospectus contains a complete description of
ratings.
If a security is downgraded below the permissible investment category for a
Fund, the Adviser will determine whether or not the security continues to be an
acceptable investment; if not, the security will be sold.
REPURCHASE AGREEMENTS. The securities in which the Funds invest may be purchased
pursuant to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions sell
U.S. government securities or other securities to a Fund and agree at the time
of sale to repurchase them at a mutually agreed upon time and price. To the
extent that the original seller does not repurchase the securities from a Fund,
the Fund could receive less than the repurchase price on any sale of such
securities.
SECURITIES OF OTHER INVESTMENT COMPANIES. Generally, each Fund may invest in the
securities of other investment companies, but may not own more than 3% of the
total outstanding voting stock of any investment company, invest more than 5% of
its respective total assets in any one investment company, or invest more than
10% of its respective total assets in investment companies, unless the Funds are
otherwise permitted to exceed these limitations by other provisions of the 1940
Act or an exemptive order of the SEC.
In that regard, the SEC granted an exemptive order permitting each Fund to
invest a portion of its assets in another Fund, provided it is consistent with
the investing Fund's investment objective and complies with certain SEC
conditions. However, only the Equity Fund intends to invest a portion of its
assets in the International Equity Fund in lieu of directly purchasing a
proportionate amount of its investment securities, and the Adviser has
voluntarily undertaken to waive the advisory fee payable by the Equity Fund on
that portion of the assets that are invested in the International Equity Fund.
Depending on market conditions, the Equity Fund anticipates investing between 0%
and 35% of its net assets in the International Equity Fund. It should be noted
that each investment company incurs certain of the same types of expenses and,
therefore, any investment by a Fund in shares of another investment company
would be subject to such duplicate expenses. See "Expenses of the Funds" herein.
As required by the conditions of the SEC exemption, the International Equity
Fund has adopted an operational policy prohibiting it from purchasing shares of
other registered investment companies in reliance on Sections 12(d)(1)(F) and
12(d)(1)(G) of the 1940 Act. Accordingly, this means that the International
Equity Fund may purchase securities of other investment companies, only in
accordance with the 3%, 5% and 10% limitations described above, rather than
being able to invest up to 100% of its assets in other mutual funds.
The International Equity Fund may invest indirectly in foreign capital markets
by purchasing shares of closed-end investment companies, but generally only in
open-market transactions involving only customary brokerage commissions.
Sometimes the Fund may pay a premium over net asset value for such shares.
SHORT SALES. The Equity Fund, the International Equity Fund and the Premier
Fund may make short sales pursuant to a fundamental policy. A short sale
occurs when a borrowed security is sold in anticipation of a decline in its
price. If the decline occurs, shares equal in number to those sold short can
be purchased at the lower price. If the price increases, the higher price must
be paid. The purchased shares are then returned to the original lender. Risk
arises because no loss limit can be placed on the transaction. When a Fund
enters into a short sale, assets equal to the market price of the securities
sold short or any lesser price at which the Fund can obtain such securities, are
segregated on the Fund's records and maintained until the Fund meets its
obligations under the short sale.
TEMPORARY INVESTMENTS. When the Adviser judges that market conditions warrant a
defensive investment position, each of the Funds may temporarily invest up to
100% of their assets in short-term debt obligations (money market instruments).
These investments include commercial paper, bank instruments, U.S. government
obligations, repurchase agreements, securities of other investment companies,
taxable or tax-free Municipal Securities and foreign securities. Each Fund's
temporary investments must be of comparable quality to its primary investments.
U.S. GOVERNMENT SECURITIES. All of the Funds may invest in U.S. government
securities. These instruments are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities. These securities include, but
are not limited to:
. direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
. notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
. notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
. notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
VARIABLE RATE DEMAND NOTES. Each Fund may purchase variable rate demand notes,
which are long-term debt instruments that have variable or floating interest
rates and provide the Fund with the right to tender the security for repurchase
at its stated principal amount plus accrued interest. Such securities typically
bear interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals (ranging
from daily to annually), and is normally based on a published interest rate or
interest rate index. Many variable rate demand notes allow a Fund to demand the
repurchase of the security on not more than seven days prior notice. Other notes
only permit a Fund to tender the security at the time of each interest rate
adjustment or at other fixed intervals. (See "Demand Features"). Each Fund
treats variable rate demand notes as maturing on the later of the date of the
next interest rate adjustment or the date on which a Fund may next tender the
security for repurchase.
WARRANTS. The Equity Fund, the International Equity Fund and Premier Fund may
invest in warrants. Warrants provide an option to purchase common stock at a
specific price (usually at a premium above the market value of the optioned
common stock at issuance) valid for a specific period of time. Warrants may have
a life ranging from less than a year to twenty years or may be perpetual.
However, most warrants have expiration dates after which they are worthless. In
addition, if the market price of the common stock does not exceed the warrant's
exercise price during the life of the warrant, the warrant will expire as
worthless. Warrants have no voting rights, pay no dividends, and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to be greater
than the percentage increase or decrease in the market price of the underlying
common stock.
ZERO COUPON SECURITIES. The Intermediate Bond Fund may invest in zero coupon
bonds. The Fund may invest in zero coupon bonds in order to receive the rate of
return through the appreciation of the bond. This application is extremely
attractive in a falling rate environment as the price of the bond rises rapidly
in value as opposed to regular coupon bonds. A zero coupon bond makes no
periodic interest payments and the entire obligation becomes due only upon
maturity.
Zero coupon bonds are debt securities which are issued at a discount to their
face amount and do not entitle the holder to any periodic payments of interest
prior to maturity. Rather, interest earned on zero coupon securities accretes at
a stated yield until the security reaches its face amount at maturity. In
addition, zero coupon securities usually have put features that provide the
holder with the opportunity to sell the bonds back to the issuer at a stated
price before maturity.
Generally, the prices of zero coupon securities are more sensitive to
fluctuations in interest than are conventional bonds and convertible securities.
In addition, federal tax law requires the holder of a zero coupon security to
recognize income from the security prior to the receipt of cash payments. To
maintain its qualification as a regulated investment company and to avoid
liability for federal income taxes, the Fund will be required to distribute
income accrued from zero coupon securities which it owns, and may have to sell
portfolio securities (perhaps at disadvantageous times) in order to generate
cash to satisfy these distribution requirements.
ADDITIONAL INVESTMENT RISKS
DEBT MARKET. In the debt market, prices move inversely to interest rates. A
decline in market interest rates results in a rise in the market prices of
outstanding debt obligations. Conversely, an increase in market interest rates
results in a decline in market prices of outstanding debt obligations. In either
case, the amount of change in market prices of debt obligations in response to
changes in market interest rates generally depends on the maturity of the debt
obligations: the debt obligations with the longest maturities will experience
the greatest market price changes.
The market value of debt obligations, and therefore each Fund's net asset value,
will fluctuate due to changes in economic conditions and other market factors
such as interest rates which are beyond the control of the Funds' Adviser. The
Funds' Adviser could be incorrect in its expectations about the direction or
extent of these market factors. Although debt obligations with longer maturities
offer potentially greater returns, they have greater exposure to market price
fluctuation. Consequently, to the extent a Fund is significantly invested in
debt obligations with longer maturities, there is a greater possibility of
fluctuation in the Fund's net asset value.
HIGH YIELD DEBT OBLIGATIONS. The Intermediate Bond Fund may invest in high yield
debt obligations. These lower-rated securities will usually offer higher yields
than higher-rated securities. However, there is more risk associated with these
investments. (For example, securities rated in the lowest category may have been
unable to satisfy their obligations under the bond indenture.) These lower-rated
bonds may be more susceptible to real or perceived adverse economic conditions
than investment grade bonds. These lower-rated bonds are regarded as
predominantly speculative with regard to each issuer's continuing ability to
make principal and interest payments. In addition, the secondary trading market
for lower-rated bonds may be less liquid than the market for investment grade
bonds. As a result of these factors, lower-rated securities tend to have more
price volatility and carry more risk to principal than higher-rated securities.
The Adviser will endeavor to limit these risks through diversifying the
portfolio and through careful credit analysis of individual issuers. Purchasers
should carefully assess the risks associated with an investment in the Fund.
Many corporate debt obligations, including many lower-rated bonds, permit the
issuers to call the security and thereby redeem their obligations earlier than
the stated maturity dates. Issuers are more likely to call bonds during periods
of declining interest rates. In these cases, if the Intermediate Bond Fund owns
a bond which is called, the Fund will receive its return of principal earlier
than expected and would likely be required to reinvest the proceeds at lower
interest rates, thus reducing income to the Fund. In addition, lower-rated bonds
may be more difficult to dispose of or to value than higher-rated,
lower-yielding bonds.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Mortgage-Backed and Asset-Backed
Securities generally pay back principal and interest over the life of the
security. At the time a Fund reinvests the payments and any unscheduled
prepayments of principal received, the Fund may receive a rate of interest which
is actually lower than the rate of interest paid on these securities
("prepayment risks"). Mortgage-Backed and Asset-Backed Securities are subject to
higher prepayment risks than most other types of debt instruments with
prepayment risks because the underlying mortgage loans or the collateral
supporting Asset-Backed Securities may be prepaid without penalty or premium.
Prepayment risks on Mortgage-Backed Securities tend to increase during periods
of declining mortgage interest rates because many borrowers refinance their
mortgages to take advantage of the more favorable rates. Prepayments on
Mortgage-Backed Securities are also affected by other factors, such as the
frequency with which people sell their homes or elect to make unscheduled
payments on their mortgages. Although Asset-Backed Securities generally are less
likely to experience substantial prepayments than are Mortgage-Backed
Securities, certain factors that affect the rate of prepayments on Mortgage-
Backed Securities also affect the rate of prepayments on Asset-Backed
Securities.
While Mortgage-Backed Securities generally entail less risk of a decline during
periods of rapidly rising interest rates, Mortgage-Backed Securities may also
have less potential for capital appreciation than other similar investments
(e.g., investments with comparable maturities) because as interest rates
decline, the likelihood increases that mortgages will be prepaid. Furthermore,
if Mortgage-Backed Securities are purchased at a premium, mortgage foreclosures
and unscheduled principal payments may result in some loss of a holder's
principal investment to the extent of the premium paid. Conversely, if
Mortgage-Backed Securities are purchased at a discount, both a scheduled payment
of principal and an unscheduled prepayment of principal would increase current
and total returns and would accelerate the recognition of income, which would be
taxed as ordinary income when distributed to shareholders.
Asset-Backed Securities present certain risks that are not presented by
Mortgage-Backed Securities. Primarily, these securities do not have the benefit
of the same security interest in the related collateral. Credit card receivables
are generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give such
debtors the right to set off certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of Asset-Backed Securities backed by
motor vehicle installment purchase obligations permit the servicer of such
receivables to retain possession of the underlying obligations. If the servicer
sells these obligations to another party, there is a risk that the purchaser
would acquire an interest superior to that of the holders of the related
Asset-Backed Securities. Further, if a vehicle is registered in one state and is
then re-registered because the owner and obligor moves to another state, such
reregistration could defeat the original security interest in the vehicle in
certain cases. In addition, because of the large number of vehicles involved in
a typical issuance and technical requirements under state laws, the trustee for
the holders of Asset-Backed Securities backed by automobile receivables may not
have a proper security interest in all of the obligations backing such
receivables. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities.
MUNICIPAL SECURITIES. Yields on Municipal Securities depend on a variety of
factors, including: the general conditions of the municipal bond market and the
short-term municipal note market; the general conditions of the taxable bond
markets; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. The ability of the Tax-Free Bond Fund or the
Intermediate Bond Fund to achieve its investment objective by purchasing
Municipal Securities also depends on the perception of and/or the continuing
ability of the issuers or credit enhancers of the Municipal Securities to meet
their obligations for the timely payment of interest and principal.
Since the Tax-Free Bond Fund may invest a significant portion of its assets in
Nebraska Municipal Securities, the Fund is particularly susceptible to political
and economic factors affecting the issuers of Nebraska Municipal Securities. The
Nebraska economy performed steadily during 1997 as the national economy
continued its slow expansion. The Nebraska economy generally avoided the
national recession of the early 1990's and continued to expand in 1997 with
growth in the labor force, jobs, retail sales, tourism visits and population.
Overall, it is anticipated that the State's economy will grow moderately,
reflecting the national economy. Historically, the Nebraska economy tends to be
less cyclical than the national economy. It typically does not grow as fast as
the national economy during expansions and does not contract as much during
recessions.
The Tax-Free Bond Fund has a fundamental investment restriction which prohibits
the Fund from investing more than 25% of its total assets in securities of
issuers in any single industry. This restriction does not, however, place any
such limitation on the purchase of securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or by the state of Nebraska, its
political subdivisions, municipalities, agencies and authorities. Moreover, the
Fund may invest 25% or more of its total assets in Municipal Securities whose
revenue sources are from mortgage loans, community development, education,
electric utilities, health care, housing and transportation. There may be
economic, business or political developments or changes that affect securities
of a similar type, such as changes in government regulation, increased costs of
necessary materials, increased competition, or declining market needs.
Therefore, developments affecting a single issuer or industry or securities
financing such projects may have a significant impact on the Fund's performance.
STOCK MARKET. As with other mutual funds that invest primarily in equity
securities, the Equity Fund, International Equity Fund and Premier Fund are
subject to market risks. That is, the possibility exists that common stocks will
decline over short or even extended periods of time, and the United States
equity market tends to be cyclical, experiencing both periods when stock prices
generally increase and periods when stock prices generally decrease.
