As filed with the Securities and Exchange Commission on February 28, 1997
Securities Act Registration No. 33-88756
Investment Company Act Registration No. 811-8958
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-1A
STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 3 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 3 X
(Check appropriate box or boxes.)
THE JEFFERSON FUND GROUP TRUST
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(Exact name of Registrant as Specified in Charter)
839 N. Jefferson Street
Milwaukee, Wisconsin 53202
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(Address of Principal Executive Offices) (Zip Code)
(800) 216-9786
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(Registrant's Telephone Number, including Area Code)
Copy to:
Lawrence Kujawski
President Scott E. Early
The Jefferson Fund Group Trust Foley & Lardner
839 N. Jefferson Street 330 North Wabash Avenue, Suite 3300
Milwaukee, Wisconsin 53202 Chicago, Illinois 60611
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(Name and Address of Agent for Service)
Registrant has registered an indefinite number or amount of shares of beneficial
interest, no par value, under the Securities Act of 1933 pursuant to Rule 24f-2
of the Investment Company Act of 1940. Registrant filed a Rule 24f-2 Notice for
the Registrant's fiscal year ended October 31, 1996 on December 27, 1996.
Registrant will file its required Rule 24f-2 Notice for Registrant's fiscal year
ending October 31, 1997 on or about December 27, 1997.
It is proposed that this filing become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
X on February 28, 1997, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of Rule 485
The Exhibit Index is located at page of the sequential numbering system.
THE JEFFERSON FUND GROUP TRUST
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and the
Statement of Additional Information of the responses to the Items of Parts A and
B of Form N-1A.)
Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information
--------------------- ----------------------------------------
Part A - INFORMATION REQUIRED IN PROSPECTUS
- --------------------------------------------
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights
Information
4. General Description Introduction; Investment Objectives
of Registrant and Policies
5. Management of the Management of the Fund; Brokerage
Fund Transactions; Capital Structure
5A. Management's Discussion *<F1>
of Fund Performance
6. Capital Stock and Dividends, Distributions and Taxes;
Other Securities Capital Structure; Shareholder
Reports
7. Purchase of Securities Determination of Net Asset Value;
Being Offered Purchase of Shares; Alternative Purchase
Agreements; Exchange Privilege; Distributor
and Distribution and Servicing Plans;
Dividend Reinvestment; Retirement Plans
8. Redemption or Repurchase How to Redeem; Exchange Privilege
9. Legal Proceedings *<F1>
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and *<F1>
History
13. Investment Objectives Investment Restrictions; Investment
and Policies Considerations
14. Management of the Trustees and Officers of the Fund
Registrant
15. Control Persons and Included in Prospectus under "Capital
Principal Holders Structure"
of Securities
16. Investment Advisory Investment Advisor, Administrator,
and Other Service Custodian, Transfer Agent and Accounting
Services Agent; Distributor and
Distribution and Servicing
Plans; Independent Accountants
17. Brokerage Allocation Allocation of Portfolio Brokerage
18. Capital Stock and Included in Prospectus under
Other Securities "Capital Structure"
19. Purchase, Redemption Included in Prospectus under
and Pricing of "Determination of Net Asset Value;"
Securities Being "Dividend Reinvestment;"
"Retirement Plans;" "Contingent"
Deferred Sales Charge -- Class A
or B Shares;" "Distributor and Distribution
and Servicing Plans;" "How to Redeem;" and
"Exchange Privilege"
20. Tax Status Taxes
21. Underwriters Distributor and Distribution and Servicing
Plans
22. Calculation of Per- Calculation of Total Return
formance Data
23. Financial Statements Report of Independent Accountants;
Financial Statements
*<F1>Answer negative or inapplicable
P R O S P E C T U S FEBRUARY 28, 1997
THE JEFFERSON FUND GROUP TRUST
JEFFERSON GROWTH AND INCOME FUND
The Jefferson Fund Group Trust is an open-end, management investment company
currently consisting of one mutual fund -- JEFFERSON GROWTH AND INCOME FUND (the
"Fund"). The Fund's investment objectives are to produce long-term capital
appreciation and current income principally through investing in equity
securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. Investors are advised to
read this Prospectus and retain it for future reference. This Prospectus does
not set forth all of the information included in the Registration Statement and
Exhibits thereto which the Fund has filed with the Securities and Exchange
Commission. A Statement of Additional Information, dated February 28, 1997,
which is a part of such Registration Statement is incorporated by reference
in this Prospectus. Copies of the Statement of Additional Information will be
provided promptly without charge to each person to whom a Prospectus is
delivered upon written or telephone request. Written requests should be made
by writing to: The Jefferson Fund Group Trust, c/o Firstar Trust Company,
Mutual Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 (for
overnight and express mail, to: The Jefferson Fund Group Trust, c/o Firstar
Trust Company, Mutual Fund Services, 615 East Michigan Street, Milwaukee,
Wisconsin 53202), and telephone requests should be made by calling
(800) 216-9785.
THE JEFFERSON FUND GROUP TRUST
(800) 216-9785
The JEFFERSON FUND GROUP TRUST
JEFFERSON GROWTH AND INCOME FUND
TABLE OF CONTENTS
Page No.
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EXPENSE INFORMATION 2
FINANCIAL HIGHLIGHTS 4
INTRODUCTION 5
RISK FACTORS 5
INVESTMENT OBJECTIVES AND 5
MANAGEMENT OF THE FUND 9
DETERMINATION OF NET ASSET VALUE 11
PURCHASE OF SHARES 11
GENERAL 13
ALTERNATIVE PURCHASE ARRANGEMENTS 14
HOW TO REDEEM 18
EXCHANGE PRIVILEGE 21
DISTRIBUTOR AND DISTRIBUTION AND SERVICING PLANS 22
RETIREMENT PLANS 23
DIVIDEND REINVESTMENT 24
DIVIDENDS, DISTRIBUTIONS AND TAXES 24
BROKERAGE TRANSACTIONS 24
CAPITAL STRUCTURE 25
SHAREHOLDER REPORTS 26
PERFORMANCE INFORMATION 26
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS 27
---------------------------------
EXPENSE INFORMATION
CLASS A CLASS B
SHAREHOLDER TRANSACTION EXPENSES SHARES SHARES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price at time of purchase) 5.5% None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price at time
of purchase) None None
Maximum Contingent Deferred Sales Charge (as a percentage
of net asset value at time of purchase) None 5.0%
Exchange Fee*<F2> None None
Redemption Fee**<F3> None None
ANNUAL FUND OPERATING EXPENSES
AFTER EXPENSE REIMBURSEMENTS CLASS A CLASS B
(as a percentage of average net assets) SHARES SHARES
Management Fees .60% .60%
12b-1 Fees***<F4> .25% 1.00%
Other Expenses (after expense reimbursements)****<F5> .30% .30%
Total Fund Operating Expenses
(after expense reimbursements)*****<F6> 1.15% 1.90%
*<F2>A fee of $5.00 is charged for each telephone exchange.
**<F3>A fee of $12.00 is charged for each wire redemption.
***<F4>12b-1 Fees which are less than or equal to .25% represent servicing fees,
and the remaining portion represent distribution fees. See "Distributor and
Distribution and Servicing Plans"
****<F5>Other expenses for the Fund are based on amounts for the fiscal year
ended October 31, 1996 and reflect expense reimbursements from Distributor.
Without such reimbursements, other expenses of Class A and Class B shares would
have been 5.11%.
*****<F6>Without expense reimbursements, the total fund operating expenses of
Class A and Class B shares would have been 5.96% and 6.71%, respectively.
Class A Shares Class B Shares
------------------------------ -------------------------------
Example: 1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
An investor would
pay the following
expenses on a
$1,000 investment,
assuming (1) 5% $66 $90 $115 $187 $69 $110 $135 $222
annual return and
(2) redemption at
the end of each time
period:
Class B Shares
-------------------------------------
1 Year 3 Years 5 Years 10 Years
An investor would pay the
following expenses on the same
investment, assuming
no redemption: $19 $60 $103 $222
THE PURPOSE OF THE PRECEDING TABLE IS TO ASSIST INVESTORS IN UNDERSTANDING THE
VARIOUS COSTS THAT AN INVESTOR IN THE FUND WILL BEAR, DIRECTLY OR INDIRECTLY.
THEY SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. THE ANNUAL FUND
OPERATING EXPENSES ARE BASED ON THE AMOUNTS SET FORTH ABOVE. THE EXAMPLE
ASSUMES A 5% ANNUAL RATE OF RETURN PURSUANT TO REQUIREMENTS OF THE SECURITIES
AND EXCHANGE COMMISSION. THIS HYPOTHETICAL RATE OF RETURN IS NOT INTENDED TO BE
REPRESENTATIVE OF PAST OR FUTURE PERFORMANCE OF THE FUND. DUE TO THE 12B-1
DISTRIBUTION FEE IMPOSED ON CLASS B SHARES, A CLASS B SHAREHOLDER OF THE FUND
MAY, DEPENDING ON THE LENGTH OF TIME THE SHARES ARE HELD, INCUR HIGHER SALES-
RELATED CHARGES THAN THE MAXIMUM PERMITTED BY THE RELEVANT RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. ON FRONT-END SALES CHARGES.