SMALL AND MEDIUM CAPITALIZATION STOCKS. Stocks in the small and medium
capitalization sector of the United States equity market tend to be slightly
more volatile in price than larger capitalization stocks, such as those
included in the Standard & Poor's Daily Stock Price Index of 500 Common Stocks
("S&P 500"). This is because, among other things, small and medium-sized
companies may have less certain growth prospects than larger companies, have a
lower degree of liquidity in the equity market, and tend to have a greater
sensitivity to changing economic conditions. Further, in addition to
exhibiting slightly higher volatility, the stocks of small and medium-sized
companies may, to some degree, fluctuate independently of the stocks of large
companies. That is, the stocks of small and medium-sized companies may decline
in price as the price of large company stocks rise or vice versa.
FOREIGN SECURITIES. Investing in non-U.S. securities carries substantial risks
in addition to those associated with domestic investments. The risks associated
with investing in foreign securities include: risks of adverse political,
social, diplomatic and economic developments (including possible governmental
seizure or nationalization of assets) and difficulty assessing trends in these
areas; the possible imposition of exchange controls or other governmental
restrictions; default in foreign government securities; foreign companies are
not generally subject to uniform financial reporting, auditing and accounting
standards, and auditing practices and requirements may not be comparable to
those applicable to U.S. companies; there are less readily available market
quotations on foreign companies; there is the possibility of less publicly
available information on foreign securities and their issuers; there are
differences in government regulation and supervision of foreign stock exchanges,
brokers, listed companies, and banks; there is generally lower foreign stock
market volume; there is the likelihood that foreign securities may be less
liquid or more volatile; foreign brokerage commissions and other transaction
costs (such as custodial services) may be higher; there is unreliable mail
service between countries; there are restrictions on foreign investments in
other jurisdictions; there are difficulties which may be encountered in
enforcing contractual obligations and obtaining or enforcing a court judgment
abroad and effecting repatriation of capital invested abroad; and there are
delays or problems in settlement of foreign transactions, which could adversely
affect shareholder equity or cause the Fund to miss attractive investment
opportunities. In addition, foreign securities may be subject to foreign taxes,
which reduce yield and total return.
On January 1, 1999, eleven of the fifteen member countries of the European Union
will have their currency exchange rate irrevocably fixed to a single European
currency, the euro. The euro will become legal tender in those countries from
this date. National currencies will continue to circulate until they are
replaced by euro coins and bank notes on July 1, 2002. The pending unification
of European currency and decision by certain countries not to participate are
likely to create uncertainty in the European markets and thereby increase
volatility of the various currencies. The European markets may become less
liquid. These events can adversely affect investment and performance, as
detailed under "European Currency Unification" in the Statement of Additional
Information.
EMERGING MARKETS. Generally included in emerging markets are all countries in
the world except Australia, Canada, Japan, New Zealand, the United States, and
most western European countries. The risks of investing in developing or
emerging markets are similar to, but greater than, the risks of investing in
the securities of developed international markets since emerging or developing
markets tend to have economic structures that are less diverse and mature, and
political systems that are less stable, than developed countries.
In certain emerging market countries, there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers, and
listed companies than in the United States. The economies of emerging market
countries may be predominantly based on a few industries and may be highly
vulnerable to change in local or global trade conditions. The securities
markets of many of these countries also may be smaller, less liquid, and
subject to greater price volatility than those in the United States. Some
emerging market countries also may have fixed or managed currencies which are
not free-floating against the U.S. dollar. Further, certain emerging market
country currencies may not be internationally traded. Certain of these
currencies have experienced a steady devaluation relative to the U.S. dollar.
Any devaluations in the currencies in which portfolio securities are
denominated may have an adverse impact on the Fund. Finally, many emerging
market countries have experienced substantial, and in some periods, extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had, and may continue to have, negative effects on the
economies for individual emerging market countries. Moreover, the economies of
individual emerging market countries may differ favorably or unfavorably from
the U.S. economy in such respects as the rate of growth of domestic product,
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
EXCHANGE RATES. Foreign securities may be denominated in foreign currencies.
Although the International Equity Fund intends to invest in such foreign
currency-denominated securities to a greater extent than the Equity Fund and
Premier Fund, the value in U.S. dollars of each of these Funds' assets and
income may be affected by changes in exchange rates and regulations. Although
each Fund values its assets daily in U.S. dollars, it will not convert its
holding of foreign currencies to U.S. dollars daily. When a Fund converts its
holdings to another currency, it may incur conversion costs. Foreign exchange
dealers realize a profit on the difference between the prices at which they
buy and sell currencies.
FOREIGN MONEY MARKET INSTRUMENTS. ECDs, ETDs, Yankee CDs, and Europaper are
subject to somewhat different risks than domestic obligations of domestic
issuers. Examples of these risks include international, economic, and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholding or other
taxes on interest income, difficulties in obtaining or enforcing a judgment
against the issuing bank, and the possible impact of interruptions in the flow
of international currency transactions. Different risks may also exist for
ECDs, ETDs, and Yankee CDs because the banks issuing these instruments, or
their domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing, and
recordkeeping, and the public availability of information. These factors will
be carefully considered by a Fund's Adviser in selecting these investments.
U.S. GOVERNMENT POLICIES. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors. When
such policies are instituted, the Equity Fund, International Equity Fund
and Premier Fund will abide by them.
FUTURES AND OPTIONS. When a Fund uses futures and options on futures as hedging
devices, there is a risk that the values of the currencies subject to the
futures contracts may not correlate with the values of the currencies in the
Fund's portfolio. This may cause the futures contract and any related options to
react differently than the portfolio securities to market changes. In addition,
the Fund's Adviser could be incorrect in its expectations about the direction or
extent of market factors such as interest or currency exchange rate movements.
In these events, the Fund may lose money on the futures contract or option.
Also, it is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the Fund's Adviser
will consider liquidity before entering into such transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will exist
for any particular futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions depends on this
secondary market.
NON-DIVERSIFICATION. The Equity Fund, International Equity Fund, Premier Fund
and Tax-Free Bond Fund are designated as non-diversified investment portfolios
under the 1940 Act and, therefore, are not subject to the issuer limitations
imposed on a diversified portfolio (see the "Diversification" section above
relating to the Intermediate Bond Fund). An investment in these Funds,
therefore, will entail greater risk than would exist in a diversified portfolio
of securities because the higher percentage of investments among fewer issuers
may result in greater fluctuation in the total market value of such Funds'
portfolios. Any economic, political, or regulatory developments affecting the
value of the securities in these Funds' portfolios may have a greater impact on
the total value of the portfolios than would be the case if the portfolios were
diversified among more issuers.
Notwithstanding the foregoing, each Fund intends to comply with the
diversification requirements of Subchapter M of the Internal Revenue Code. This
requires that at the end of each quarter of the Fund's taxable year, the
aggregate value of all investments of the Fund in any one issuer (except U.S.
government obligations, cash, cash items and other investment companies) which
exceed 5% of the Fund's total assets (valued at the time of investment) shall
not exceed 50% of the value of its total assets, and, with respect to the
remaining assets, no more than 25% of the Fund's assets (valued at the time of
investment) shall be invested in a single issuer.
TAX INFORMATION
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FEDERAL INCOME TAX
None of the Funds will pay federal income tax because each expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
other Funds of the Trust, if any, will not be combined for tax purposes with
those realized by any of the other Funds.
Unless otherwise exempt, you are required to pay federal income tax on any
dividends and other distributions received. However, shareholders of Tax-Free
Bond Fund are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds; but, under the Tax Reform Act of 1986, dividends representing
net interest earned on certain "private-activity" municipal bonds may be
included in calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations. Dividends of the Tax-Free Bond
Fund representing net interest income earned on some temporary taxable
investments and any realized net short-term gains are taxed as ordinary income.
Investment income received by the International Equity Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries that
entitle the International Equity Fund to reduced tax rates or exemptions on this
income. The effective rate of foreign tax cannot be predicted since the amount
of the International Equity Fund's assets to be invested within various
countries is unknown. However, the International Equity Fund intends to operate
so as to qualify for treaty-reduced tax rates where applicable.
If more than 50% of the value of the International Equity Fund's assets at the
end of the tax year is represented by stock or securities of foreign
corporations, the International Equity Fund intends to qualify for certain
Internal Revenue Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Internal
Revenue Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of the International
Equity Fund's foreign taxes rather than take the foreign tax credit must itemize
deductions on their income tax returns.
To the extent the Equity Fund invests in the International Equity Fund, the
shareholders of the Equity Fund will not be able to earn the foreign tax credit
on investments held by the International Equity Fund.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.
STATE AND LOCAL TAXES
Distributions on the Tax-Free Bond Fund representing net interest received on
tax-exempt Municipal Securities are not necessarily free from income taxes of
any state or local taxing authority, although they may be exempt from Nebraska
personal income tax. State laws differ on this issue, and you should consult
your tax adviser for specific details regarding the status of your account under
state and local tax laws, including treatment of distributions as income or
return of capital.
NEBRASKA TAXES
Under existing Nebraska laws, distributions made by the Tax-Free Bond Fund will
not be subject to Nebraska income taxes to the extent that such distributions
qualify as exempt-interest dividends under the Internal Revenue Code, and
represent (i) interest from obligations of Nebraska, its political subdivisions,
authorities, commissions or instrumentalities; or (ii) interest from obligations
of the United States and its territories and possessions or of any authority,
commission, or instrumentality of the United States to the extent exempt from
state income taxes under the laws of the United States. Conversely, to the
extent that distributions made by the Tax-Free Bond Fund are attributable to
other types of obligations, such distributions will be subject to Nebraska
income taxes.
APPENDIX
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STANDARD & POOR'S CORPORATE BOND RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A--Debt rated A 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 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.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied "CCC-" debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
D--Debt rated D 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. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
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.
AA--Bonds which 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.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured.) Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NR--Not rated by Moody's.
FITCH IBCA, INC. LONG-TERM DEBT RATINGS
AAA--Bonds 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.
AA--Bonds 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 issuers
is generally rated F-1+.
A--Bonds 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.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligator'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 of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment or interest or principal.
DDD, DD, AND D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
NR--Indicates that Fitch does not rate the specific issue.
STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. The issues determined to possess
overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
MOODY'S INVESTORS SERVICES, INC. COMMERCIAL PAPER RATINGS
P-1--Issuers rated PRIME-1 (for related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. PRIME-1 repayment
capacity will normally be evidenced by the following characteristics:
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated PRIME-2 (for related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
FITCH IBCA, INC. SHORT-TERM RATINGS
F-1+--(Exceptionally Strong Credit Quality). Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--(Very Strong Credit Quality). Issues assigned to this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F1+.
F-2--(Good Credit Quality). Issues carrying this rating have a satisfactory
degree of assurance for timely payment but the margin of safety is not as great
as the F-1+ and F-1 categories.
ADDRESSES
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<TABLE>
<S> <C> <C>
Great Plains Equity Fund 5800 Corporate Drive
Great Plains International Equity Fund Pittsburgh, Pennsylvania 15237-7010
Great Plains Premier Fund
Great Plains Intermediate Bond Fund
Great Plains Tax-Free Bond Fund
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Distributor
Edgewood Services, Inc. 5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-5829
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Adviser
First Commerce Investors, Inc. 610 NBC Center
Lincoln, Nebraska 68508
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Custodian
National Bank of Commerce 1248 "O" Street
Lincoln, Nebraska 68508
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Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8612
Boston, MA 02266-8612
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Administrator and Portfolio Accountant
Federated Services Company Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
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Legal Counsel
Bell, Boyd & Lloyd Three First National Plaza
70 West Madison Street
Chicago, Illinois 60602
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Independent Public Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401
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</TABLE>
Not FDIC Insured
May Lose Value
No Bank Guarantee
Edgewood Services, Inc., Distributor
GO2180-01 (10/98)
GREAT PLAINS EQUITY FUND
GREAT PLAINS PREMIER FUND
GREAT PLAINS INTERNATIONAL EQUITY FUND
GREAT PLAINS INTERMEDIATE BOND FUND
GREAT PLAINS TAX-FREE BOND FUND
(PORTFOLIOS OF GREAT PLAINS FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
October 31, 1998
This Statement of Additional Information should be read with the prospectus,
dated October 31, 1998, for the Funds listed above. This Statement is not a
prospectus itself. You may request a copy of a prospectus or a paper copy of
this Statement, if you have received it electronically, free of charge, by
writing or calling the Funds at 1-800-568-8257.
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
EDGEWOOD SERVICES, INC.
Distributor
A subsidiary of
FEDERATED INVESTORS, INC.
<PAGE>
TABLE OF CONTENTS
- ---------------------------------------------------------------------------
POLICIES AND ACCEPTABLE INVESTMENTS 1
INVESTMENT LIMITATIONS 8
Fundamental Limitations 8
Non-Fundamental Limitations 9
NEBRASKA INVESTMENT RISKS 10
GREAT PLAINS FUNDS MANAGEMENT 14
Officers and Trustees 14
Fund Ownership 16
Trustees' Compensation 17
INVESTMENT ADVISORY SERVICES 17
Adviser to the Funds 17
Advisory Fees 17
OTHER SERVICES 17
Administrative Services 17
Transfer Agent, Dividend Disbursing Agent and Portfolio Accounting Services 18
Custodian 18
Independent Auditors 18
SHAREHOLDER SERVICING ARRANGEMENTS 18
PORTFOLIO TRANSACTIONS 18
DISTRIBUTION PLAN AND AGREEMENT 19
Administrative Arrangements 20
Conversion to Federal Funds 20
VALUATION OF ASSETS 20
Values 20
Valuation of Foreign Securities 21
REDEMPTION IN KIND 21
EFFECT OF BANKING LAWS 21
MASSACHUSETTS PARTNERSHIP LAW 21
TAX STATUS 22
The Funds' Tax Status 22
Foreign Taxes 22
Shareholders' Tax Status 22
Capital Gains 22
TOTAL RETURN 22
YIELD 23
TAX-EQUIVALENT YIELD 24
Tax-Equivalency Table-Nebraska 24
Tax-Equivalency Table-Multi-State 25
PERFORMANCE COMPARISONS 26
Economic and Market Information 28
FINANCIAL STATEMENTS 28
<PAGE>
This Statement contains additional information about the Great Plains Funds (the
"Trust") and its five investment portfolios (the "Funds"). This Statement uses
the same terms as defined in the Prospectus. POLICIES AND ACCEPTABLE INVESTMENTS
ASSET-BACKED SECURITIES. Asset-Backed Securities are bonds or notes backed by
loans or accounts receivable originated by banks, or other credit providers or
financial institutions. Asset-Backed Securities may be pooled and then divided
into classes of securities, known as tranches, and resold. Each tranche has a
specified interest rate and maturity. The cash flows from the underlying pool of
Asset-Backed Securities are applied first to pay interest and then to retire
securities. All principal payments are directed first to the shortest-maturity
tranche. When those securities are completely retired, all principal payments
are then directed to the next-shortest-maturity tranche. This process continues
until all of the tranches have been completely retired. AVERAGE MATURITY. For
purposes of determining the dollar-weighted average maturity of a Fund's
portfolio, the maturity of a security will be its ultimate maturity. If it is
probable that the issuer of the security will take advantage of
maturity-shortening devices such as a call, refunding, or redemption provision,
the maturity date will be the date on which it is probable that the security
will be called, refunded, or redeemed. If the security includes the right to
demand payment, the maturity of the security for purposes of determining a
Fund's dollar-weighted average portfolio maturity will be the period remaining
until the principal amount of the security can be recovered by exercising the
right to demand payment. BORROWING MONEY. The Funds have secured a committed
line of credit to enable them to borrow money from the Fund's custodian,
National Bank of Commerce. During times of extraordinary market conditions or
unusually large redemptions, this will facilitate borrowings by the Funds to
meet redemption requests without needing to immediately liquidate portfolio
securities at times when it may be disadvantageous to the Funds to do so. The
terms and cost of the line of credit were determined by the Trustees to be
comparable to what the custodian would charge to unaffiliated persons and what
the Funds could obtain from unaffiliated lenders. CONVERTIBLE SECURITIES. When
owned as part of a unit along with warrants, which entitle the holder to buy the
common stock, convertible securities function as convertible bonds, except that
the warrants generally will expire before the bonds' maturity. A Fund will
exchange or convert the convertible securities held in its portfolio into shares
of the underlying common stocks when, in the Adviser's opinion, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objective. Otherwise, the Fund will hold or trade the
convertible securities. In evaluating these matters with respect to a particular
convertible security, the Fund's Adviser considers numerous factors, including
the economic and political outlook, the value of the security relative to other
investment alternatives, trends in the determinants of the issuer's profits, and
the issuer's management capability and practices. DERIVATIVE CONTRACTS AND
SECURITIES. The term derivative has traditionally been applied to certain
contracts (including futures, forward, option and swap contracts) that "derive"
their value from changes in the value of an underlying security, currency,
commodity or index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as "derivatives." The
term has also been applied to securities "derived" from the cash flows from
underlying securities, mortgages or other obligations. Derivative contracts and
securities can be used to reduce or increase the volatility of an investment
portfolio's total performance. While the response of certain derivative
contracts and securities to market changes may differ from traditional
investments, such as stock and bonds, derivatives do not necessarily present
greater market risks than traditional investments. The Funds will only use
derivative contracts for the purposes disclosed in the applicable sections of
their Prospectus or this Statement. To the extent that a Fund invests in
securities that could be characterized as derivatives, it will only do so in a
manner consistent with its investment objective, policies, and limitations.
DURATION. Duration is a commonly used measure of potential volatility in the
price of a bond, or other fixed income security, or in a portfolio of fixed
income securities, prior to maturity. Volatility is the magnitude of the change
in the price of a bond relative to a given change in the market rate of
interest. A bond's price volatility depends on three primary variables: the
bond's coupon rate; maturity date; and the level of market yields of similar
fixed income securities. Generally, bonds with lower coupons or longer
maturities will be more volatile than bonds with higher coupons or shorter
maturities. Duration combines these variables into a single measure. Duration is
calculated by dividing the sum of time-weighted values of the cash flows of a
bond or bonds, including interest and principal payments, by the sum of the
present values of the cash flows. When a Fund invests in mortgage pass-through
securities, its duration will be calculated in a manner which requires
assumptions to be made regarding future principal prepayments. A more complete
description of this calculation is available upon request from the Funds.
EUROPEAN CURRENCY UNIFICATION. Eleven of the fifteen member countries of the
European Union ("EU") are about to adopt a single European currency, the euro.
The euro will become legal tender in these countries effective January 1, 1999.
The countries participating in the European Monetary Union ("EMU") are Austria,
Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands,
Portugal and Spain. The four EU members not participating in the EMU are Great
Britain, Denmark, Sweden and Greece. The new European Central Bank ("ECB") has
already been created, in anticipation of January 1, 1999, when it will take over
management. On the same day, the exchange rates among the EMU member countries
will be permanently fixed. National currencies will continue to circulate until
they are replaced by euro coins and bank notes by July 1, 2002. This change is
likely to significantly impact the European capital markets in which the Equity
Fund, the International Equity Fund and the Premier Fund may invest a portion of
their assets. The biggest changes will be the additional risks that will be
faced in pursuing their investment objectives. All of the risks described below
may increase the volatility of the prices of securities that are traded
principally in EMU member countries.
UNCERTAINTIES AS UNIFICATION NEARS
TAXES. IRS regulations generally provide that euro conversion will not
cause a U.S. taxpayer to realize gain or loss to the extent the taxpayer's
rights and obligations are altered solely by reason of the euro conversion.
However, other changes that may occur contemporaneously to indices, accrual
periods, holiday conventions, or other features may require the realization
of a gain or loss. VOLATILITY OF CURRENCY EXCHANGE RATES. Exchange rates
between the U.S. dollar and European currencies could become more volatile
and unstable, particularly between now and January 1, 1999. CAPITAL MARKET
REACTION. Uncertainty in the lead-up to introduction of the euro may lead
to a shift by institutional money managers away from European currencies
and into other currencies. This reaction may make markets less liquid and
thus more difficult for the Equity Fund, the International Equity Fund and
the Premier Fund to pursue their investment strategies. CONVERSION COSTS.
European issuers of securities, particularly those that deal in goods and
services, may face substantial conversion costs. These costs may not be
accurately anticipated and therefore present another risk factor that may
affect issuer profitability and creditworthiness. LACK OF EUROPEAN
UNANIMITY. Because some European countries will not be participants in the
euro, there could be greater volatility in the exchange rates between these
nonparticipating countries and the euro. This risk will also remain during
the initial periods after unification.
UNCERTAINTIES AFTER UNIFICATION OF CURRENCY
CONTRACT CONTINUITY. Some financial contracts may become unenforceable when
the currencies are unified. These financial contracts may include bank loan
agreements, master agreements for swaps and other derivatives, master
agreements for foreign exchange and currency option transactions and debt
securities. The risk of unenforceability may arise in a number of ways. For
example, a contract used to hedge against exchange rate volatility between
two EU currencies will become "fixed," rather than "variable," as part of
the conversion since the currencies have, in effect, disappeared for
exchange purposes. The European Council has enacted laws and regulations
designed to ensure that financial contracts will continue to be enforceable
after conversion. There is no guarantee, however, that these laws will be
completely effective in preventing disputes from arising. Disputes and
litigation over these contract issues could negatively impact portfolio
holdings and may create uncertainties in the valuation of financial
contracts held. ECB POLICYMAKING. As the ECB and European market
participants search for a common understanding of policy targets and
instruments, interest rates and exchange rates could become more volatile.
FOREIGN CURRENCY HEDGING TRANSACTIONS. In order to hedge against foreign
currency exchange rate risks, the Equity Fund, International Equity Fund and
Premier Fund may enter into forward foreign currency exchange contracts and
foreign currency futures contracts, as well as purchase put or call options on
foreign currencies or currency futures transactions, as described below. The
Funds may also conduct their foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market. The Equity Fund, International Equity Fund and Premier Fund may enter
into forward foreign currency exchange contracts ("forward contracts") to
attempt to minimize the risk to a Fund from adverse changes in the relationship
between the U.S. dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded by currency
traders and their customers. A Fund may enter into a forward contract, for
example, when it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S. dollar price of
the security. In addition, for example, when a Fund believes that a foreign
currency may suffer a substantial decline against the U.S. dollar, it may enter
into a forward contract to sell an amount of that foreign currency approximating
the value of some or all of the Fund's portfolio securities denominated in such
foreign currency; or when a Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into a forward
contract to buy that foreign currency for a fixed dollar amount. This second
investment practice is generally referred to as "cross-hedging." Because in
connection with a Fund's forward foreign currency transactions an amount of the
Fund's assets equal to the amount of the purchase will be held aside or
segregated to be used to pay for the commitment, the Fund will always have cash,
cash equivalents or high quality debt securities available sufficient to cover
any commitments under these contracts or to minimize potential risk. The
segregated account will be marked to market on a daily basis. While these
contracts are not presently regulated by the Commodity Futures Trading
Commission ("CFTC"), the CFTC may in the future assert authority to regulate
forward contracts. In such event, the Fund's ability to utilize forward
contracts in the manner set forth above may be restricted. Forward contracts may
limit potential gain from a positive change in the relationship between the U.S.
dollar and foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had not engaged in
such contracts. The Equity Fund, International Equity Fund and Premier Fund may
purchase and write put and call options on foreign currencies for the purpose of
protecting against declines in the dollar value of foreign portfolio securities
and against increases in the dollar cost of foreign securities to be acquired.
As is the case with other kinds of options, however, the writing of an option on
foreign currency will constitute only a partial hedge, up to the amount of the
premium received, and a Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on foreign currency may constitute an effective hedge
against fluctuation in exchange rates, although, in the event of rate movements
adverse to the Fund's position, the Fund may forfeit the entire amount of the
premium plus related transaction costs. Options on foreign currencies to be
written or purchased by a Fund will be traded on U.S. and foreign exchanges or
over-the-counter. The Equity Fund, International Equity Fund and Premier Fund
may enter into exchange-traded contracts for the purchase or sale for future
delivery of foreign currencies ("foreign currency futures") and may purchase and
write put and call options on foreign currency futures. This investment
technique will be used only to hedge against anticipated future changes in
exchange rates which otherwise might adversely affect the value of a Fund's
portfolio securities or adversely affect the prices of securities that the Fund
intends to purchase at a later date. The successful use of foreign currency
futures will usually depend on the ability of a Fund's Adviser to forecast
currency exchange rate movements correctly. Should exchange rates move in an
unexpected manner, the Fund may not achieve the anticipated benefits of foreign
currency futures or may realize losses.
"MARGIN" IN FUTURES TRANSACTIONS. Unlike the purchase or sale of a
security, the Equity Fund, International Equity Fund and Premier Fund do
not pay or receive money upon the purchase or sale of a futures contract.
Rather, the Fund is required to deposit an amount of "initial margin" in
cash, U.S. government securities or highly-liquid debt securities with its
custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in
securities transactions in that initial margin in futures transactions does
not involve the borrowing of funds by the Fund to finance the transactions.
Initial margin is in the nature of a performance bond or good faith deposit
on the contract which is returned to the Fund upon termination of the
futures contract, assuming all contractual obligations have been satisfied.
A futures contract held by the Equity Fund, International Equity Fund and
Premier Fund is valued daily at the official settlement price of the
exchange on which it is traded. Each day a Fund pays or receives cash,
called "variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to market." Variation
margin does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the
other if the futures contract expired. In computing its daily net asset
value, the Fund will mark to market its open futures positions. The Fund is
also required to deposit and maintain margin when it writes call options on
futures contracts. When the Fund purchases futures contracts, an amount of
cash and cash equivalents, equal to the underlying commodity value of the
futures contracts (less any related margin deposits), will be deposited in
a segregated account with the Fund's custodian (or the broker, if legally
permitted) to collateralize the position and thereby insure that the use of
such futures contracts is unleveraged. To the extent required to comply
with CFTC Regulation 4.5 and thereby avoid status as a "commodity pool
operator," the Equity Fund, International Equity Fund and Premier Fund will
not enter into a futures contract for other than bona fide hedging
purposes, or purchase an option thereon, if immediately thereafter the
initial margin deposits for futures contracts held by it, plus premiums
paid by it for open options on futures contracts, would exceed 5% of the
market value of a Fund's net assets, after taking into account the
unrealized profits and losses on those contracts it has entered into; and,
provided further, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in computing such
5%. Second, the Funds will not enter into these contracts for speculative
purposes; rather, these transactions are entered into only for bona fide
hedging purposes, or other permissible purposes pursuant to regulations
promulgated by the CFTC. Third, since the Funds do not constitute a
commodity pool, they will not market themselves as such, nor serve as a
vehicle for trading in the commodities futures or commodity options
markets. Finally, because the Funds will submit to the CFTC special calls
for information, the Funds will not register as commodities pool operators.
LIMITATION ON OPEN FUTURES POSITIONS. The Equity Fund, International Equity
Fund and Premier Fund will not maintain open positions in futures contracts
they have sold or call options they have written on futures contracts if,
in the aggregate, the value of the open positions (marked to market)
exceeds the current market value of their respective securities portfolio
plus or minus the unrealized gain or loss on those open positions, adjusted
for the correlation of volatility between the hedged securities and the
futures contracts. If this limitation is exceeded at any time, the Funds
will take prompt action to close out a sufficient number of open contracts
to bring their respective open futures and options positions within this
limitation. RISKS. When the Equity Fund, International Equity Fund and
Premier Fund use futures and options on futures as hedging devices, there
is a risk that the prices of the securities or foreign currency subject to
the futures contracts may not correlate perfectly with the prices of the
securities or currency in that Fund's portfolio. This may cause the futures
contract and any related options to react differently to market changes
than the portfolio securities or foreign currency. In addition, a Fund's
Adviser could be incorrect in its expectations about the direction or
extent of market factors such as stock price movements or foreign currency
exchange rate fluctuations. In these events, a Fund may lose money on the
futures contract or option. It is not certain that a secondary market for
positions in futures contracts or for options will exist at all times.