FINANCIAL HIGHLIGHTS
The financial information for a Share outstanding of the Jefferson Growth
and Income Fund during the periods shown in the table below have been audited by
Coopers & Lybrand L.L.P., independent accountants, in conjunction with
their audit of the financial statements of the Fund. The table should be read
in conjunction with the financial statements and related notes included in the
Statement of Additional Information.
September 1, 1995 1
Year Ended through <F7>
October 31, 1996 October 31, 1995
----------------- -----------------
Class A Class B Class A Class B
------- ------- ------- -------
Per share data:
Net asset value, beginning of period $10.04 $10.03 $10.00 $10.00
Income from investment operations:
Net investment income 0.27 0.21 0.04 0.03
Net realized and unrealized gains
(losses) on securities 0.87 0.83 - -
------ ------ ----- -----
Total from investment operations 1.14 1.04 0.04 0.03
Less Distributions:
Dividends from net investment
income (0.27) (0.20) - -
------ ------ ------ -----
Net asset value, end of period $10.91 $10.87 $10.04 $10.03
======= ====== ====== ======
Total Return,2<F8> 11.50% 10.49% 0.40%3 0.30%3
<F10> <F10>
Supplemental data and ratios:
Net assets, in thousands,
end of period $4,688 $412 $1,279 $133
Ratio of net expenses to average
net assets 1.15% 1.90% 1.15%4 1.90%4
<F10> <F10>
Ratio of net investment income
to average net assets 3.03% 2.28% 3.09%4 2.59%4
<F10> <F10>
Portfolio turnover rate 5<F11> 131.98% 131.98% - -
Average commission cate6<F12> $0.0884 $0.0884 - -
1<F7> Commencement of operations.
2<F9> The total return calculation does not reflect the 5.5% front end sales
charge for Class A or the 5% CDSC on Class B.
3<F8> Not annualized.
4<F10> Annualized.
5<F11> Calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued. During the period
ended October 31, 1995, there were no sales of securities.
6<F12> Average commission rate disclosure not required effective for the period
ended October 31, 1995.
INTRODUCTION
The Jefferson Fund Group Trust, of which the Fund is a diversified
series, was organized as a business trust under the laws of Delaware on January
20, 1995. It is an open-end, management investment company registered under the
Investment Company Act of 1940. As an open-end investment company, it obtains
its assets by continuously selling shares of beneficial interest, having no par
value ("Shares"), to the public. Proceeds from such sales are invested by the
Fund in securities of other companies. The resources of many investors are thus
combined and each individual investor has an interest in every one of the
securities owned thereby providing diversification in a variety of industries.
The Fund's investment adviser furnishes professional management to select and
watch over its investments. The Fund is intended for long-term investors, not
for those who may wish to redeem their shares after a short period of time. The
Fund is a member of the Jefferson family of funds.
RISK FACTORS
As discussed more fully below under "Investment Objectives and
Policies," there can be no assurance that the Fund will achieve its investment
objectives. Share prices and bond prices of even the best managed, most
profitable corporations are subject to market risk. This may result in
fluctuations in the Fund's Share price. When an investor sells shares of the
Fund, the price may be higher or lower than the price at which the shares were
purchased. In addition, special risks may be presented by the particular types
of securities in which the Fund may invest. For example, investment in lower-
rated securities is speculative and involves risks not associated with
investment in higher rated securities, including overall greater risk of non-
payment of interest and principal and potentially greater sensitivity to general
economic conditions and changes in interest rates. In addition, the price of
non-convertible debt securities may vary inversely to interest rates, i.e.,
appreciate when interest rates decline and depreciate when interest rate rise.
The Fund's investment in non-convertible debt securities may cause the price of
the shares to fluctuate in the same manner. More details on the risks involved
are set forth in the Investment Objectives and Policies section of this
Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Fund are to produce long-term capital
appreciation and current income principally through investing in equity
securities. Uniplan, Inc., the Fund's investment adviser (the "Adviser"),
anticipates that most of the time more than 50% of the Fund's portfolio will be
invested in equity securities. For this purpose, the Adviser deems common
stocks, preferred stocks and securities (including debt securities) that are
convertible into common stocks to be equity securities. As described more fully
below, the Adviser anticipates that under normal market conditions the remaining
portion of the Fund's portfolio will be invested in non-convertible debt
securities, including short-term money market instruments and U.S. Government
and agency securities. Under unusual conditions, for temporary defensive
purposes, the Fund may invest 100% of its assets in nonconvertible debt
securities.
In selecting investments, the Adviser will consider various
financial characteristics of the issuer, including historical sales and net
income, debt/equity and price/earnings ratios and book value. The Adviser will
usually place an emphasis on issuers with favorable credit and earnings
characteristics. The Adviser may also review research reports of broker-dealers
and trade publications and, in appropriate situations, may meet with management.
Greater weight will be given to internal factors, such as product or service
development, than to external factors, such as interest rate changes, commodity
price fluctuations, general stock market trends and foreign currency exchange
values.
Investors should be aware that since the major portion of the Fund's portfolio
will normally be invested in equity securities, the Fund's net asset value may
be subject to greater fluctuation than a portfolio containing a substantial
amount of fixed-income securities. There can be no assurance that the
objectives of the Fund will be realized. Nor can there be any assurance that
the Fund's portfolio will not decline in value or that any income will be
earned.
When the Adviser believes that securities other than equity securities
offer opportunity for long-term capital appreciation and current income, the
Fund may invest its assets in non-convertible debt securities. Investments in
non-convertible debt securities offer an opportunity for growth of capital
during periods of declining interest rates, when the market value of such
securities in general increases. The Fund will limit its investments in non-
convertible debt securities to those which have been assigned one of the six
highest ratings of either Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's") (or unrated but determined by the
Adviser to be of comparable quality). A Moody's rating of B (or an S&P rating of
B) is the sixth highest rating. This means that the non-convertible debt
security generally lacks the characteristics of a desirable investment.
Assurance of interest and principal payments over any long period of time may be
small. In the event a non-convertible debt security is downgraded below the
sixth highest rating after investment, the Fund may retain such security. A
description of the foregoing ratings is attached to this Prospectus as Appendix
A. A security is considered to be of "investment grade" quality if it is either
(1) rated in one of the top four rating categories by a nationally recognized
statistical rating organization ("NRSRO") (at least Baa by Moody's or BBB by
S&P) or (2) not rated by any NRSRO but determined by the Fund's Adviser to be of
comparable quality to obligations so rated. Securities rated in the fifth
highest rating category, sixth highest rating category or below are not
considered to be of investment grade and are referred to herein as "High Yield
Securities," and are commonly known as "junk bonds." These lesser rated debt
securities may involve special risks. Investments in securities rated below
investment grade that are eligible for purchase by the Fund are described as
"speculative" by both Moody's and S&P. Investment in lower rated corporate debt
securities (i.e. High Yield Securities) generally provides greater income and
increased opportunity for capital appreciation than investments in higher
quality securities, but they also typically entail greater price volatility and
principal and income risk. These High Yield Securities are regarded as
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments. The market for these securities is
relatively new, and many of the outstanding high yield securities have not
endured a major business recession. A long-term track record on default rates,
such as that for investment grade corporate bonds, does not exist for this
market. Analysis of the creditworthiness of issuers of debt securities that are
high yield may be more complex than for issuers of higher quality debt
securities. No more than 15% of the Fund's net assets will be invested in debt
securities rated below investment grade (or unrated but determined by the
Adviser to be of comparable quality).
As with other fixed-income securities, High Yield Securities are
subject to credit risk and market risk. Market risk relates to changes in a
security's value as a result of changes in interest rates. Credit risk relates
to the ability of the issuer to make payments of principal and interest. High
Yield Securities rated "BB" or "Ba" or lower by Moody's or S&P or of comparable
quality are considered to be speculative with respect to the issuer's capacity
to pay interest and repay principal.
High Yield Securities are generally subject to greater credit risk
than higher-rated securities because the issuers are more vulnerable to economic
downturns, higher interest rates or adverse issuer-specific developments. In
addition, the prices of High Yield Securities are generally subject to greater
market risk and therefore react more sharply to changes in interest rates. The
value and liquidity of High Yield Securities may be diminished by adverse
publicity and investor perceptions. Also, legislative proposals limiting the
tax benefits to the issuers or holders of taxable High Yield Securities or
requiring federally-insured savings and loan institutions to reduce their
holdings of taxable High Yield Securities have had and may continue to have
an adverse effect on the market value of these securities.
Because the market for certain High Yield Securities is relatively
new, that market may be particularly sensitive to an economic downturn or a
general increase in interest rates. Recent regulatory developments and declines
in the value of certain High Yield Securities have limited and may continue to
limit the ability of important participants in the High Yield Securities market
to maintain orderly markets in certain High Yield Securities.
Particular types of High Yield Securities may present special
concerns. Some High Yield Securities in which the Fund may invest may be
subject to redemption or call provisions that may limit increases in market
value that might otherwise result from lower interest rates while increasing the
risk that the Fund may be required to reinvest redemption or call proceeds
during a period of relatively low interest rates.
The Fund may purchase "illiquid securities," defined as securities
which may not be disposed of in the ordinary course of business within seven
days, and certain securities whose disposition is restricted by the securities
laws. The Fund may also purchase securities of unseasoned companies defined as
companies having a record of less than three years of continuous operation,
including the operation of any predecessor business of a company which came into
existence as a result of a merger, consolidation, reorganization or purchase of
substantially all of the assets of such predecessor business. The Fund may
purchase "illiquid securities" and securities of unseasoned companies so long
as no more than 10% of the Fund's net assets would be invested in such
securities after giving effect to the purchase. Within this 10% limitation,
the Fund will not invest more than 5% of its net assets in securities of issuers
that are restricted from being sold to the public without registration under the
Securities Act of 1933, including restricted securities subject to resale
pursuant to Rule 144A under the Securities Act of 1933. Illiquid securities at
present are considered to include repurchase agreements maturing in more than
seven days and certain over-the-counter options, to the extent described under
"Options Transactions - OTC Options" in the Statement of Additional Information.
Transactions in illiquid securities may involve relatively higher transaction
costs.
The Fund may invest in convertible securities. Convertible securities
are generally preferred stocks or fixed income securities that are convertible
into common stock at either a stated price or a stated rate. The price of the
convertible security will normally vary in some proportion to changes in the
price of the underlying common stock because of this conversion feature. A
convertible security may normally also provide a fixed income stream. For this
reason, the convertible security may not decline in price as rapidly as the
underlying common stock.
The Adviser will select convertible securities to be purchased by the
Fund based primarily upon its evaluation of the fundamental investment
characteristics and growth prospects of the issuer of the security. As a fixed-
income security, a convertible security tends to increase in market value when
interest rates decline and to decrease in value when interest rates rise. While
convertible securities generally offer lower interest or dividend yields than
non-convertible fixed-income securities of similar quality, their value tends to
increase as the market value of the underlying stock increases and to decrease
when the value of the underlying stock decreases.
For temporary defensive purposes, the Fund may invest all of its
assets in cash, high quality money market instruments and United States
Government or agency securities. These investments may be retained by the Fund
in amounts that assist the fund in engaging temporary defensive measures to
avoid the effects of declining securities prices.
The money market instruments in which the Fund may invest include
United States Treasury Bills and other short term U.S. Government Securities,
commercial paper rated A-3 or better by Standard & Poor's Corporation,
commercial paper master notes and repurchase agreements. Commercial paper
master notes are unsecured promissory notes issued by corporations to finance
short-term credit needs. They permit a series of short-term borrowings under a
single note. Borrowings under commercial paper master notes are payable in whole
or in part at any time, may be prepaid in whole or in part at any time, and bear
interest at rates which are fixed to known lending rates and automatically
adjusted when such known lending rates change. There is no secondary market
for commercial paper master notes. The Adviser will monitor the
creditworthiness of the issuer of the commercial paper master notes.
Repurchase agreements are agreements under which the seller of a
security agrees at the time of sale to repurchase the security at an agreed time
and price. The Fund will not enter into repurchase agreements with entities
other than banks or registered broker-dealers or invest over 25% of its net
assets in repurchase agreements, except that no such limit applies when the Fund
is investing for temporary defensive purposes. If a seller of a repurchase
agreement defaults and does not repurchase the security subject to the
agreement, the Fund will look to the collateral security underlying the seller's
repurchase agreement, including the securities subject to the repurchase
agreement, for satisfaction of the seller's obligation to the Fund. In such
event, the Fund might incur disposition costs in liquidating the collateral and
might suffer a loss if the value of the collateral declines. In addition, if
bankruptcy proceedings are instituted against a seller of a repurchase
agreement, realization upon the collateral may be delayed or limited.
The Fund may lend its portfolio securities to broker-dealers under
contracts calling for collateral in cash, U.S. Government securities or other
high quality debt securities equal to at least the market value of the
securities loaned. The Fund's performance will continue to reflect changes in
the value of the securities loaned and will also receive either interest,
through investment of cash collateral by the Fund in permissible investments, or
a fee, if the collateral is U.S. Government securities. Securities lending
involves the risk of loss of rights in the collateral or delay in recovery of
the collateral should the borrower fail financially. The Fund will normally pay
lending fees to the broker-dealer arranging the loan.
The Fund may from time to time make short sales "against the box."
While a short sale is made by selling a security the Fund does not own, a short
sale is "against the box" to the extent that the Fund contemporaneously owns or
has the right to obtain securities identical to those sold short at no added
cost. Short sales expose the Fund to the risk that it will be required to
purchase securities to cover its short position at a time when the securities
have appreciated in value, thus resulting in a loss to the Fund. Short sales
may be treated as short-term gains and/or losses for tax purposes to investors.
The Fund may purchase securities which it is eligible to purchase on a
when-issued basis, may purchase and sell such securities for delayed delivery
and may make contracts to purchase such securities for a fixed price at a future
date beyond normal settlement time ("forward commitments"). When-issued
transactions, delayed delivery purchases and forward commitments involve a risk
of loss if the value of the securities declines prior to the settlement date,
which risk is in addition to the risk of decline in the value of the Fund's
other assets. No income accrues to the purchaser of such securities prior to
delivery.
The Fund does not intend to place emphasis on short-term trading
profits. The Fund's annual portfolio turnover rate generally will not
exceed 75%. For the fiscal year ended October 31, 1996, the Fund's annual
portfolio turnover rate exceeded this amount because of a large inflow of
assets in a relatively short amount of time towards the end of the Fund's
fiscal year end. The Fund continues to believe that its annual portfolio
turnover rate generally will not exceed 75%. The annual portfolio turnover
rate indicates changes in the Fund's portfolio and is calculated by dividing
the lesser of purchases or sales of portfolio securities (excluding
securities having maturities at acquisition of one year or less) for the fiscal
year, by the monthly average of the value of the portfolio securities (excluding
securities having maturities at acquisition of one year or less) owned by the
Fund during the fiscal year. The annual portfolio turnover rate may vary widely
from year to year depending upon market conditions and prospects. High turnover
(100% or more) in any year may result in the payment by the Fund from capital of
above average amounts of brokerage commissions and could generate higher than
normal short-term capital gains.
The Fund will limit investments in American Depository Receipts of
foreign issuers to 25% of its assets. Such investments may involve risks which
are in addition to the usual risks inherent in investments in domestic issuers.
In many countries, there is less publicly available information about issuers
than is available in the reports and ratings published about companies in the
United States. Additionally, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards. Dividends and interest
on foreign securities may be subject to foreign withholding taxes, which would
reduce the Fund's income without providing a tax credit for the Fund's
stockholders. Although the Fund intends to invest in American Depository
Receipts of foreign issuers domiciled in nations which the Fund's investment
adviser considers as having stable and friendly governments, there is the
possibility of expropriation, confiscatory taxation, currency blockage or
political or social instability which could affect investments relating to
issuers domiciled in those nations.
The Fund may invest in interest rate futures contracts and securities
index futures contracts and options thereon ("futures options") that are traded
on a United States or foreign exchange or board of trade for hedging purposes.
There are several risks associated with the use of futures and futures options
for hedging purposes. There can be no guarantee that there will be a
correlation between price movements in the hedging vehicle and in the portfolio
securities being hedged. An incorrect correlation could result in a loss on
both the hedged securities in the Fund and the hedging vehicle so that the
portfolio return might have been greater had hedging not been attempted. There
can be no assurance that a liquid market will exist at a time when the Fund
seeks to close out a futures contract or a futures option position. Most
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single day; once the daily limit has been
reached on a particular contract, no trades may be made that day at a price
beyond that limit. In addition, certain of these instruments are relatively new
and without a significant trading history. As a result, there is no assurance
that an active secondary market will develop or continue to exist. Lack of a
liquid market for any reason may prevent the Fund from liquidating an
unfavorable position and the Fund would remain obligated to meet margin
requirements until the position is closed.
The Fund will only enter into futures contracts or futures options
which are standardized and traded on a U.S. or foreign exchange or board of
trade, or similar entity, or quoted on an automated quotation system. The Fund
will use financial futures contracts and related options only for "bona fide
hedging" purposes, as such term is defined in applicable regulations of the
CFTC, or, with respect to positions in financial futures and related options
that do not qualify as "bona fide hedging" positions, will enter such non-
hedging positions only to the extent that aggregate initial margin deposits plus
premiums paid by it for open futures option positions, less the amount by which
any such positions are "in-the-money," would not exceed 5% of the Fund's total
assets.
The Fund may purchase put options on securities to protect holdings in
an underlying or related security against a substantial decline in market value.
The Fund may purchase call options on securities to protect against substantial
increases in prices of securities the Fund intends to purchase pending its
ability to invest in such securities in an orderly manner. The Fund may sell
put or call options it has previously purchased, which could result in a net
gain or loss depending on whether the amount realized on the sale is more or
less than the premium and other transaction costs paid on the put or call
options which is sold. The Fund may write a call or put option only if the
option is "covered" by the Fund holding a position in the underlying securities
or by other means which permit immediate satisfaction of the Fund's obligation
as write of the option. Prior to exercise or expiration, an option may be
closed out by an offsetting purchase or sale of an option of the same series.