Although the Adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or
option at any particular time. The Funds' ability to establish and close
out futures and options positions depends on this secondary market. The
inability to close these positions could have an adverse effect on the
Funds' ability to hedge their respective portfolios.
LENDING OF PORTFOLIO SECURITIES. The collateral received when a Fund lends
portfolio securities must be valued daily and, should the market value of the
loaned securities increase, the borrower must furnish additional collateral to
the Fund. During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities. Loans are subject to
termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker. If the Fund does not have the
right to vote securities on loan, it would terminate the loan and regain the
right to vote if that were considered important with respect to the investment.
MORTGAGE-BACKED SECURITIES. The following is additional information about
Mortgage-Backed Securities.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). The following example
illustrates how mortgage cash flows are prioritized in the case of CMOs -
most of the CMOs in which the Intermediate Bond Fund invests use the same
basic structure: (1) Several classes of securities are issued against a
pool of mortgage collateral. A common structure may contain four classes of
securities. The first three (A, B, and C bonds) pay interest at their
stated rates beginning with the issue date, and the final class (Z bond)
typically receives any excess income from the underlying investments after
payments are made to the other classes and receives no principal or
interest payments until the shorter maturity classes have been retired, but
then receives all remaining principal and interest payments; (2) The cash
flows from the underlying mortgages are applied first to pay interest and
then to retire securities; (3) The classes of securities are retired
sequentially. All principal payments are directed first to the
shortest-maturity class (or A bond). When those securities are completely
retired, all principal payments are then directed to the next
shortest-maturity security (or B bond). This process continues until all of
the classes have been paid off. Because the cash flow is distributed
sequentially instead of pro rata, as with pass-through securities, the cash
flows and average lives of CMOs are more predictable, and there is a period
of time during which the investors in the longer-maturity classes receive
no principal paydowns. The interest portion of these payments is
distributed by the Fund as income, and the capital portion is reinvested.
MUNICIPAL SECURITIES. Examples of Municipal Securities include, but are not
limited to: tax and revenue anticipation notes ("TRANs") issued to finance
working capital needs in anticipation of receiving taxes or other revenues; tax
anticipation notes ("TANs") issued to finance working capital needs in
anticipation of receiving taxes; revenue anticipation notes ("RANs") issued to
finance working capital needs in anticipation of receiving revenues; bond
anticipation notes ("BANs") that are intended to be refinanced through a later
issuances of longer-term bonds; municipal commercial paper and other short-term
notes; variable rate demand notes; municipal bonds (including bonds having
serial maturities and pre-refunded bonds) and leases; construction loan notes
insured by the Federal Housing Administration and financed by the Federal or
Government National Mortgage Associations; and participation, trust and
partnership interests in any of the foregoing obligations. Although an emphasis
will be placed on purchasing Nebraska Municipal Securities, the Tax-Free Bond
Fund's investments may consist of issues of Municipal Securities representative
of various areas of the U.S. and general obligations of states, cities and
school districts as well as some revenue issues which meet the Fund's acceptable
quality criteria.
MUNICIPAL LEASES. The Intermediate Bond Fund and the Tax-Free-Bond Fund may
purchase Municipal Securities in the form of participation interests that
represent an undivided proportional interest in lease payments by a
governmental or nonprofit entity. The lease payments and other rights under
the lease provide for and secure payments on the certificates. Lease
obligations may be limited by municipal charter or the nature of the
appropriation for the lease. In particular, lease obligations may be
subject to periodic appropriation. If the entity does not appropriate funds
for future lease payments, the entity cannot be compelled to make such
payments. Furthermore, a lease may provide that the participants cannot
accelerate lease obligations upon default. The participants would only be
able to enforce lease payments as they became due. In the event of a
default or failure of appropriation, unless the participation interests are
credit enhanced, it is unlikely that the participants would be able to
obtain an acceptable substitute source of payment. Under the criteria
currently established by the Trustees, the Funds' Adviser must consider the
following factors in determining the liquidity of municipal lease
securities: (1) the frequency of trades and quotes for the security; (2)
the volatility of quotations and trade prices for the security; (3) the
number of dealers willing to purchase or sell the security and the number
of potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the marketplace
trades; (6) the rating of the security and the financial condition and
prospects of the issuer of the security; (7) such other factors as may be
relevant to the Funds' ability to dispose of the security; (8) whether the
lease can be terminated by the lessee; (9) the potential recovery, if any,
from a sale of the leased property upon termination of the lease; (10) the
lessee's general credit strength; (11) the likelihood that the lessee will
discontinue appropriating funding for the leased property because the
property is no longer deemed essential to its operations; and (12) any
credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease. VARIABLE RATE MUNICIPAL
SECURITIES. Variable interest rates generally reduce changes in the market
value of Municipal Securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential for
capital appreciation or depreciation is less for variable rate Municipal
Securities than for fixed income obligations. Many Municipal Securities
with variable interest rates purchased by a Fund are subject to repayment
of principal (usually within seven days) on the Fund's demand. For purposes
of determining the Funds' average maturity, the maturities of these
variable rate demand Municipal Securities (including participation
interests) are the longer of the periods remaining until the next
readjustment of their interest rates or the periods remaining until their
principal amounts can be recovered by exercising the right to demand
payment. The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of the municipal
obligations, the issuer of the participation interests, or a guarantor of
either issuer.
MUNICIPAL BOND INSURANCE. The Intermediate Bond Fund and Tax-Free Bond Fund may
purchase Municipal Securities covered by insurance which guarantees the timely
payment of principal at maturity and interest on such securities ("Policy" or
"Policies"). These insured Municipal Securities are either (1) covered by an
insurance policy applicable to a particular security, whether obtained by the
issuer of the security or by a third party ("Issuer-Obtained Insurance") or (2)
insured under master insurance policies issued by municipal bond insurers, which
may be purchased by the Funds. The premiums for the Policies may be paid by the
Funds and the yield on the Funds' portfolios may be reduced thereby.
The Funds may require or obtain municipal bond insurance when purchasing
Municipal Securities which would not otherwise meet the Funds' quality
standards. The Funds may also require or obtain municipal bond insurance when
purchasing or holding specific Municipal Securities, when, in the opinion of the
Funds' Adviser, such insurance would benefit the Funds (for example, through
improvement of portfolio quality or increased liquidity of certain securities).
Issuer-Obtained Insurance policies are noncancellable and continue in force as
long as the Municipal Securities are outstanding and their respective insurers
remain in business. If a Municipal Security is covered by Issuer-Obtained
Insurance, then such security need not be insured by the Policies purchased by a
Fund.
The Funds may purchase two types of Policies issued by municipal bond insurers.
One type of Policy covers certain Municipal Securities only during the period in
which they are in the Funds' portfolio. In the event that a Municipal Security
covered by such a Policy is sold from a Fund, the insurer of the relevant Policy
will be liable for those payments of interest and principal which are due and
owing at the time of the sale.
The other type of Policy covers Municipal Securities not only while they remain
in the Funds' portfolio but also until their final maturity if they are sold out
of the Funds' portfolio, so that the coverage may benefit all subsequent holders
of those Municipal Securities. The Funds will obtain insurance which covers
Municipal Securities until final maturity even after they are sold out of the
Funds' portfolio only if, in the judgment of the Adviser, the Funds would
receive net proceeds from the sale of those securities, after deducting the cost
of such permanent insurance and related fees, in excess of the proceeds the
Funds would receive if such Municipal Securities were sold without insurance.
Payments received from municipal bond insurers may not be tax-exempt income to
shareholders of the Funds.
The Funds may purchase Municipal Securities insured by Policies from MBIA Corp.
("MBIA"), AMBAC Indemnity Corporation ("AMBAC"), Financial Guaranty Insurance
Company ("FGIC"), or any other municipal bond insurer which is rated AAA by S&P
or Aaa by Moody's. Each Policy guarantees the payment of principal and interest
on those Municipal Securities it insures. The Policies will have the same
general characteristics and features. A Municipal Security will be eligible for
coverage if it meets certain requirements set forth in the Policy. In the event
interest or principal on an insured Municipal Security is not paid when due, the
insurer covering the security will be obligated under its Policy to make such
payment not later than 30 days after it has been notified by a Fund that such
non-payment has occurred. MBIA, AMBAC, and FGIC will not have the right to
withdraw coverage on securities insured by their Policies so long as such
securities remain in the Funds' portfolio, nor may MBIA, AMBAC, or FGIC cancel
their Policies for any reason except failure to pay premiums when due.
MBIA, AMBAC, and FGIC will reserve the right at any time upon 90 days' written
notice to the Funds to refuse to insure any additional Municipal Securities
purchased by the Funds after the effective date of such notice. The Funds
reserve the right to terminate any of the Policies if they determine that the
benefits to a Fund of having its portfolio insured under such Policy are not
justified by the expense involved.
Additionally, the Funds reserve the right to enter into contracts with insurance
carriers other than MBIA, AMBAC, or FGIC if such carriers are rated AAA by S&P
or Aaa by Moody's.
REPURCHASE AGREEMENTS. Each Fund requires its custodian to take possession of
the securities subject to repurchase agreements and these securities are marked
to market daily. To the extent that the original seller does not repurchase the
securities from a Fund, the Fund could receive less than the repurchase price on
any sale of such securities. In the event that such a defaulting seller files
for bankruptcy or becomes insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Funds believe that, under the regular
procedures normally in effect for custody of the portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Funds and allow retention or disposition of such securities. The Funds will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by a Fund's Adviser to be
creditworthy pursuant to guidelines established by the Trustees. RESTRICTED
SECURITIES. The Funds may invest in commercial paper issued in reliance on the
exemption from restriction afforded by Section 4(2) of the Securities Act of
1933. Section 4(2) commercial paper is restricted as to disposition under
federal securities law and is generally sold to institutional investors, such as
the Funds, who agree that they are purchasing the paper for investment purposes
and not with a view to public distribution. Any resale by the purchaser must be
in an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Funds through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Funds believe that Section 4(2) commercial
paper and possibly certain other restricted securities which meet the criteria
for liquidity established by the Trustees are quite liquid. The Funds intend,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper
(as determined by a Fund's Adviser), as liquid and not subject to the investment
limitation applicable to illiquid securities. In addition, because Section 4(2)
commercial paper is liquid, the Funds intend to not subject such paper to the
limitation applicable to restricted securities. REVERSE REPURCHASE AGREEMENTS.
Each Fund may enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement, the Fund transfers
possession of a portfolio instrument to another person, such as a financial
institution, broker, or dealer, in return for a percentage of the instrument's
market value in cash, and agrees that on a stipulated date in the future the
Fund will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time. When
effecting reverse repurchase agreements, liquid assets of the Fund, in a dollar
amount sufficient to make payment for the obligations to be purchased, are
segregated at the trade date. These securities are marked to market daily and
maintained until the transaction is settled. SHORT SALES. The Equity Fund,
International Equity Fund and Premier Fund will not sell securities short unless
the Funds (1) own, or have a right to acquire, an equal amount of such
securities, or (2) have segregated an amount of their other assets equal to the
lesser of the market value of the securities sold short or the amount required
to acquire such securities. The segregated amount will not exceed 25% of the
respective Fund's net assets. While in a short position, each Fund will retain
the securities, rights, or segregated assets. SWAP TRANSACTIONS. In a standard
swap transaction, two parties agree to exchange the returns (or differentials in
rates of return) earned or realized on particular predetermined investments or
instruments, which may be adjusted for an interest factor. The gross returns to
be exchanged or "swapped" between the parties are generally calculated with
respect to a "notional amount," which is the return on or increase in value of a
particular dollar amount invested at a particular interest rate, or in a
"basket" of securities representing a particular index. For example, a $10
million LIBOR swap would require one party to pay the equivalent of the London
Interbank Offer Rate on $10 million principal amount in exchange for the right
to receive the equivalent of a fixed rate of interest on $10 million principal
amount. Neither party to the swap would actually advance $10 million to the
other. The Funds expect to enter into swap transactions primarily to hedge
against changes in the price of other portfolio securities. For example, the
Funds may hedge against changes in the market value of a fixed rate note by
entering into a concurrent swap that requires the Funds to pay the same or a
lower fixed rate of interest on a notional principal amount equal to the
principal amount of the note in exchange for a variable rate of interest based
on a market index. Interest accrued on the hedged note would then equal or
exceed the Funds' obligations under the swap, while changes in the market value
of the swap would largely offset any changes in the market value of the note.
The Funds may also enter into swaps and caps to preserve or enhance a return or
spread on a portfolio security. The Funds do not intend to use these
transactions in a speculative manner. The Funds will usually enter into swaps on
a net basis (i.e., the two payment streams are netted out), with a Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of the Funds' obligations over
its entitlements with respect to each interest rate swap will be accrued on a
daily basis, and the Funds will segregate liquid assets in an aggregate net
asset value at least equal to the accrued excess, if any, on each business day.