The purchase and writing of options involves certain risks. During
the option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price. If a
put or call option purchased by the Fund is not sold when it has remaining
value, and if the market price of the underlying security, in the case of a put,
remains equal to or greater than the exercise price or, in the case of a call,
remains less than or equal to the exercise price, the Fund will lose its entire
investment in the option. Also, where a put or call option on a particular
security is purchased to hedge against price movements in a related
security, the price of the put or call option may move more or less than the
price of the related security. There can be no assurance that a liquid market
will exist when the Fund seeks to close out an option position. Furthermore, if
trading restrictions or suspensions are imposed on the options market, the Fund
may be unable to close out a position.
Under certain circumstances the Fund may (a) invest in warrants, (b)
write covered call and put options or purchase put and call options, (c)
temporarily borrow money from banks for emergency or extraordinary borrowings,
(d) pledge its assets to secure borrowings, (e) purchase securities of other
investment companies, and (f) purchase and sell futures contracts and options
thereon. A more complete discussion of the circumstances in which the Fund may
engage in these activities is included in the Fund's Statement of Additional
Information. Except for the investment policies listed in subparagraph (b),
(c), (d) and (f) of this paragraph, the investment objectives and the other
policies described under this caption are not fundamental policies and may be
changed without shareholder approval. Such changes may result in the Fund
having investment objectives different from the objectives which the shareholder
considered appropriate at the time of investment in the Fund. Shareholders will
receive at least thirty days' prior written notice of any changes in the
investment objectives of the Fund.
MANAGEMENT OF THE FUND
As a Delaware business trust, the business and affairs of the Fund
are managed under the direction of its Trustees. Under an investment advisory
agreement (the "Agreement") with the Fund, Uniplan, Inc., 839 N. Jefferson
Street, Milwaukee, Wisconsin 53202 (the "Adviser"), furnishes continuous
investment advisory services and management to the Fund. In addition to the
Fund, the Adviser is the investment adviser to individual and institutional
clients with substantial investment portfolios. As of December 31, 1996, the
Adviser and its affiliates managed approximately $290 million in assets. The
Adviser was organized in 1985 and is currently controlled by Richard P.
Imperiale, who is a director and the President of the Adviser.
The Adviser supervises and manages the investment portfolio of the
Fund and, subject to such policies as the Trustees of the Fund may determine,
directs the purchase or sale of investment securities in the day-to-day
management of the Fund. Under the Agreement, the Adviser, at its own expense
and without reimbursement from the Fund, will furnish office space and all
necessary office facilities, equipment and executive personnel for making the
investment decisions necessary for managing the Fund and maintaining its
organization, and will pay the salaries and fees of all officers and Trustees of
the Fund (except the fees paid to disinterested directors or Trustees who are
affiliated with the Distributor). For the foregoing, the Adviser receives an
annual fee of .60% on the first $500,000,000 of the Fund's average net assets,
.50% of the next $500,000,000 of the Fund's average net assets and .40% of the
Fund's average net assets in excess of $1,000,000,000. Such fee will be paid
monthly. The Adviser may utilize a portion of the advisory fee to make
solicitation payments in accordance with the Investment Advisers Act of 1940.
Richard P. Imperiale, President of the Adviser since 1985, is
primarily responsible for the day-to-day management of the Fund's portfolio. He
has held this responsibility since the Fund commenced operations.
Mr. Imperiale also has served as the Chairman, Secretary and a Trustee of the
Fund since it was organized.
The Fund also has entered into an administration agreement (the
"Administration Agreement") with Firstar Trust Company (the "Administrator"),
615 East Michigan Street, Milwaukee, Wisconsin 53202. Under the Administration
Agreement, the Administrator maintains the books, accounts and other documents
required by the Act, responds to shareholder inquiries, prepares the Fund's
financial statements and tax returns, prepares certain reports and filings with
the Securities and Exchange Commission and with state Blue Sky authorities,
furnishes statistical and research data, clerical, accounting and bookkeeping
services and stationery and office supplies, keeps and maintains the Fund's
financial and accounting records and generally assists in all aspects of the
Fund's operations. The Administrator, at its own expense and without
reimbursement from the Fund, furnishes office space and all necessary office
facilities, equipment and executive personnel for performing the services
required to be performed by it under the Administration Agreement. For the
foregoing, the Administrator receives from the Fund a fee, paid monthly, based
on the Fund's average net assets, plus certain out-of-pocket expenses. The fee
varies when the Fund's average net assets exceed certain trigger points.
Notwithstanding the foregoing, the Administrator's minimum annual fee is
$20,000.
Firstar Trust Company also provides custodial, transfer agency and
accounting services for the Fund. Information regarding the fees payable by the
Fund to Firstar Trust Company for these services is provided in the Statement of
Additional Information.
The Fund will pay all of its expenses not assumed by the Adviser or
Rodman & Renshaw, Inc. ("Distributor"), including, but not limited to, the costs
of preparing and printing its registration statements required under the
Securities Act of 1933 and the Investment Company Act of 1940 and any amendments
thereto, the expenses of registering its shares with the
Securities and Exchange Commission and in the various states, the printing
and distribution cost of prospectuses mailed to existing shareholders,
the cost of trustee and officer liability insurance, reports to shareholders,
reports to government authorities and proxy statements, interest charges,
brokerage commissions, and expenses incurred in connection with portfolio
transactions. The Fund will also pay the fees of Trustees who are not officers
of the Fund, salaries of administrative and clerical personnel, association
membership dues, auditing and accounting services, fees and expenses of any
custodian or trustees having custody of Fund assets, expenses of calculating the
net asset value and repurchasing and redeeming shares, and charges and expenses
of dividend disbursing agents, registrars, and Share transfer
agents, including the cost of keeping all necessary shareholder records and
accounts and handling any problems relating thereto. In addition to any
reimbursement requirement required under the most restrictive applicable expense
limitation of state securities commissions described above, the Distributor has
agreed to reimburse the Fund for expenses in excess of 1.15% of its average net
assets for Class A Shares and 1.90% of its average net assets for Class B
Shares.
DETERMINATION OF NET ASSET VALUE
The per Share net asset value of the Fund is determined by dividing
the total value of its net assets (meaning its assets less its liabilities) by
the total number of its Shares outstanding at that time. The net asset value is
determined as of the close of regular trading (currently 4:00 p.m. Eastern time)
on the New York Stock Exchange on each day the New York Stock Exchange
is open for trading. This determination is applicable to all transactions
in Shares of the Fund prior to that time and after the previous time
as of which net asset value was determined. Accordingly, purchase orders
accepted or Shares tendered for redemption prior to the close of regular trading
on a day the New York Stock Exchange is open for trading will be valued as of
the close of trading, and purchase orders accepted or Shares tendered for
redemption after that time will be valued as of the close of the next trading
day. Orders received by the Distributor from dealers or brokers after the net
asset value is determined that day will be valued as of the close of the next
trading day even if the orders were received by the dealer or broker from its
customer prior to such determination. Purchase orders received on other than a
regular business day will be executed on the next succeeding regular business
day. The Distributor, in its sole discretion, may accept or reject any order
for purchase of Fund shares. The sale of shares will be suspended during any
period in which New York Stock Exchange is closed for other than weekends or
holidays, or if permitted by the rules of the SEC when trading on the New York
Stock Exchange is restricted or during an emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets, or during any other period permitted by the SEC for the
protection of investors.
Securities traded on any national stock exchange or quoted on
the NASDAQ National Market System will be valued on the basis of the last
sale price on the date of valuation or, in the absence of any sale on that
date, the most recent bid price. Other portfolio securities will be valued at
the most recent bid price, if market quotations are readily available. Certain
of the Fund's holdings of debt securities are valued by a pricing service.
Securities for which there are no readily available market quotations and other
assets will be valued at their fair value as determined in good faith by the
Trustees or pursuant to procedures adopted by the Trustees. Odd lot
differentials and brokerage commissions will be excluded in calculating values.
PURCHASE OF SHARES
Shares of the Fund are continuously offered through the Fund's
principal underwriter, the Distributor, and through other firms which have
dealer agreements with the Distributor ("participating brokers") or which have
agreed to act as introducing brokers for the Distributor ("introducing
brokers").
There are two ways to purchase Shares: either (1) through your
broker or dealer which has a dealer agreement or (2) by mailing an Account
Application with payment, as described below under the heading "Direct
Investment," to the Transfer Agent (if no dealer is named in the application,
the Distributor may act as dealer).
The Fund offers and sells two classes of Shares (Class A and Class
B) which may be purchased at a price equal to their net asset value per share
next determined after receipt of an order, plus a sales charge which, at the
election of the purchaser, may be imposed either (i) at the time of the purchase
in the case of Class A Shares (the "initial sales charge alternative") or (ii)
on a contingent deferred basis in the case of Class B Shares (the "deferred
sales charge alternative"). Purchase payments for Class B Shares are fully
invested at the net asset value next determined after acceptance of the trade.
Purchase payments for Class A Shares, less the applicable sales charge, are
invested at the net asset value next determined after acceptance of the trade.
Except for purchases through the Auto Invest plan and tax-qualified
programs referred to below, the minimum initial investment in the Fund is $2,500
and the minimum additional investment is $100. As discussed below, the
minimum initial IRA investment is $250 and the minimum subsequent IRA investment
is $100. For information about dealer commissions, see "Initial Sales Charge
Alternative -- Class A Shares" and "Deferred Sales Charge Alternative -Class B
Shares." Persons selling Fund shares may receive different compensation for
selling Class A and Class B Shares. Normally Fund Shares purchased through
participating brokers are held in the investor's account with that broker. No
share certificates will be issued.
DIRECT INVESTMENT: Investors who wish to invest in the Fund
directly, rather than through a participating broker, may do so by completing
the Account Application included with this Prospectus. All shareholders who
open direct accounts with the Fund will receive from the Fund individual
confirmations of each purchase, redemption, dividend or reinvestment of Fund
Shares, including the total number of Fund Shares owned as of the confirmation
date except that purchases which result from the reinvestment of dividends
and/or distributions will be confirmed once each calendar quarter. See
"Distributions" below. Information regarding direct investment or any other
features or plans offered by the Fund may be obtained by calling 800-216-9785
or by calling your broker.
PURCHASE BY MAIL: Investors who wish to invest directly may send a
completed application form to:
The Jefferson Fund Group Trust
c/o Firstar Trust Company
Mutual Fund Services, 3rd Floor
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Do not mail letters or applications by overnight courier to the post
office address. Correspondence and applications mailed by overnight courier
should be sent to:
The Jefferson Fund Group Trust
c/o Firstar Trust Company
Mutual Fund Services, 3rd Floor
615 East Michigan Street
Milwaukee, Wisconsin 53202
All applications must be accompanied by payment in the form of a
check drawn on a U.S. bank payable to The Jefferson Fund Group Trust or by
direct wire transfer. No cash will be accepted. Firstar Trust Company will
charge a $20 fee against a shareholder's account for any payment check returned
to the custodian. The shareholder will also be responsible for any loss
suffered by the Fund as a result.
Purchases are accepted subject to collection of checks at full value
and conversion into federal funds. The purchase price is based on the net asset
value next determined after the purchase order and check are accepted, even
though the check may not yet have been converted into federal funds.
Funds should be wired to: Firstar Bank of Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA #0750-00022
Firstar Trust MFS A/C #112-952-137
Credit to: The Jefferson Fund Group Trust
[Your account number and title of account,
if known]
The establishment of a new account or any additional purchases for
an existing account by wire transfer should be preceded by a phone call to
Firstar Trust Company at (800) 216-9785 to provide information for the account.
A properly signed Share purchase application marked "follow-up" must be sent for
all new accounts opened by wire transfer. Applications are subject to acceptance
by the Fund, and are not binding until so accepted. The Fund reserves the right
to reject applications in whole or part.
SUBSEQUENT PURCHASES OF SHARES: Subsequent purchases can be made as
indicated above by mailing a check with a letter describing the investment or
with the additional investment portion of a confirmation statement. The minimum
subsequent purchase is $100. All payments should be made payable to The
Jefferson Fund Group Trust and should clearly indicate the shareholder's account
number. Checks should be mailed to, or funds wired to, the locations set forth
above under "Purchase by Mail."
AUTO INVEST: The Auto Invest plan provides for periodic investments
into the shareholder's account with the Fund by means of automatic transfers of
a designated amount from the shareholder's bank account. Investments may be
made monthly, on the business day of a shareholder's choosing, and may be in any
amount subject to a minimum of $100 per month. Further information regarding
the Auto Invest plan is available from the Distributor or participating brokers.
You may enroll by completing the appropriate section of the Application that
accompanies this Prospectus.
FUND LINK: (Does not apply to shares held in broker "street name"
accounts.) Fund Link ("Fund Link") connects your Fund account with a bank
account. Fund Link may be used for subsequent purchases and for redemption and
other transactions described under "How to Redeem." Purchase transactions are
effected by electronic funds transfers from the shareholder's account at a U.S.
bank or other financial institution that is an Automated Clearing House ("ACH")
member. Investors may use Fund Link to make subsequent purchases of shares in
amounts from $100 to $10,000. To initiate such purchases, call 800-216-9785.
The Fund may accept telephone instructions from any person identifying
himself as the owner of an account. The Fund may employ reasonable procedures
to confirm that instructions communicated by telephone are genuine, and may be
liable for any losses due to unauthorized or fraudulent instructions if it
fails to employ such procedures. The Fund will require a form of personal
identification prior to acting on a caller's telephone instructions, will
provide written confirmations of such transactions and will record telephone
instructions . Fund Link is normally established within 15 days of receipt of
an Application by the Transfer Agent. Shares will be purchased on the regular
business day the Transfer Agent receives the funds through the ACH system,
provided the funds are received before the close of regular trading on the
New York Stock Exchange. If the funds are received after the close of regular
trading, the Shares will be purchased on the next regular business day. Most
transfers are completed within three business days after you call to place the
order.
Fund Link privileges may be requested on the Account Application. To
establish Fund Link on an existing account, complete the Supplemental
Application with signatures guaranteed from all shareholders of record for the
account. See "Signature Guarantee" under "General" below. Such privileges
apply to each shareholder of record for the account unless and until the
Transfer Agent receives written instructions from a shareholder of record
canceling such privileges. Changes of bank account information must be made by
completing a new Supplemental Application signed by all owners of record of the
account, with all signatures guaranteed. The Transfer Agent and the Fund may
rely on any telephone instructions believed to be genuine and will not be
responsible for any damage, loss or expenses arising out of such instructions.
The Fund reserves the right to amend, suspend or discontinue Fund Link
privileges at any time without prior notice.
GENERAL
Changes in registration or account privileges may be made in writing
to Firstar Trust Company, the Fund's transfer agent (the "Transfer Agent").
Signature guarantees may be required. See "Signature Guarantee" below.
All correspondence must include the account number and must be sent
to:
The Jefferson Fund Group Trust
c/o Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
Overnight or express mail should be directed to:
The Jefferson Fund Group Trust
c/o Firstar Trust Company
615 East Michigan Street, 3rd Floor
Milwaukee, Wisconsin 53202
SIGNATURE GUARANTEE: When a signature guarantee is called for, the
shareholder should have "Signature Guaranteed" stamped under his signature and
guaranteed by any of the following entities: U.S. banks, foreign banks having a
U.S. correspondent bank, credit unions, savings associations, U.S. registered
dealers and brokers, municipal securities dealers and brokers, government
securities dealers and brokers, national securities exchanges, registered
securities associations and clearing agencies (each an "Eligible Guarantor
Institution"). The Distributor reserves the right to reject any signature
guarantee purchase to its written signature guarantee standards or procedures,
which may be revised in the future to permit it to reject signature guarantees
from Eligible Guarantor Institutions that do not, based on credit guidelines,
satisfy such written standards or procedures. The Fund may change the signature
guarantee requirements from time to time upon notice to shareholders, which may
be given by means of a new or supplemented Prospectus.
TDD SERVICE: Firstar Trust Company, the transfer agent, offers
Telecommunication Device for the Deaf (TDD) services for hearing impaired
shareholders. The dedicated number for this service is 1-800-684-3416.
ALTERNATIVE PURCHASE ARRANGEMENTS
The alternative purchase agreements offered by the Fund enable the
investor to choose the method of purchasing Fund shares that is most beneficial
given the amount of the intended purchase, the length of time the investor
expects to hold the Shares and other circumstances. Investors should consider
whether, during the anticipated life of an intended investment in the Fund, the
accumulated continuing distribution and servicing fees plus contingent deferred
sales charges on Class B Shares would exceed the initial sales charges plus
accumulated servicing fees on Class A Shares purchased at the same time, as
well as the possibility that the anticipated higher yield of Class A Shares due
to lower ongoing charges will offset the initial sales charge paid on such
Shares.
As an illustration, investors purchasing shares of sufficient value to
qualify for sales charges of 1% or less might prefer the initial sales charge
alternative (Class A) because similar reductions are not available on the
contingent deferred sales charge for purchases under the deferred sales charge
alternative (Class B). Moreover, all Shares acquired under the initial sales
charge alternative are subject to a servicing fee but are not subject to a
distribution fee and, accordingly, such shares are expected to pay
correspondingly higher dividends on a per Share basis. Investors whose purchase
will not qualify for reduced initial sales charges may nonetheless wish to
consider the initial sales charge alternative if they expect to hold their
shares for an extended period of time, because, depending on the number of years
the investor holds the investment, the accumulated continuing distribution and
servicing fees on Class B Shares would eventually exceed the initial sales
charge plus the continuing servicing fee on Class A Shares during the life of
such an investment. However, because initial sales charges are deducted at the
time of purchase, not all of the purchase payment for Class A Shares is invested
initially in Shares.