If a Fund enters into a swap on other than a net basis, a Fund will segregate
liquid assets in the full amount accrued on a daily basis of a Fund's
obligations with respect to the swap. If there is a default by the other party
to such a transaction, the Funds will have contractual remedies pursuant to the
agreements related to the transaction. The swap market has grown substantially
in recent years with a large number of banks and investment banking firms acting
both as principals and agents utilizing standardized swap documentation. The
Adviser has determined that, as a result, the swap market has become relatively
liquid. Interest rate caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they are
less liquid than other swaps. To the extent swaps, caps or floors are determined
by the Adviser to be illiquid, they will be included in a Fund's limitation on
investments in illiquid securities. To the extent a Fund sells caps and floors,
it will maintain in a segregated account cash and/or U.S. government securities
having an aggregate net asset value at least equal to the full amount, accrued
on a daily basis, of a Fund's obligations with respect to caps and floors. The
use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Adviser is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of a Fund would diminish compared with what it would have been if these
investment techniques were not utilized. Moreover, even if the Adviser is
correct in its forecasts, there is a risk that the swap position may correlate
imperfectly with the price of the portfolio security being hedged. Swap
transactions do not involve the delivery of securities or other underlying
assets or principal. Accordingly, the risk of loss with respect to a default on
an interest rate swap is limited to the net asset value of the swap together
with the net amount of interest payments owed to a Fund by the defaulting party.
A default on a portfolio security hedged by an interest rate swap would also
expose a Fund to the risk of having to cover its net obligations under the swap
with income from other portfolio securities. WHEN-ISSUED AND DELAYED DELIVERY
TRANSACTIONS. These transactions are made to secure what is considered to be an
advantageous price or yield for the Funds. Settlement dates may be a month or
more after entering into these transactions, and the market values of the
securities purchased may vary from the purchase prices. No fees or other
expenses, other than normal transaction costs, are incurred. However, liquid
assets of a Fund sufficient to make payment for the securities to be purchased
are segregated on a Fund's records at the trade date. These assets are marked to
market daily and are maintained until the transaction has been settled.
INVESTMENT LIMITATIONS FUNDAMENTAL LIMITATIONS
The following investment limitations are fundamental and cannot be changed
without shareholder approval except that no investment limitation of the Fund
shall prevent the Fund from investing substantially all of its assets (except
for assets which are not considered "investment securities" under the Investment
Company Act of 1940, or assets exempted by the SEC) in an open end investment
company with substantially the same investment objective. SELLING SHORT AND
BUYING ON MARGIN
Except for the Equity Fund, International Equity Fund and Premier Fund, none of
the other Funds will sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as may be necessary for clearance
of purchases and sales of portfolio securities. A deposit or payment by a Fund
of initial or variation margin in connection with futures contracts, forward
contracts or related options transactions is not considered the purchase of a
security on margin. ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Funds will not issue senior securities except that each Fund may borrow
money, directly or through reverse repurchase agreements, in amounts up to
one-third of the value of its total assets including the amounts borrowed; and
except to the extent that a Fund is permitted to enter into futures contracts,
options or forward contracts. A Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of its portfolio
by enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. A Fund
will not purchase any securities while any borrowings in excess of 5% of its
total assets are outstanding. PLEDGING ASSETS
The Funds will not mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. In those cases, each Fund may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or
one-third of the value of its total assets at the time of the pledge. For
purposes of this limitation, the following are not deemed to be pledges: margin
deposits for the purchase and sale of futures contracts and related options; and
segregation of collateral arrangements made in connection with options
activities, forward contracts or the purchase of securities on a when-issued or
delayed delivery basis. LENDING CASH OR SECURITIES
The Funds will not lend any of their assets except portfolio securities. Loans
may not exceed one-third of the value of a Fund's total assets. This shall not
prevent a Fund from purchasing or holding U.S. government obligations, money
market instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by a Fund's
investment objective, policies, and limitations. INVESTING IN COMMODITIES
The Funds will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. However, each Fund may purchase and sell futures
contracts and related options and enter into forward contracts and related
options.
INVESTING IN REAL ESTATE
The Funds will not purchase or sell real estate, although a Fund may invest in
the securities of companies whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or which represent
interests in real estate. DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Intermediate Bond Fund will not purchase securities issued by any one issuer
(other than cash, cash items, securities of other investment companies, or
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by such
securities) if as a result more than 5% of the value of its total assets would
be invested in the securities of that issuer or if it would own more than 10% of
the outstanding voting securities of such issuer. CONCENTRATION OF INVESTMENTS
Each Fund will not invest 25% or more of the value of its total assets in any
one industry. Each Fund may invest 25% or more of the value of its total assets
in cash or cash items, securities of other investment companies, securities
issued or guaranteed by the U.S. government, its agencies, or instrumentalities,
and repurchase agreements collateralized by such securities. In addition, the
Tax-Free Bond Fund may invest more than 25% of the value of its total assets in
obligations issued by any state, territory, or possession of the United States,
the District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, including tax-exempt project notes
guaranteed by the U.S. government, regardless of the location of the issuing
municipality. This policy applies to securities which are related in such a way
that an economic, business, or political development affecting one security
would also affect the other securities (such as securities paid from revenues
from selected projects in transportation, public works, education, or housing).
UNDERWRITING
A Fund will not underwrite any issue of securities, except as it may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
sale of restricted securities which the Fund may purchase pursuant to its
investment objective, policies and limitations. NON-FUNDAMENTAL LIMITATIONS
The following investment limitations are non-fundamental and, therefore, may be
changed by the Trustees without shareholder approval except that no investment
limitation of the Fund shall prevent the Fund from investing substantially all
of its assets (except for assets which are not considered "investment
securities" under the Investment Company Act of 1940, or assets exempted by the
SEC) in an open end investment company with substantially the same investment
objective. Shareholders will be notified before any material change in these
limitations becomes effective. INVESTING IN ILLIQUID AND RESTRICTED SECURITIES
The Funds will invest in illiquid and restricted securities. However, the Funds
will not invest more than 15% of the value of their net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice, non-negotiable fixed time deposits with maturities
over seven days, over-the-counter options, guaranteed investment contracts, and
certain securities not determined by the Trustees to be liquid (including
certain municipal leases).
PURCHASING SECURITIES TO EXERCISE CONTROL
The Funds will not purchase securities of a company for the purpose of
exercising control.
INVESTING IN OPTIONS
The Equity Fund, International Equity Fund and Premier Fund will not purchase
put options or write call options on securities (other than options on
currencies) unless the securities are held in the Funds' portfolio or unless the
Funds are entitled to them in deliverable form without further payment or have
segregated cash in the amount of any further payment. Except with respect to
borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such restriction. For
purposes of its policies and limitations, the Funds consider instruments (such
as certificates of deposit and demand and time deposits) issued by a U.S. branch
of a domestic bank or savings and loan having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash items."
NEBRASKA INVESTMENT RISKS The Tax-Free Bond Fund may invest in obligations of
Nebraska (the "State") issuers which result in the Fund's performance being
subject to risks associated with the overall conditions present within the
State. The following information is a general summary of the State's financial
condition and a brief summary of the prevailing economic conditions. This
information is based on various sources that are believed to be reliable but
should not be considered as a complete description of all relevant information.
The Tax-Free Bond Fund's investment emphasis on debt obligations of Nebraska
issuers carries a higher risk than a portfolio that is geographically
diversified. There are 93 counties and 535 incorporated municipalities in
Nebraska, many of which have outstanding debt. A number of other public
authorities and private, nonprofit organizations, including utilities, also
issue tax exempt debt within the State.
ECONOMY. The economy of the State continues to demonstrate relatively strong
performance, with per capita personal income for 1997 at $23,803. Per capita
income is total personal income divided by population, so it is a measure of
income distributed among all residents. Since not all persons have an annual
income, this statistic is not a measure of individual economic well-being. Total
State employment was 855,800 in 1997, with the majority of jobs in trade,
services and government. Annual average unemployment was 2.6% in 1997, compared
to a national average of 4.9%. The State's population in 1990 was 1,578,385,
with 1,656,870 estimated for 1997. Two-fifths of the population is concentrated
in the three metropolitan areas of Lincoln, Omaha and South Sioux City.
DEBT. The State of Nebraska does not issue debt. Local governments issue three
basic types of debt, with varying degrees of credit risk: general obligation
bonds backed by the unlimited, and in some cases limited, taxing power of the
issuer, revenue bonds secured by specific pledged fees or charges for a related
utility or project, and tax-exempt lease obligations, secured by annual
appropriations by the issuer, usually with no implied tax or specific revenue
appropriations by the issuer.
Many Nebraska agencies and instrumentalities are authorized to borrow money
under legislation which expressly provides that the loan obligations shall not
be deemed to constitute a debt or pledge of the faith and credit of the State.
Representative issuers of this kinds of debt include the Nebraska Educational
Facilities Authority and Nebraska Investment Finance Authority. The principal of
and interest on bonds issued by these bodies are payable solely from specific
sources, principally fees generated from the use of the facilities, or
enterprises financed by the bonds, or other dedicated revenues.
FINANCIAL. To a large degree, the risk of the Tax-Free Bond Fund is dependent
upon the financial strength of the State of Nebraska and its political
subdivisions. Agriculture traditionally has been the backbone of Nebraska's
economy, although its relative importance has diminished in the last two decades
compared to other sectors. Its continued importance to the State's economy was
clearly demonstrated in recent years, when increasing farm credit problems and
adverse weather conditions affected other sectors interacting with agriculture.
These sectors include manufacturers of farm equipment and supplies; feed, seed,
and other farm supply retailers; truckers transporting farm products; and banks
providing loans for farm operating capital. While Nebraska has not experienced
severe symptoms of past national recessions, Nebraska political subdivisions
have faced budget crises in the recent past (see Property Tax System below).
PROPERTY TAX SYSTEM. In 1996, the Nebraska legislature enacted legislation
intended to reduce the level of property taxation in the State. LB299 provides
for a new overall budget limitation on certain restricted funds, and LB1114
reduces the rate of taxation for general property taxes authorized for cities.
LB299 imposes for the current budget year for cities a limitation on the growth
of restricted funds of 2% plus a factor for population growth, if any. For the
next subsequent budget year, the limitation on growth in restricted funds will
be 0% plus a factor for population growth, if any. Restricted funds include
property taxes (excluding any amounts required to pay interest and principal on
bonded indebtedness), payments in lieu of taxes, local option sales taxes,
permit and regulatory fees, state aid and fees from enterprise funds to the
extent budgeted for general purposes rather than the enterprise function. The
limitation imposed does not apply to capital improvements or revenues pledged to
retire bonded indebtedness. The 2% or 0% limitation may be exceeded by an
additional 1% upon an affirmative vote of at least 75% of the governing body.
State aid may be withheld from governmental units which fail to comply. Under
LB1114 the rates for levying property taxes are to be limited for each type of
governmental unit in the State. The rate for cities after July 1, 1998, is no
more than $0.45 per $100 of taxable value. Property tax levies to pay bonded
debt are not included in such limitation. A political subdivision may exceed the
limits upon rates for tax levies with approval from the voters of such
subdivision.
PUERTO RICO. From time to time the Tax-Free Bond Fund may invest in obligations
of the Commonwealth of Puerto Rico and its public corporations exempt from
federal and Nebraska state and local income taxes. The majority of the
Commonwealth's debt is issued by ten of the major public agencies that are
responsible for many of the islands' public functions, such as water,
wastewater, highways, telecommunications, education, and public construction.
Since the 1980's, Puerto Rico's economy and financial operations have paralleled
the economic cycles of the United States. The island's economy, particularly the
manufacturing sector, has experienced substantial gains in employment.
Unemployment, while reaching its lowest level in ten years, still remains high.
Much of these economic gains are attributable in part to favorable treatment
under Section 936 of the U.S. Federal Tax Code for U.S. corporations doing
business in Puerto Rico.
Debt ratios for the Commonwealth are high as it assumes much of the
responsibility for local infrastructure. Sizable infrastructure improvements are
anticipated to upgrade the island's water, sewer, and road system. The
Commonwealth's general obligation debt is secured by a first lien on all
available revenues.
The Commonwealth's economy remains vulnerable to changes in oil prices, American
trade, foreign policy, and levels of federal assistance. Per capita income
levels, while the highest in the Caribbean, lag for behind the United States.
OTHER RISK FACTORS. Because of its investment policies, the Tax-Free Bond Fund
may not be suitable or appropriate for all investors. The Fund is designed for
investors who want a high level of current income that is exempt from federal
and Nebraska state income taxes. Investors in the Fund should not rely on the
Fund for their short-term financial needs. The principal values of longer term
securities fluctuate more widely in response to changes in interest rates than
those of shorter term securities, providing greater opportunity for capital gain
or risk of capital loss.