Some investors might determine that it would be more advantageous to
utilize the deferred sales charge alternative to have all purchase payments
invested initially, although remaining subject to continuing distribution and
servicing fees and being subject to contingent deferred sales charges.
For a description of the Distribution and Servicing Plans and
distribution and servicing fees payable thereunder with respect to Class A and
Class B Shares, see "Distributor and Distribution and Servicing Plans" below.
INITIAL SALES CHARGE ALTERNATIVE --
CLASS A SHARES
Class A Shares are sold at a public offering price equal to their net
asset value per share plus a sales charge, as set forth below.
Discount or
Commission
Sales Charge to Dealers
Sales Charge as % of the as % of
as % of Net Public Public
Amount Offering Offering
Amount of Purchase Invested Price Price
- ------------------ ------------ ---------- ----------
$0-$9,999 5.82% 5.50% 4.75%
$10,000-$24,999 4.71% 4.50% 3.75%
$25,000-$49,999 3.63% 3.50% 3.00%
$50,000-$99,999 2.56% 2.50% 2.00%
$100,000-$499,999 1.52% 1.50% 1.00%
$500,000-$999,999 1.01% 1.00% 0.75%
$1,000,000 + 0%1<F13> 0%1<F13> 0.25%1<F13>
1<F13>The Distributor will pay a 0.25% commission to dealers who sell amounts
of $1,000,000 or more of the Fund's Class A Shares, which commission may be paid
in installments over the course of the year following the purchase, and the
Distributor may pay additional commissions, not exceeding 0.25% per year, to
dealers, if the shares remain outstanding. The Distributor will not pay any
commission upon the sale of Class A Shares to any of the purchasers described
below under "Sales at Net Asset Value."
The Fund receives the entire net asset value of its Class A shares
sold to investors. The Distributor receives the sales charge shown above less
any applicable discount or commission "reallowed" to participating brokers in
the amounts indicated in the table above. The Distributor may, however, elect
to reallow the entire sales charge to participating brokers for all sales with
respect to which orders are placed with the Distributor for the Fund during a
particular period. A participating broker who receives a reallowance of 90% or
more of the sales charge may be deemed to be an "underwriter" under the
Securities Act of 1933. During such periods as may from time to time be
designated by the Distributor, the Distributor may pay selected participating
dealers an additional 0.25% of the public offering price to each participating
dealer which obtains purchase orders in amounts exceeding thresholds established
by Distributor.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are issued at net asset value and are
not subject to any sales charges.
Under the circumstances described below, investors may be entitled to
pay reduced sales charges for Class A Shares.
COMBINED PURCHASE PRIVILEGE. Investors may qualify for a reduced
sales charge by combining purchases of the Class A Shares
of the Fund into a "single purchase," if the resulting purchase
totals at least $50,000. The term "single purchase" refers to: (i) a
single purchase by an individual, or concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an individual, his
spouse and their children under the age of 21 years purchasing Class A Shares of
the Fund for his, her or their own account; (ii) a single purchase by a trustee
or other fiduciary purchasing shares for a single trust, estate or fiduciary
account although more than one beneficiary is involved; or (iii) a single
purchase for the employee benefit plans of a single employer. For further
information, consult the Statement of Additional Information or call 1-800-216-
9785 or your broker.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A purchase of
additional Class A shares of the Fund may qualify for a Cumulative Quantity
Discount at the rate applicable to the discount bracket obtained by adding:
(i) the investor's current purchase;
(ii) the value (at the close of business on the day of the current
purchase) of all Class A Shares of the Fund held by the investor; and
(iii) the value of all shares described in paragraph (ii) owned by
another shareholder eligible to be combined with the investor's purchase into a
"single purchase" as defined above under "Combined Purchase Privilege."
For example, if you owned Class A Shares of the Fund worth $25,000 and
wished to purchase Class A Shares of the Fund worth an additional $30,000, the
sales charge for the $30,000 purchase would be at the 2.50% rate applicable to a
single $55,000 purchase of shares of the Fund, rather than the 5.50% rate.
An investor or participating broker must notify the Distributor
whenever a quantity discount or reduced sales charge is applicable to a purchase
and must provide the Distributor with sufficient information at the time of
purchase to verify that each purchase qualifies for the privilege or discount.
Upon such notification, the investor will receive the lowest applicable sales
charge. The quantity discounts described above may be modified or terminated at
any time.
LETTER OF INTENT. An investor may also obtain a reduced sales charge
by means of a written Letter of Intent, which expresses an intention to invest
not less than $50,000 within a period of 13 months in Class A Shares of the
Fund. Each purchase of shares under a Letter of Intent will be made at the
public offering price or prices applicable at the time of such purchase to a
single transaction of the dollar amount indicated in the Letter. At the
investor's option, a Letter of Intent may include purchases of Class A Shares of
the Fund made not more than 90 days prior to the date the Letter of Intent is
signed; however, the 13-month period during which the Letter is in effect will
begin on the date of the earliest purchase to be included and the sales charge
on any purchases prior to the Letter will not be adjusted.
Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the Fund under a single Letter of Intent. For
example, if at the time you sign a Letter of Intent to invest at least $100,000
in Class A Shares of the Fund, you and your spouse each purchase Class A Shares
of the Fund worth $30,000 (for a total of $60,000), it will only be necessary
to invest a total of $40,000 during the following 13 months in Class A Shares
of the Fund to qualify for the 1.50% sales charge on the total amount being
invested (the sales charge applicable to an investment of $100,000 in the Fund).
A Letter of Intent is not a binding obligation to purchase the full
amount indicated. The minimum initial investment under a Letter of Intent is 5%
of such amount. Shares purchased with the first 5% of such amount will be held
in escrow (while remaining registered in your name) to secure payment of the
higher sales charge applicable to the shares actually purchased in the event the
full intended amount is not purchased. If the full amount indicated is not
purchased, such escrowed shares will be involuntarily redeemed to pay the
additional sales charge applicable to the amount actually purchased, if
necessary. Dividends on escrowed shares, whether paid in cash or reinvested in
additional Fund shares, are not subject to escrow. When the full amount
indicated has been purchased, the escrow will be released.
If you wish to enter into a Letter of Intent in conjunction with your
initial investment in Class A Shares of the Fund, you should complete the
appropriate portion of the Account Application included with this Prospectus.
If you are a current Class A shareholder desiring to do so you can obtain a form
of Letter of Intent by calling 800-216-9785 or any broker participating in this
program.
SALES AT NET ASSET VALUE. The Fund may sell its Class A Shares at net
asset value without a sales charge: (1) to any Trustee or officer of the Fund;
(2) to any director or officer, or to any full-time employee or sales
representative (who has acted as such for at least 90 days), of the Adviser or
any subadviser hired by the Adviser, or of the Distributor; (3) to registered
representatives and employees of broker/dealers with whom the Distributor has
sales agreements; (4) to any qualified retirement plan for persons described
above; (5) to any officer, director or employee of a corporate affiliate of the
Adviser or the Distributor; (6) to any spouse, child, parent, grandparent,
brother or sister of any person named in (1), (2), (3) or (5) above; (7) to
employee benefit plans for employees of the Adviser, the Distributor and/or
their corporate affiliates; (8) to any employee or agent who retires from the
Adviser, the Distributor and/or a corporate affiliate of the Adviser or the
Distributor; (9) to any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the investment, the plan,
fund or foundation has assets of $5,000,000 or more or at least 100
participants; (10) to any state, county, city, department, authority or similar
agency prohibited by law from paying a sales charge; or (11) any unallocated
accounts held by any third party administrators, registered investment advisers,
trust companies and bank trust departments which exercise discretionary
authority and hold the accounts in fiduciary, agency, custodial or similar
capacity, if in the aggregate such accounts equal or exceed $1,000,000; provided
that sales to persons listed in (1) through (11) above are made upon the written
assurance of the purchaser that the purchase is made for investment purposes and
that the shares so acquired will not be resold except to the Fund. As described
above, the Distributor will not pay any initial commission to dealers upon the
sale of Class A Shares to the purchasers described in this paragraph.
PARTICIPATING BROKERS. Investment dealers and other firms provide
varying arrangements for their clients to purchase and redeem Fund Shares. Some
may establish higher minimum investment requirements than set forth above.
Firms may arrange with their clients for other investment or administrative
services. Such firms may independently establish and charge additional amounts
to their clients for such services, which charges would reduce clients' return.
Firms also may hold Fund Shares in nominee or street name as agent for and on
behalf of their customers. In such instances, the Fund's transfer agent will
have no information with respect to or control over accounts of specific
shareholders. Such shareholders may obtain access to their accounts and
information about their accounts only from their broker. In addition, certain
privileges with respect to the purchase and redemption of Shares or the
reinvestment of dividends may not be available through such firms. Some firms
may participate in a program allowing them access to their clients' accounts for
servicing including, without limitation, transfers of registration and dividend
payee changes; and may perform functions such as generation of confirmation
statements and disbursement of cash dividends. This Prospectus should be read
in connection with such firms' material regarding their fees and services.