There can be no assurance that the Tax-Free Bond Fund will achieve its
investment objective. Yields on Municipal Securities are dependent on a variety
of factors, including the general conditions of the money market and the
municipal bond market, the size of a particular offering, the maturity of the
obligation, and the rating of the issue. Municipal Securities with longer
maturities tend to produce higher yields and are generally subject to
potentially greater capital appreciation and depreciation than obligations with
shorter maturities and lower yields. The market prices of Municipal Securities
usually vary, depending upon available yields. An increase in interest rates
will generally reduce the value of Fund investments, and a decline in interest
rates will generally increase the value of Fund investments. The ability of the
Fund to achieve its investment objective is also dependent on the continuing
ability of the issuers of Municipal Securities to meet their obligations for the
payment of interest and principal when due. The ratings of Moody's and S&P
represent their opinions as to the quality of Municipal Securities which they
undertake to rate. Ratings are not absolute standards of quality; consequently,
Municipal Securities with the same maturity, coupon, and rating may have
different yields. There are variations in Municipal Securities, both within a
particular classification and between classifications, depending on numerous
factors. It should also be pointed out that, unlike other types of investments,
Municipal Securities have traditionally not been subject to regulation by, or
registration with, the Securities and Exchange Commission, although there have
been proposals which would provide for regulation in the future. The federal
bankruptcy statutes relating to the debts of political subdivisions and
authorities of states of the United States provide that, in certain
circumstances, such subdivisions or authorities may be authorized to initiate
bankruptcy proceedings without prior notice to or consent of creditors, which
proceedings could result in material and adverse changes in the rights of
holders of their obligations. Proposals have been introduced in Congress to
restrict or eliminate the federal income tax exemption for interest on Municipal
Securities, and similar proposals may be introduced in the future. Some of the
past proposals would have applied to interest on Municipal Securities issued
before the date of enactment, which would have adversely affected their value to
a degree. If such a proposal were enacted, the availability of Municipal
Securities for investment by the Fund and the value of each Fund's investments
would be affected and, in such an event, the Fund would reevaluate its
investment objectives and policies. The Fund's investment emphasis on securities
issued by municipalities and political subdivisions of the State of Nebraska
involves greater risk than investing in Municipal Securities issued by a
diversified group of entities from various geographical areas in the United
States. Specifically, the credit quality of the Fund will depend upon the
continued financial strength of the public bodies and municipalities in
Nebraska. The State of Nebraska does not issue debt and, as a result, the
financial condition of each municipality or political subdivision for each issue
must be analyzed separately. Nebraska Municipal Securities generally have been
highly regarded. Defaults on Nebraska Municipal Securities have been confined to
issues made by sanitary improvement districts primarily occurring in the early
1980's and a few industrial development bond issues also occurring in the early
1980's. The Fund expects to invest a substantial portion of its assets in the
debt obligations of local governments and public authorities in the State of
Nebraska. While local governments in Nebraska are predominantly reliant on
independent revenue sources, such a property taxes, they are not immune to
budget shortfalls caused by cut-backs in State aid. None of the obligations
issued by public authorities in Nebraska are backed by the full faith and credit
of the State of Nebraska. In addition, property tax increases and general
increases in governmental sending may be subject to voter approval. The Fund may
also invest in certain sectors of the municipal securities market which have
unique risks. The sectors include, but are not limited to, investments in
issuances of health care providers, electric revenue issues with exposure to
nuclear power plants and deregulation intended to foster competition, and
private activity bonds without governmental backing. Each of these sectors is
impacted by its own unique set of circumstances, including significant regulator
impacts, which may adversely affect an issuer's financial performance. Over 25%
of the Nebraska Municipal Securities in the Tax-Free Bond Fund's portfolio may
be health care revenue bonds. Ratings of bonds issued for health care facilities
are sometimes based on feasibility studies that contain projections of occupancy
levels, revenues and expenses. A facility's gross receipts and net income
available for debt service may be affected by future events and conditions
including among other things, demand for services, the ability of the facility
to provide the services required, physicians' confidence in the facility,
management capabilities, competition with other hospitals, efforts by insurers
and governmental agencies to limit rates, legislation establishing state
rate-setting agencies, expenses, government regulation, the cost and possible
unavailability of malpractice insurance and the termination of restriction of
governmental financial assistance, including that associated with Medicare,
Medicaid and other similar third party payer programs. Pursuant to recent
federal legislation, Medicare reimbursements are currently calculated on a
prospective basis utilizing a single nationwide schedule of rates. Prior to such
legislation Medicare reimbursements were based on the actual costs incurred by
the health facility. Legislation may in the future adversely affect
reimbursements to hospitals and other facilities for services provided under the
Medicare program.
Over 25% of the Nebraska Municipal Securities in the Tax-Free Bond Fund's
portfolio may derive their payment from mortgage loans. Certain of the Nebraska
Municipal Securities in the Fund's portfolio may be single family mortgage
revenue bonds, which are issued for the purpose of acquiring from originating
financial institutions notes secured by mortgages on residences located within
the issuer's boundaries and owned by persons of low or moderate income. Mortgage
loans are generally partially or completely prepaid prior to their final
maturities as a result of events such as sale of the mortgaged premises,
default, condemnation or casualty loss. Because these bonds are subject to
extraordinary mandatory redemption in whole or in part from such prepayments of
mortgage loans, a substantial portion of such bonds will probably be redeemed
prior to their scheduled maturities or even prior to their ordinary call dates.
The redemption price of such issues may be more or less than the offering price
of such bonds. Extraordinary mandatory redemption without premium could also
result from the failure of the originating financial institutions to make
mortgage loans in sufficient amounts within a specified time period or, in some
cases, from the sale by the bond issuer of the mortgage loans. Failure of the
originating financial institutions to make mortgage loans would be due
principally to the interest rates on mortgage loans funded from other sources
becoming competitive with the interest rates on the mortgage loans funded with
the proceeds of the single family mortgage revenue bonds. Single family mortgage
revenue bonds issued after December 31, 1980, were issued under Section 103A of
the Internal Revenue Code, which Section contains certain ongoing requirements
relating to the use of the proceeds of such bonds in order for the interest on
such bonds to retain its tax-exempt status. In each case, the issuer of the
bonds has covenanted to comply with applicable ongoing requirements, and bond
counsel to such issuer has issued an opinion that the interest on the bonds is
exempt from federal income tax under existing laws and regulations. There can be
no assurances that the ongoing requirements will be met. The failure to meet
these requirements could cause the interest on the bonds to become taxable,
possibly retroactively to the date of issuance.
Certain of the Nebraska Municipal Securities in the Fund's portfolio may be
obligations of issuers whose revenues are primarily derived from mortgage loans
to housing projects for low to moderate income families. The ability of such
issuers to make debt service payments will be affected by events and conditions
affecting financed projects including, among other things, the achievement and
maintenance of sufficient occupancy levels and adequate rental income, increases
in taxes, employment and income conditions prevailing in local labor markets,
utility costs and other operating expenses, the managerial ability of project
managers, changes in laws and governmental regulations, the appropriation of
subsidies and social and economic trends affecting the localities in which the
projects are located. The occupancy of housing projects may be adversely
affected by high rent levels and income limitations imposed under federal and
state programs. Like single family mortgage revenue bonds, multi-family mortgage
revenue bonds are subject to redemption and call features, including
extraordinary mandatory redemption features, upon prepayment, sale or
non-origination of mortgage loans as well as upon the occurrence of other
events. Certain issuers of single or multi-family housing bonds have considered
various ways to redeem bonds they have issued prior to the stated first
redemption dates for such bonds. In one situation, the New York City Housing
Development Corporation, in reliance on its interpretation of certain language
in the indenture under which one of its bond issues was created, redeemed all of
such issue at par in spite of the fact that such indenture provided that the
first optional redemption was to include a premium over par and could not occur
prior to a specific date.
Over 25% of the Nebraska Municipal Securities in the Tax-Free Bond Fund's
portfolio may be obligations of issuers whose revenues are primarily derived
from the sale of electric energy. Utilities are generally subject to extensive
regulation by state utility commissions which, among other things, establish the
rates which may be charged and the appropriate rate of return on an approved
asset base. The problems faced by such issuers include the difficulty in
obtaining approval for timely and adequate rate increases from the governing
public utility commission, the difficulty in financing large construction
programs, the limitations on operations and increased costs and delays
attributable to environmental considerations, increased competition, recent
reductions in estimates of future demand for electricity in certain areas of the
country, the difficulty of the capital market in absorbing utility debt, the
difficulty in obtaining fuel at reasonable prices and the effect of energy
conservation. All of such issuers have been experiencing certain of these
problems in varying degrees. In addition, federal, state and municipal
governmental authorities may from time to time review existing and impose
additional regulations governing the licensing, construction and operation of
nuclear and other power plants, which may adversely affect the ability of the
issuers of such bonds to make payments of principal and/or interest of such
bonds. The utility industry is undergoing deregulation in many states.
Deregulation of an industry has historically increased competition. In some
cases, electric utilities will not be allowed to recoup costs associated with
nuclear plants, expansions and other high cost projects.
The yields on Nebraska Municipal Securities are dependent on a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions of the Nebraska tax-exempt obligation market, the
size of a particular offering, the maturity of the obligation and the rating of
the issue or issuer. The ratings of NRSROs represent their opinions as to the
quality of the Nebraska Municipal Securities which they undertake to rate. It
should be emphasized, however, that ratings are general, and not absolute,
standards of quality. Consequently, Nebraska Municipal Securities of the same
maturity, interest rate and rating may have different yields, while Nebraska
Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to their purchase by the Tax-Free
Bond Fund, particular Nebraska Municipal Securities or other investments may
cease to be rated or their ratings may be reduced below the minimum rating
required for purchase by the Fund.
<PAGE>
GREAT PLAINS FUNDS MANAGEMENT
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations for
at least the last 5 years, birthdates and present positions, including any
affiliation with First Commerce Investors, Inc., National Bank of Commerce,
Federated Investors, Inc., Edgewood Services, Inc., Federated Shareholder
Services Company and Federated Services Company.
Dr. Keith L. Broman*
3540 Calvert St.
Lincoln, NE 68506
Birthdate: July 13, 1922
Trustee
Professor Emeritus, University of Nebraska; Former Chairman of Investment
Committee, First Commerce Investors, Inc.
Hugh Hansen@
1325 Fall Creek Road
Lincoln, NE 68510
Birthdate: September 27, 1927
Trustee
Consultant, First Commerce Bancshares, Inc.; Formerly, President, COO and
Director, First Commerce Bancshares, Inc.; Formerly, Vice Chairman and Director,
National Bank of Commerce; Formerly, Chairman and Director, North Platte
National Bank; Formerly, Director, First National Bank, Kearney, NE, McCook, NE
and West Point, NE; Formerly, Director, First Commerce Mortgage Co.; Formerly,
Director, Overland National Bank; Formerly, Director, NBC Computer Services
Corporation.
George E. Howard@ +
3901 South 27th Street, #50
Lincoln, NE 68508
Birthdate: August 11, 1924
Trustee
Formerly, Chairman and CEO, Lincoln Mutual Life Insurance Company.
Dr. Martin A. Massengale +
220 Keim Hall
University of Nebraska-Lincoln
Lincoln, NE 68583-0953
Birthdate: October 25, 1933
Trustee
Foundation Distinguished Professor, President Emeritus, Director of Center for
Grassland Studies, University of Nebraska; Director, IBP, Inc., America First
Companies LLC, and Woodmen Life and Accident Company.
<PAGE>
Keith C. Mitchell
2331 Woodscrest Ave.
Lincoln, NE 68502
Birthdate: September 25, 1943
Trustee
Vice President and Chief Financial Officer, MDS-Harris; Financial Consultant;
Director, Cliff Notes, Inc.; Former General Partner, Deloitte & Touche LLP.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President
Vice Chairman, Federated Investors, Inc. ; Vice President, Federated
Advisers, Federated Management, Federated Research, Federated Research Corp.,
Federated Global Research Corp. and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of certain investment
companies distributed, organized, or advised by Federated Investors, Inc. and
its affiliates (Federated Funds); President, Executive Vice President and
Treasurer of some of the Federated Funds.
James Stuart, III
610 NBC Center
Lincoln, NE 68508
Birthdate: December 4, 1963
Vice President
Chairman and Chief Executive Officer, First Commerce Investors, Inc.; Director,
First Commerce Bancshares, Inc.; Director, National Bank of Commerce; Chief
Investment Officer and Secretary, Stuart Global Investment Company, BVI; James
Stuart, III, Sole Proprietorship, Consultant; Executive Vice President, Stuart
Investment Co.
Stacy Auman
610 NBC Center
Lincoln, NE 68508
Birthdate: July 7, 1973
Vice President
Assistant Vice President, First Commerce Investors, Inc., Great Plains Funds
Product Manager since 1997; Administrative Assistant from 1995 to 1997,
Accounting and Control Assistant from 1994 to 1995, Trust Department, National
Bank of Commerce.
Anne E. Hansen
610 NBC Center
Lincoln, NE 68508
Birthdate: October 3, 1960
Vice President
Vice President , First Commerce Investors, Inc.
Beth S. Broderick
Federated Investors Tower
Pittsburgh, PA 15222
Birthdate: August 2, 1965
Vice President and Treasurer
Assistant Vice President, Federated Services Company since 1997; Client Services
Officer, Federated Services Company from 1992 to 1997.
Victor R. Siclari
Federated Investors Tower
Pittsburgh, PA 15222
Birthdate: November 17, 1961
Secretary
Senior Corporate Counsel and Vice President, Federated Services Company since
November 1992; Attorney, Morrison & Foerster (law firm) from September 1990 to
October 1992.
* This Trustee is deemed to be an "interested person" of the Funds as
defined in the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Board between meetings
of the Board.
+ Member of the Audit Committee.
FUND OWNERSHIP
Officers and Trustees of the Trust owned less than 1% of each Fund's outstanding
shares. As of October 9, 1998, the following shareholders of record owned 5% or
more of the outstanding shares of the Funds: Firlin and Company, a nominee of
NBC, c/o NBC Trust Division, Lincoln, Nebraska, owned of record approximately
17,946,674 shares (93.72%) of the Equity Fund; approximately 2,467,856 shares
(93.45%) of the Premier Fund; approximately 14,110,257 shares (95.89%) of the
Intermediate Bond Fund; approximately 6,693,884 shares (96.44%) of the Tax-Free
Bond Fund and the Great Plains Equity Fund, Lincoln, Nebraska, owned of record
approximately 6,151,468 shares (100%) of the International Equity Fund.
<PAGE>
TRUSTEES' COMPENSATION
NAME, AGGREGATE
POSITION WITH COMPENSATION
TRUST FROM TRUST*#
- ----- ----------
Dr. Keith L. Broman $5,000
Trustee
Hugh Hansen $6,700
Trustee
George E. Howard $6,700
Trustee
Dr. Martin A. Massengale $6,500
Trustee
Keith C. Mitchell $6,500
Trustee
*Information is furnished for the period from the Trust's date of organization,
July 11, 1997, through its fiscal year ended August 31, 1998.