DEFERRED SALES CHARGE ALTERNATIVE --
CLASS B SHARES
Class B Shares are sold at their current net asset value without any
initial sales charge. A contingent deferred sales charge ("CDSC") is imposed on
Class B Shares if an investor redeems an amount which causes the current value
of the investor's account for the Fund to fall below the total dollar amount of
purchase payments subject to the CDSC, except that no CDSC is imposed if the
Shares redeemed have been acquired through the reinvestment of dividends or
capital gains distributions or if the amount redeemed is derived from increases
in the value of the account above the amount of purchase payments subject to the
CDSC. All of an investor's purchase payments are invested in shares of the
Fund.
Whether a CDSC is imposed and the amount of the CDSC will depend on
the number of years since the investor made a purchase payment from which a
purchase payment for which an amount is being redeemed and the date such
purchase payment was made. Purchases are subject to the CDSC according to the
following schedule:
Year Since Purchase Percentage Contingent
Payment Was Made Deferred Sales Charge
- ------------------- ---------------------
First 5
Second 4
Third 4
Fourth 3
Fifth 3
Sixth 2
Seventh 1
Eighth and Following 0
In determining whether a CDSC is payable, it is assumed that the
purchase payment from which the redemption is made is the earliest purchase
payment (from which a redemption or exchange has not already been effected).
The following example will illustrate the operation of the CDSC:
Assume that an individual opens an account and makes a purchase
payment of $10,000 for Class B Shares of the Fund and that six months later the
value of the investor's account for the Fund has grown through investment
performance and reinvestment of distributions to $11,000. The investor then may
redeem up to $1,000 from the Fund ($11,000 minus $10,000) without incurring a
CDSC. If the investor should redeem $3,000, a CDSC would be imposed on
$2,000 of the redemption (the amount by which the investor's account for the
Fund was reduced below the amount of the purchase payment). At the rate of 5%,
the CDSC would be $100.
In determining whether an amount is available for redemption without
incurring a CDSC, the purchase payments made for all Class B Shares in the
shareholder's account with the Fund are aggregated, and the current value of all
such Shares is aggregated. Any sales charges imposed on redemptions are paid to
the Distributor.
Except as described below, for sales of Class B Shares made and
services rendered to Class B shareholders, the Distributor intends to make
payments to participating brokers, at the time the shareholder purchases Class
B shares, of up to 1% (representing .75% distribution fees and .25% servicing
fees) of the purchase amount. For sales of Class B shares made to participants
making periodic purchases of not less than $100 through certain employers'
non-qualified savings plans which are clients of a broker or dealer with which
the Distributor has an agreement with respect to such plans, no payments are
made at the time of purchase.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE. The CDSC applicable to
Class B Shares is currently waived for (i) any partial or complete redemption
in connection with a distribution without penalty under Section 72(t) of the
Internal Revenue Code of 1986, as amended (the "Code") from a qualified
retirement plan, including a Keogh or IRA (a) upon attaining age 59 1/2,
(b) as part of a series of substantially equal periodic payments, or (c) in
the case of an employer retirement plan, upon separation from service and
attaining age 55; (ii) any partial or complete redemption in connection with a
qualifying loan from an employer retirement plan; (iii) any complete redemption
in connection with a distribution from a qualified employer retirement plan in
connection with termination of employment or termination of the employer's plan
and the transfer to another employer's plan or to an IRA; (iv) any partial or
complete redemption following death or disability (as defined in the Code) of a
shareholder (including one who owns the Shares as joint tenant with his or her
spouse) from an account in which the deceased or disabled is named, provided
the redemption is requested within one year of the death or initial
determination of disability; (v) any redemption resulting from a return of an
excess contribution to a qualified employer retirement plan or an IRA; (vi)
redemptions by trustees, officers and employees of The Jefferson Fund Group
Trust and by directors, officers and employees of the Distributor and the
Adviser; (vii) redemptions effected pursuant to the Fund's right to
involuntarily redeem a shareholder's account if the aggregate net asset value
of shares held in such shareholder's account is less than a minimum account size
specified in this Prospectus; (viii) involuntary redemptions caused by operation
of law; (ix) redemption of shares of the Fund that is combined with another
fund, investment company, or personal holding company by virtue of a merger,
acquisition or other similar reorganization transaction; (x) redemptions by a
shareholder who is a participant making periodic purchases of not less than $100
through non-qualified savings plans that are clients of a broker-dealer with
which the Distributor has an agreement with respect to such purchases; (xi)
redemptions effected by trustees or other fiduciaries who have purchased shares
for employer-sponsored plans, the administrator for which has an agreement with
the Distributor with respect to such purchases; or (xii) certain periodic
redemptions under a Systematic Withdrawal Plan from an account meeting certain
minimum balance requirements, in amounts meeting certain maximums established
from time to time by the Distributor. The Distributor may require documentation
prior to waiver of the charge, including distribution letters, certification by
plan administrators, applicable tax forms, death certificates, physicians
certificates, etc.
For more information about the CDSC, call 800-216-9785.
HOW TO REDEEM
Shares may be redeemed through a participating broker, by telephone,
by submitting a written redemption request directly to the Transfer Agent (for
non-broker accounts) or through Fund Link.
A CDSC may apply to a redemption of Class B Shares. See "Purchase
of Shares." Shares are redeemed at their net asset value next determined after
a proper redemption request has been received, less any applicable CDSC. There
is no charge by the Distributor (other than applicable CDSC) with respect to
redemption; however, a participating broker who processes a redemption for an
investor may charge customary commissions for its services. Dealers and other
financial services firms are obligated to transmit orders promptly. Requests
for redemption received by dealers or other firms prior to the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) on a
regular business day and received by the Transfer Agent prior to the close of
the Distributor's business day will be confirmed at the net asset value
effective as of the closing of the Exchange on that day, less any applicable
CDSC.
DIRECT REDEMPTION: A shareholder's original Account Application
permits the shareholder to redeem by written request and by telephone (unless
the shareholder specifically elects not to utilize telephone redemptions) and to
elect one or more of the additional redemption procedures described below. A
shareholder may change the instructions indicated on his original Account
Application, or may request additional redemption options, only by transmitting
a written direction to the Transfer Agent. Requests to institute or change any
of the additional redemption procedures will require a signature guarantee.
Redemption proceeds will normally be mailed to the redeeming
shareholder within seven days or, in the case of wire transfer redemptions, sent
to the designated bank account within one business day. Fund Link redemptions
may be received by the bank on the third business day. In cases where shares
have recently been purchased by personal check, redemption proceeds will be
mailed upon the clearance of the personal check which may take up to 15 days
or more. To avoid such delay, investors should purchase shares by certified or
bank check or by wire transfer.
WRITTEN REQUESTS. (Does not apply to shares held in broker "street
name" accounts.) To redeem Shares in writing a shareholder must send the
following items to: The Jefferson Fund Group Trust, c/o Firstar Trust Company,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701: (1) a written request for
redemption signed by all registered owners exactly as the account is registered
on the Transfer Agent's records, including fiduciary titles, if any, and
specifying the account number and the dollar amount or number of Shares to be
redeemed; (2) for certain redemptions described below, a guarantee of all
signatures on the written request or, if required, as described under "Signature
Guarantee"; and (3) any additional documents which may be required by the
Transfer Agent for redemption by corporations, partnerships or other
organizations, executors, administrators, trustees, custodians or guardians,
or if the redemption is requested by anyone other than the shareholder(s) of
record. Redemption requests sent by overnight or express mail should be
directed to: The Jefferson Fund Group Trust, c/o Firstar Trust Company, Mutual
Fund Services, 3rd Floor, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
Transfers of shares are subject to the same requirements. A signature guarantee
is not required for redemptions of $50,000 or less, requested by and payable to
all shareholders of record for the account, to be sent to the address of record
for that account. To avoid delay in redemption or transfer, shareholders having
any questions about these requirements should contact the Transfer Agent in
writing or by calling 1-800-216-9785 before submitting a request. If a
redemption request is inadvertently sent to the Fund, it will be promptly
forwarded to Firstar Trust Company, but the effective date of redemption will
be delayed until the request is received by Firstar Trust Company. Requests
for redemption by telegram and requests which are subject to any special
conditions or which specify an effective date other than as provided herein
cannot be honored. REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL
ALL REQUIRED DOCUMENTS IN THE PROPER FORM HAVE BEEN RECEIVED BY THE TRANSFER
AGENT.
Shareholders who have an IRA must indicate on their redemption
requests whether or not to withhold federal income tax. Unless otherwise
indicated, these redemptions, as well as redemptions of other investment plans
not involving a direct rollover to an eligible plan, will be subject to federal
income tax withholding.
If the proceeds of the redemption (i) exceed $50,000, (ii) are to be
paid to a person other than the record owner, (iii) are to be sent to an address
other than the address of the account on the Transfer Agent's records, or (iv)
are to be paid to a corporation, partnership, trust or fiduciary, the
signature(s) on the redemption request must be guaranteed as described above,
except that the Distributor may waive the signature guarantee requirement for
redemptions up to $2,500 by a trustee of a qualified retirement plan, the
administrator for which has an agreement with the Distributor.