# The aggregate compensation is provided for the Trust which is comprised
of five portfolios.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUNDS
The Funds' investment adviser is First Commerce Investors, Inc. ("Adviser"). The
Adviser shall not be liable to the Trust, the Funds or any shareholder of the
Funds for any losses that may be sustained in the purchase, holding, or sale of
any security, or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust. Because
of the internal controls maintained by the Adviser's affiliates to restrict the
flow of non-public information, Fund investments are typically made without any
knowledge of the Adviser or its affiliates' lending relationships with an
issuer. The Adviser had previously entered into a Sub-Advisory Agreement with
Peter A. Kinney ("Sub-Adviser") pursuant to which the Sub-Adviser provided
investment advice regarding international markets and recommended (but did not
select) foreign securities for purchase by the Equity Fund and the International
Equity Fund. Mr. Kinney served as Sub-Adviser from September 29, 1997 to January
23, 1998, and earned advisory fees of $24,770 paid by the Adviser, none of which
were waived. ADVISORY FEES
For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.
For the period from September 29, 1997 (date of initial public investment), to
August 31, 1998, the Adviser earned advisory fees of $1,358,809, $223,127,
$624,053, and $299,741, from the Equity Fund, the Premier Fund, the Intermediate
Bond Fund, and the Tax-Free Bond Fund, respectively, of which $2,159, $44,836,
$987, and $865, were waived. Since the International Equity Fund did not
commence operations prior to August 31, 1998, it did not pay any fees.
OTHER SERVICES
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, Inc., provides
administrative personnel and services to the Funds for a fee as described in the
prospectus. For the period from September 29, 1997 (date of initial public
investment), to August 31, 1998, the Equity Fund, the Premier Fund, the
Intermediate Bond Fund, and the Tax-Free Bond Fund incurred $252,570, $75,000,
$174,007, and $83,702, respectively, in costs for administrative services, of
which $0, $43,913, $0, and $0, were waived. Since the International Equity Fund
did not commence operations prior to August 31, 1998, it did not pay any fees.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES
Federated Services Company, Pittsburgh, Pennsylvania, through its
registered transfer agent, Federated Shareholder Services Company, is transfer
agent for shares of the Funds and dividend disbursing agent for the Funds.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Funds' portfolio investments.
CUSTODIAN
National Bank of Commerce (the "Bank") is custodian for the securities and cash
of the Funds. Under the custodian agreement, the Bank holds the Funds' portfolio
securities and keeps all necessary records and documents relating to its duties.
The Bank's fees for custody services are based upon the market value of the
Funds' securities held in custody plus certain out-of-pocket expenses. Subject
to arrangements approved by the Trustees, the Bank may place the securities and
cash of the Funds with other qualified custodial entities. INDEPENDENT AUDITORS
The Independent Auditors for the Funds are Deloitte & Touche LLP, Pittsburgh,
Pennsylvania. SHAREHOLDER SERVICING ARRANGEMENTS These arrangements permit the
payment of fees to the shareholder servicing agent to cause services to be
provided to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and services
may include, but are not limited to, providing office space, equipment,
telephone facilities, and various clerical, supervisory, computer, and other
personnel as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses.
PORTFOLIO TRANSACTIONS
Portfolio transactions for each Fund are placed with those securities brokers
and dealers that the Adviser believes will provide the best value in transaction
and research services for that Fund, either in a particular transaction or over
a period of time. In valuing brokerage services, the Adviser makes a judgment as
to which brokers are capable of providing the most favorable net price (not
necessarily the lowest commission) and the best execution in a particular
transaction. Best execution connotes not only general competence and reliability
of a broker, but specific expertise and effort of a broker in overcoming the
anticipated difficulties in fulfilling the requirements of particular
transactions, because the problems of execution and the required skills and
effort vary greatly among transactions. Although some transactions involve only
brokerage services, many involve research services as well. In valuing research
services, the Adviser makes a judgment of the usefulness of research and other
information provided by a broker to the Adviser in managing a Fund's investment
portfolio. In some cases, the information, e.g., data or recommendations
concerning particular securities, relates to the specific transaction placed
with the broker, but for the greater part the research consists of a wide
variety of information concerning companies, industries, investment strategy and
economic, financial and political conditions and prospects, useful to the
Adviser in advising the Funds. The Adviser is the principal source of
information and advice to the Funds, and is responsible for making and
initiating the execution of the investment decisions for each Fund. However, the
Trustees recognizes that it is important for the Adviser, in performing its
responsibilities to the Fund, to continue to receive and evaluate the broad
spectrum of economic and financial information that many securities brokers have
customarily furnished in connection with brokerage transactions, and that in
compensating brokers for their services, it is in the interest of the Funds to
take into account the value of the information received for use in advising the
Funds. Consequently, the commission paid to brokers providing research services
may be greater that the amount of commission another broker would charge for the
same transaction. The extent, if any, to which the obtaining of such information
may reduce the expenses of the Adviser in providing management services to the
Funds is not determinable. In addition, it is understood by the Trustee that
other clients of the Adviser might also benefit from the information obtained
for the Funds, in the same manner that the Funds might also benefit from
information obtained by the Adviser in performing services to others. The
reasonableness of brokerage commissions paid by the Funds in relation to
transaction and research services received is evaluated by the staff of the
Adviser on an ongoing basis. The general level of brokerage charges and other
aspects of the Fund's portfolio transactions are reviewed periodically by the
Trustees. Transactions of the Funds in the over-the-counter market and the third
market are executed with primary market makers acting as principal except where
it is believed that better prices and execution may be obtained otherwise.
Although investment decisions for the Funds are made independently from those
for other investment advisory clients of the Adviser, it may develop that the
same investment decision is made for both a Fund and one or more other advisory
clients. If both a Fund and other clients purchase or sell the same class of
securities on the same day, the transactions will be allocated as to amount and
price in a manner considered equitable to each. The Funds do not purchase
securities with a view to rapid turnover. However, there are no limitations on
the length of time that portfolio securities must be held. Portfolio turnover
can occur for a number of reasons, including general conditions in the
securities market, more favorable investment opportunities in other securities,
or other factors relating to the desirability of holding or changing a portfolio
investment. A high rate of portfolio turnover would result in increased
transaction expense, which must be borne by the Fund. High portfolio turnover
may also result in the realization of capital gains or losses, and to the extent
net short-term capital gains are realized, any distributions resulting from such
gains will be considered ordinary income for federal income tax purposes. The
portfolio turnover rates for the Funds are set forth in the prospectus under
"Financial Highlights." The following table shows the aggregate brokerage
commissions paid by each Fund during the period indicated in transactions
directed to brokers because of research services provided by those brokers, as
well as the aggregate dollar amount involved in those transactions:
FISCAL
YEAR ENDED AUGUST 31, 1998
Amount of
FUND COMMISSIONS
TRANSACTIONS
Equity Fund
$114,454 $66,387,741
Premier Fund $
29,387 $16,407,438
For the period from September 29, 1997 (date of initial public investment), to
August 31, 1998, the Equity Fund, the Premier Fund, the Intermediate Bond Fund,
and the Tax-Free Bond Fund paid total brokerage commissions of $127,149,
$32,809, $0, and $0, respectively. Since the International Equity Fund did not
commence operations prior to August 31, 1998, it did not pay any brokerage
commissions. DISTRIBUTION PLAN AND AGREEMENT The Trust has adopted a
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940 and a form of Distribution Agreement. These arrangements
permit the payment of fees to the Distributor to stimulate distribution
activities and to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances
and goals. The Distributor may select certain entities to provide sales and/or
administrative services as agents for holders of Plan shares. These activities
and services may include, but are not limited to, marketing efforts, providing
office space, equipment, telephone facilities, and various clerical,
supervisory, computer, and other personnel as necessary or beneficial to
establish and maintain shareholder accounts and records, processing purchase and
redemption transactions and automatic investments of client account cash
balances, answering routine client inquiries, and assisting clients in changing
dividend options, account designations, and addresses; and providing such other
services as the Funds reasonably request. Such entities will receive fees from
the Distributor based upon Plan shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Distributor. The Funds' Plan is a
compensation type plan. As such, the Funds make no payments to the Distributor
except as described above. Therefore, the Funds do not pay for unreimbursed
expenses of the Distributor, including amounts expended by the Distributor in
excess of amounts received by it from the Funds, interest, carrying or other
financing charges in connection with excess amounts expended, or the
Distributor's overhead expenses. However, the Distributor may be able to recover
such amounts or may earn a profit from future payments made by the Funds under
the Plan. By adopting the Plan, the Trustees expect that the Funds will be able
to achieve a more predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio management and assist
the Funds in pursuing their investment objectives. By identifying potential
investors whose needs are served by a Fund's objective, and properly servicing
these accounts, it may be possible to curb sharp fluctuations in rates of
redemptions and sales. Other benefits, which may be realized under either
arrangement, may include: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts. For the fiscal
year ended August 31, 1998, the Funds paid no fees pursuant to the 12b-1 Plan.
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Funds, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Funds may reasonably request.
CONVERSION TO FEDERAL FUNDS
It is the Funds' policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds before shareholders begin to
earn dividends. Federated Shareholder Services Company acts as the shareholder's
agent in depositing checks and converting them to federal funds.
VALUATION OF ASSETS VALUES
Values of portfolio securities of the Funds are determined as follows:
o for domestic equity securities and foreign securities, according to the
last reported sales price on a recognized securities exchange, if
available;
o in the absence of reported sales prices for domestic equity securities,
according to the mean between the last closing bid and asked prices;
o in the absence of reported sales prices for foreign securities or if the
foreign security is traded over-the-counter, according to the last
reported bid price;
o for domestic bonds and other fixed income securities, at the last reported
sales prices on a national securities exchange if available; otherwise as
determined by an independent pricing service;
o for domestic short-term obligations, according to the mean between bid
and asked price as furnished by an independent pricing service;
o for short-term obligations with remaining maturities of less than 60 days
at the time of purchase, at amortized cost, which approximates fair value;
or
o at fair value as determined in good faith by the Trustees.
If a security is traded on more than one exchange, the price on the primary
market for that security, as determined by the Funds' Adviser, is used. Prices
provided by independent pricing services may be determined without relying
exclusively on quoted prices and may reflect institutional trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data. The Funds will value futures
contracts, and options on stocks, stock indices and futures contracts at their
market values established by the exchanges at the close of trading on such
exchanges unless the Trustees determine in good faith that another method of
valuing these positions is necessary.
<PAGE>
VALUATION OF FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing their net asset value, the
Funds value foreign securities at the latest closing price on the exchange on
which they are traded immediately prior to the closing of the New York Stock
Exchange. Certain foreign currency exchange rates may also be determined at the
latest rate prior to the closing of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
New York Stock Exchange. If such events materially affect the value of portfolio
securities, these securities may be valued at their fair value as determined in
good faith by the Trustees, although the actual calculation may be done by
others. REDEMPTION IN KIND Although the Trust intends to redeem shares in cash,
it reserves the right under certain circumstances to pay the redemption price in
whole or in part by a distribution of securities from a Fund's portfolio. To the
extent available, such securities will be readily marketable. Redemption in kind
will be made in conformity with applicable Securities and Exchange Commission
rules, taking such securities at the same value employed in determining net
asset value and selecting the securities in a manner the Trustees determine to
be fair and equitable. The Trust has elected to be governed by Rule 18f-1 under
the Investment Company Act of 1940, which obligates the Trust to redeem shares
for any one shareholder in cash only up to the lesser of $250,000 or 1% of a
Fund's net asset value during any 90-day period. Redemption in kind is not as
liquid as a cash redemption. If redemption is made in kind, shareholders
receiving their securities and selling them before their maturity could receive
less than the redemption value of their securities and could incur transaction
costs. EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any affiliate thereof from sponsoring, organizing or controlling a registered,
open-end investment company continuously engaged in the issuance of its shares,
and from issuing, underwriting, selling or distributing securities in general.
Such laws and regulations do not prohibit such a holding company or affiliate
from acting as investment adviser, transfer agent, or custodian to such an
investment company or from purchasing shares of such a company as agent for, and
upon the order of, their customers. Some entities providing services to the
Trust are subject to such banking laws and regulations. They believe, based on
the advice of its counsel, that they may perform those services for the Trust
contemplated by any agreement entered into with the Trust without violating
those laws or regulations. Changes in either federal or state statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations,
could prevent these entities from continuing to perform all or a part of the
above services. If this happens, the Trustees would consider alternative means
of continuing available services. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences. MASSACHUSETTS PARTNERSHIP LAW Under certain circumstances,
shareholders may be held personally liable as partners under Massachusetts law
for obligations of the Trust. To protect its shareholders, the Trust has filed
legal documents with Massachusetts that expressly disclaim the liability of its
shareholders for acts or obligations of the Trust. These documents require
notice of this disclaimer to be given in each agreement, obligation, or
instrument the Trust or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX STATUS
THE FUNDS' TAX STATUS
The Funds will pay no federal income tax because each Fund expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, each Fund must, among other
requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
There are tax uncertainties with respect to whether increasing rate securities
will be treated as having an original issue discount. If it is determined that
the increasing rate securities have original issue discount, a holder will be
required to include as income in each taxable year, in addition to interest paid
on the security for that year, an amount equal to the sum of the daily portions
of original issue discount for each day during the taxable year that such holder
holds the security. There may also be tax uncertainties with respect to whether
an extension of maturity on an increasing rate note will be treated as a taxable
exchange. In the event it is determined that an extension of maturity is a
taxable exchange, a holder will recognize a taxable gain or loss, which will be
a short-term capital gain or loss if the holder holds the security as a capital
asset, to the extent that the value of the security with an extended maturity
differs from the adjusted basis of the security deemed exchanged therefor.
FOREIGN TAXES
Investment income on certain foreign securities may be subject to foreign
withholding or other taxes that could reduce the return on these securities. Tax
treaties between the United States and foreign countries, however, may reduce or
eliminate the amount of foreign taxes to which a Fund would be subject.
Shareholders are required to hold International Equity Fund shares for a
specified period to claim a foreign tax credit. However, if a Fund may invest in
the stock of certain foreign corporations that constitute a Passive Foreign
Investment Company (PFIC), then federal income taxes may be imposed on a Fund
upon disposition of PFIC investments. SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to the Equity Fund, the International Equity Fund or the Premier Fund
if those Funds were regular corporations, and to the extent designated by those
Funds as so qualifying. These dividends, and any short-term capital gains are
taxable as ordinary income. CAPITAL GAINS
Capital gains, when experienced by a Fund, could result in an increase in
dividends. Capital losses could result in a decrease in dividends. When a Fund
realizes net long-term capital gains, it will distribute them at least once
every 12 months. TOTAL RETURN The average annual total return for a Fund is the
average compounded rate of return for a given period that would equate a $1,000
initial investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned at the
end of the period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the period
by any additional shares, assuming the quarterly reinvestment of any dividends
and distributions. The cumulative total returns for the period from September
29, 1997 (date of initial public investment) to August 31, 1998, for the Equity
Fund, the Premier Fund, the Intermediate Bond Fund, and the Tax-Free Bond Fund
were (3.92%), (14.34%), 5.94%, and 2.12%, respectively. Since the International
Equity Fund did not commence operations prior to August 31, 1998, there is no
similar performance information. Cumulative total return reflects a Fund's total
performance over a specific period of time. YIELD The yield is determined by
dividing the net investment income per share (as defined by the Securities and
Exchange Commission) earned by a Fund over a thirty-day period by the offering
price per share of the Fund on the last day of the period. This value is
annualized using semi-annual compounding. This means that the amount of income
generated during the thirty-day period is assumed to be generated each month
over a twelve-month period and is reinvested every six months. The yield does
not necessarily reflect income actually earned by a Fund because of certain
adjustments required by the Securities and Exchange Commission and, therefore,
may not correlate to the dividends or other distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a Fund,
performance will be reduced for those shareholders paying those fees. The yields
for the thirty-day period ended August 31, 1998, for the Equity Fund, the
Premier Fund, the Intermediate Bond, Fund, and the Tax-Free Bond Fund were
0.91%, 0.05%, 5.13%, and 3.47%, respectively. Since the International Equity
Fund did not commence operations prior to August 31, 1998, there is no similar
performance information.
<PAGE>
TAX-EQUIVALENT YIELD (TAX-FREE BOND FUND ONLY)
The tax-equivalent yield of the Tax-Free Bond Fund is calculated similarly to
the yield, but is adjusted to reflect the taxable yield that this Fund would
have had to earn to equal its actual yield, assuming a 39.6% tax rate (the
maximum marginal federal rate for individuals) and assuming that income is 100%
tax-exempt. The Tax-Free Bond Fund's tax-equivalent yield for the thirty-day
period ended August 31, 1998, was 5.75%. TAX-EQUIVALENCY TABLE
The Tax-Free Bond Fund may also use a tax-equivalency table in advertising and
sales literature. The interest earned by the municipal bonds in the Fund's
portfolio generally remains free from federal income tax* and is often free from
state and local taxes as well. As the table on the next page indicates, a
"tax-free" investment is an attractive choice for investors, particularly in
times of narrow spreads between tax-free and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1998
STATE OF NEBRASKA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
20.01% 34.68% 37.68% 42.68% 46.28%
JOINT $1- $42,351- $102,301- $155,951- OVER
RETURN 42,350 102,300 155,950 278,450 $278,450
SINGLE $1- $25,351- $61,401- $128,101- OVER
RETURN 25,350 61,400 128,100 278,450 $278,450
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
2.00% 2.50% 3.06% 3.21% 3.49% 3.72%
2.50% 3.13% 3.83% 4.01% 4.36% 4.65%
3.00% 3.75% 4.59% 4.81% 5.23% 5.58%
3.50% 4.38% 5.36% 5.62% 6.11% 6.52%
4.00% 5.00% 6.12% 6.42% 6.98% 7.45%
4.50% 5.63% 6.89% 7.22% 7.85% 8.38%
5.00% 6.25% 7.65% 8.02% 8.72% 9.31%
5.50% 6.88% 8.42% 8.83% 9.60% 10.24%
6.00% 7.50% 9.19% 9.63% 10.47% 11.17%
6.50% 8.13% 9.95% 10.43% 11.34% 12.10%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional state
and local taxes paid on comparable taxable investments were not used to
increase federal deductions.
<PAGE>
TAXABLE YIELD EQUIVALENT FOR 1998
MULTI-STATE MUNICIPAL FUND
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
JOINT $1- $42,351- $102,301- $155,951- OVER
RETURN 42,350 102,300 155,950 278,450 $278,450
SINGLE $1- $25,351- $61,401- $128,101- OVER
RETURN 25,350 61,400 128,100 278,450 $278,450
Tax-Exempt
Yield Taxable Yield Equivalent
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional state
and local taxes paid on comparable taxable investments were not used to
increase federal deductions. The chart above is for illustrative purposes
only. It is not an indicator of past or future performance of Fund shares.
*Some portion of the Tax-Free Bond Fund's income may be subject to the
federal alternative minimum tax and state and local income taxes.
<PAGE>
PERFORMANCE COMPARISONS
A Fund's performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is invested;
changes in interest rates and market value of portfolio securities; changes in
Fund or class expenses; the relative amount of Fund cash flow; and various other
factors. Investors may use financial publications and/or indices to obtain a
more complete view of a Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of any
index used, prevailing market conditions, portfolio compositions of other funds,
and methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
o MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST INDEX
(EAFE) is a market capitalization weighted foreign securities index, which
is widely used to measure the performance of European, Australian and New
Zealand, and Far Eastern stock markets. The index covers approximately
1,020 companies drawn from 18 countries in the above regions. The index
values its securities daily in both U.S. dollars and local currency and
calculates total returns monthly. EAFE U.S. dollar total return is a net
dividend figure less Luxembourg withholding tax. The EAFE is monitored by
Capital International, S.A., Geneva, Switzerland.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific
period of time. From time to time, a Fund will quote its Lipper ranking in
the growth and income category in advertising and sales literature.
o CONSUMER PRICE INDEX is generally considered to be a measure of inflation.
o DOW JONES INDUSTRIAL AVERAGE ("DJIA") is an unmanaged index representing
share prices of major industrial corporations, public utilities, and
transportation companies. Produced by the Dow Jones & Company, it is cited
as a principal indicator of market conditions.
o STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, financial,
and public utility companies. The Standard & Poor's index assumes
reinvestment of all dividends paid by stocks listed on the index. Taxes
due on any of these distributions are not included, nor are brokerage or
other fees calculated in the Standard & Poor's figures.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUES. MUTUAL FUND VALUES rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
o BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published
in the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan Statistical
Areas. Account minimums range upward from $2,500 in each institution and
compounding methods vary. If more than one rate is offered, the lowest
rate is used. Rates are subject to change at any time specified by the
institution.
o THE S&P/BARRA VALUE INDEX AND THE S&P/BARRA GROWTH INDEX are constructed
by Standard & Poor's and BARRA, Inc., an investment technology and
consulting company, by separating the S&P 500 Index into value stocks and
growth stocks. The S&P/BARRA Growth and S&P/BARRA Value Indices are
constructed by dividing the stocks in the S&P 500 Index according to their
price-to-book ratios. The S&P/BARRA Growth Index, contains companies with
higher price-to-earnings ratios, low dividends yields, and high earnings
growth (concentrated in electronics, computers, health care, and drugs).
The Value Index contains companies with lower price-to-book ratios and has
50% of the capitalization of the S&P 500 Index. These stocks tend to have
lower price-to-earnings ratios, high dividend yields, and low historical
and predicted earnings growth (concentrated in energy, utility and
financial sectors). The S&P/BARRA Value and S&P/BARRA Growth Indices are
capitalization-weighted and rebalanced semi-annually. Standard &
Poor's/BARRA calculates these total return indices with dividends
reinvested.
o STANDARD & POOR'S MIDCAP 400 STOCK PRICE INDEX, a composite index of 400
common stocks with market capitalizations between $200 million and $7.5
billion in industry, transportation, financial, and public utility
companies. The Standard & Poor's index assumes reinvestment of all
dividends paid by stocks listed on the index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
in the Standard & Poor's figures.
o MERRILL LYNCH 1-3 YEAR TREASURY INDEX is an unmanaged index tracking
short-term U.S. government securities with maturities between 1 and 2.99
years. The index is produced by Merrill Lynch, Pierce, Fenner & Smith,
Inc.
O MERRILL LYNCH CORPORATE & GOVERNMENT MASTER INDEX is an unmanaged index
comprised of approximately 4,821 issues which include corporate debt
obligations rated BBB or better and publicly issued, non-convertible
domestic debt of the U.S. government or any agency thereof. These quality
parameters are based on composites of ratings assigned by Standard &
Poor's and Moody's Investors Service, Inc. Only notes and bonds with a
minimum maturity of one year are included.
o MERRILL LYNCH CORPORATE A-RATED (1-3 YEAR) BOND INDEX is a universe of
corporate bonds and notes with maturities between 1-3 years and rated A3
or higher.
o LEHMAN BROTHERS GOVERNMENT/CORPORATE (TOTAL) INDEX is comprised of
approximately 5,000 issues which include: non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed
by the U.S. government and quasi-federal corporation; and publicly issued,
fixed rate, non-convertible domestic bonds of companies in industry,
public utilities, and finance. The average maturity of these bonds
approximates nine years. Traced by Lehman Brothers, Inc., the index
calculates total return for one-month, three-month, twelve-month, and
ten-year periods and year-to-date.
o LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX (5-10) is composed of all bonds
that are investment grade rated Baa or higher by Moody's or BBB or higher
by S&P, if unrated by Moody's. Issues must have maturities between 5 and
9.99 years. Total return comprises price appreciation/depreciation and
income as a percentage of the original investment.
o LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a universe
of government and corporate bonds rated BBB or higher with maturities
between 1-10 years.
o THE SALOMON BROTHERS TOTAL RATE-OF-RETURN INDEX for mortgage pass through
securities reflects the entire mortgage pass through market and reflects
their special characteristics. The index represents data aggregated by
mortgage pool and coupon within a given sector. A market weighted
portfolio is constructed considering all newly created pools and coupons.
o THE MERRILL LYNCH TAXABLE BOND INDICES include U.S. Treasury and agency
issues and were designed to keep pace with structural changes in the fixed
income market. The performance indicators capture all rating changes, new
issues, and any structural changes of the entire market.
o LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is a universe of fixed
rate securities backed by mortgage pools of Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corp. (FHLMC), and Federal
National Mortgage Association (FNMA).
o LEHMAN BROTHERS MUNICIPAL INDEX/ 7 YEAR is an unmanaged index of municipal
bonds issued after January 1, 1991 with a minimum credit rating of at
least Baa, been issued as part of a deal of at least $50 million, have a
maturity value of at least $3 million and a maturity range of 4-6 years.
As of January 1996, the index also includes zero coupon bonds and bonds
subject to the Alternative Minimum Tax.
o LEHMAN BROTHERS FIVE-YEAR STATE GENERAL OBLIGATIONS BONDS is an index
comprised of all state general obligation debt issues with maturities
between four and six years. These bonds are rated A or better and
represent a variety of coupon ranges. Index figures are total returns
calculated for one, three, and twelve month periods as well as
year-to-date. Total returns are also calculated as of the index inception,
December 31, 1979.
o RUSSELL 2000 SMALL STOCK INDEX is an unmanaged capitalization weighted
index consisting of 2,000 small capitalization common stocks. Investments
cannot be made in an index.
o FINANCIAL TIMES ACTUARIES INDICES--including the FTA-World Index (and
components thereof), which are based on stocks in major world equity
markets.
Investors may also consult the fund evaluation consulting universes listed
below. Consulting universes may be composed of pension, profit sharing,
commingled, endowment/foundation, and mutual funds.
o FIDUCIARY CONSULTING GRID UNIVERSE, for example, is composed of over 1,000
funds, representing 350 different investment managers, divided into
subcategories based on asset mix. The funds are ranked quarterly based on
performance and risk characteristics.
o SEI DATA BASE for equity funds includes approximately 900 funds,
representing 361 money managers, divided into fund types based on investor
groups and asset mix. The funds are ranked every three, six, and twelve
months.
o MERCER MEIDINGER, INC. compiles a universe of approximately 600 equity
funds, representing about 500 investment managers, and updates their
rankings each calendar quarter as well as on a one, three, and five
year basis.
o BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published
in the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan Statistical
Areas. Account minimums range upward from $2,500 in each institution and
compounding methods vary. If more than one rate is offered, the lowest
rate is used. Rates are subject to change at any time specified by the
institution.
Advertising and other promotional literature may include charts, graphs and
other illustrations using a Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding, dollar
cost averaging, and systematic investment. In addition, a Fund can compare its
performance, or performance for the types of securities in which it invests, to
a variety of other investments, such as bank savings accounts, certificates of
deposit, and Treasury bills. ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for a Fund may include discussions of economic,
financial and political developments and their effect on the securities market.
Such discussions may take the form of commentary on these developments by Fund
portfolio managers and their views and analysis on how such developments could
affect a Fund. In addition, advertising and sales literature may quote
statistics and give general information about mutual fund industry, including
the growth of the industry, from sources such as the Investment Company
Institute ("ICI"). For example, according to the ICI, thirty-seven percent of
American households are pursuing their financial goals through mutual funds.
These investors, as well as business and institutions, have entrusted over $4.4
trillion to the more than 6,700 mutual funds available. FINANCIAL STATEMENTS The
financial statements for the Great Plans Funds for the fiscal year ended August
31, 1998 are incorporated by reference to the Annual Report to Shareholders of
the Great Plains Funds dated August 31, 1998 (File No. 811-8281). A copy of the
Annual Report must accompany this Statement of Additional Information.
Cusip 391163102
Cusip 391163201
Cusip 391163300
Cusip 391163409
Cusip 391163508
G02180 02 (10/98)