TELEPHONE REDEMPTIONS. (Does not apply to shares held in broker
"street name" accounts.) The Fund accepts telephone requests for redemption of
shares for amounts from $1,000 up to $50,000 within any 7 calendar day period,
except for investors who have specifically declined telephone redemption
privileges on the Account Application or elected in writing not to utilize
telephone redemptions. The proceeds of a telephone redemption will be sent to
the record shareholder at his record address. Changes in account information
must be made in a written authorization with a signature guarantee. See
"Signature Guarantee" under "General." Telephone redemptions will not be
accepted during the 30-day period following any change in an account's record
address.
By completing an Account Application, an investor agrees that the
Fund, the Distributor and the Transfer Agent shall not be liable for any loss
incurred by the investor by reason of the Fund accepting unauthorized telephone
redemption requests for his account if the Fund reasonably believes the
instructions to be genuine. Thus, shareholders risk possible losses in the
event of a telephone redemption not authorized by them. The Fund may accept
telephone redemption instructions from any person identifying himself as the
owner of an account or the owner's broker where the owner has not declined in
writing to utilize this service. The Fund will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine, and may be
liable for any losses due to unauthorized or fraudulent instructions if it fails
to employ such procedures. The Fund will require a form of personal
identification prior to acting on a caller's telephone instructions, will
provide written confirmations of such transactions and will record telephone
instructions.
A shareholder making a telephone redemption should call the Transfer
Agent at 800-216-9785 and state (i) the name of the shareholder as it appears on
the Transfer Agent's records, (ii) his account number with the Fund, (iii) the
amount to be withdrawn and (iv) the name of the person requesting the
redemption. Usually the proceeds are sent to the investor on the next Fund
business day after the redemption is effected, provided the redemption request
is received prior to the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time) that day. If the redemption request is
received after the closing of the New York Stock Exchange, the redemption is
effected on the following Fund business day at that day's net asset value and
the proceeds are usually sent to the investor on the second following Fund
business day. The Fund reserves the right to terminate or modify the telephone
redemption service at any time. During times of severe disruptions in the
securities markets, the volume of calls may make it difficult to redeem by
telephone, in which case a shareholder may wish to send a written request for
redemption as described under "Written Requests" above. Telephone
communications may be recorded by the Distributor or the Transfer Agent.
FUND LINK REDEMPTIONS. (Does not apply to shares held in broker
"street name" accounts.) If a shareholder has established Fund Link, the
shareholder may redeem shares by telephone and have the redemption proceeds sent
to a designated account at a financial institution. Fund Link is normally
established within 15 days of receipt of the Application by the Transfer Agent.
To use Fund Link for redemptions, call the Transfer Agent at 800-216-9785.
Subject to the limitations set forth above under "Telephone Redemptions," the
Distributor, the Fund and the Transfer Agent may rely on instructions by any
registered owner believed to be genuine and will not be responsible for any loss
or expense arising out of such instructions. Requests received by the Transfer
Agent prior to the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time) on a business day will be processed at the net
asset value on that day and the proceeds (less any CDSC) will normally be sent
to the designated bank account on the following business day and received by the
bank on the second or third business day. If the redemption request is received
after the close of regular trading on the New York Stock Exchange, the
redemption is effected on the following business day. Shares purchased by check
may not be redeemed through Fund Link until such shares have been owned (i.e.,
paid for) for at least 15 days. Changes in bank account information must be
made by completing a new Supplemental Application, signed by all owners of
record of the account, with all signatures guaranteed. See "Signature
Guarantee" under "General." See "Fund Link" under "Purchase of Shares" for
information on establishing the Fund Link privilege. The Fund may terminate
the Fund Link program at any time without notice to shareholders.
EXPEDITED WIRE TRANSFER REDEMPTIONS.
(Does not apply to shares held in broker "street name" accounts.) If a
shareholder has given authorization for expedited wire redemption, shares can
be redeemed and the proceeds sent by federal wire transfer to a single
previously designated bank account. Requests received by the Fund prior to the
close of the New York Stock Exchange will result in shares being redeemed that
day at the next determined net asset value (less any CDSC) and normally the
proceeds being sent to the designated bank account the following business day.
The bank must be a member of the Federal Reserve wire system. Delivery of the
proceeds of a wire redemption request may be delayed by the Fund for up to 7
days if the Transfer Agent deems it appropriate under then current market
conditions. Once authorization is on file, the Fund will honor requests by any
person identifying himself as the owner of an account or the owner's broker by
telephone at 800-216-9785 or by written instructions. The Fund cannot be
responsible for the efficiency of the Federal Reserve wire system or the
shareholder's bank. The Transfer Agent currently charges a $12.00 fee for each
payment of redemption proceeds made by wire, which will be deducted from the
shareholder's account. The shareholder is responsible for any charges imposed
by the shareholder's bank. The minimum amount that may be wired is $1,000.
The Fund reserves the right to change this minimum or to terminate the wire
redemption privilege. Shares purchased by check may not be redeemed by wire
transfer until such shares have been owned (i.e. paid for) for at least 15 days.
To change the name of the single bank account designated to receive wire
redemption proceeds, it is necessary to send a written request with signatures
guaranteed to The Jefferson Fund Group Trust, c/o Firstar Trust Company, Mutual
Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201 or via express mail or
overnight courier to The Jefferson Fund Group Trust, c/o Firstar Trust Company,
Mutual Fund Services, 3rd Floor, 615 East Michigan Street, Milwaukee, Wisconsin
53202. See "Signature Guarantee" under "General."
SYSTEMATIC WITHDRAWAL PLAN. An investor who owns or buys shares of
the Fund having a net asset value of $10,000 or more may open a Systematic
Withdrawal Plan and have a designated sum of money (not less than $100) paid
monthly to the investor or another person. Such a plan may be established by
completing the appropriate section of the Supplemental Application. If a
Systematic Withdrawal Plan is set up after the account is established providing
for payment to a person other than the record shareholder or to an address other
than the address of record, a signature guarantee is required. See "Signature
Guarantee" under "General." Shares of either class of the Fund are deposited in
a plan account and all distributions are reinvested in additional shares of that
class of the Fund at net asset value. Shares in a plan account are then
redeemed at net asset value (less any applicable CDSC) to make each withdrawal
payment. The CDSC applicable to Class B shares is waived for certain redemptions
under a plan. See "Waiver of Contingent Deferred Sales Charges" under "Deferred
Sales Charge Alternative -- Class B Shares" above.
Redemptions for the purpose of withdrawals are ordinarily made on
the business day preceding the day of payment at that day's closing
net asset value and checks are mailed on the day after the day of
payment selected by the shareholder in the Supplemental Application.
Payment will be made to any person the investor designates; however,
if the shares are registered in the name of a trustee or other fiduciary,
payment will be made only to the fiduciary, except in the case of a profit-
sharing or pension plan where payment will be made to the designee. As
withdrawal payments may include a return of principal, they cannot be considered
a guaranteed annuity or actual yield of income to the investor. The redemption
of shares in connection with Systematic Withdrawal Plan may result in a gain or
loss for tax purposes. Continued withdrawals in excess of income will reduce and
possibly exhaust invested principal, especially in the event of a market
decline. The maintenance of a Systematic Withdrawal Plan concurrently with
purchases of additional shares of the Fund would be disadvantageous to the
investor because of the CDSC that may become payable on such withdrawals
in the case of Class B shares and because of the initial sales charge in the
case of Class A shares. For this reason, the minimum investment accepted for
the Fund while a Systematic Withdrawal Plan is in effect is $1,000, and an
investor may not maintain a plan for the accumulation of shares of the Fund
(other than through reinvestment of distributions) and a Systematic Withdrawal
Plan at the same time. The cost of administering the Systematic Withdrawal
Plans for the benefit of those shareholders participating in them is borne by
the Fund as an expense of all shareholders. The Fund or the Distributor may
terminate or change the terms of the Systematic Withdrawal Plan at any time.
Because the Systematic Withdrawal Plan may involve invasion of
capital, investors should consider carefully with their own financial advisers
whether the plan and the specified amounts to be withdrawn are appropriate in
their circumstances. The Fund and the Distributor make no recommendations or
representations in this regard.
EXCHANGE PRIVILEGE
A shareholder of the Fund may, without charge, exchange at net asset
value any or all of an investment in the Fund for shares of the Portico Money
Market Fund (the "Money Market Fund"). This Exchange Privilege is a convenient
way for shareholders to buy shares in a money market fund in order to respond to
changes in their goals or market conditions. Before exchanging into the Money
Market Fund, read its prospectus. To obtain the Money Market Fund prospectus
and the necessary exchange authorization forms, call the Transfer Agent at 1-
800-216-9785. There is no charge for exchange transactions which are requested
by mail. The Transfer Agent may charge a $5.00 fee for each telephone exchange
which will be deducted from the investor's account from which the funds are
being withdrawn prior to effecting the exchange. Use of the Exchange Privilege
is subject to the minimum purchase and redemption amounts set forth in the
Prospectus for the Money Market Fund.
This Exchange Privilege also permits shareholders of the Fund to
make regular investments in an existing account with the Fund by redeeming
shares from their Money Market Fund account. There is no charge for this
service, but sales charges or CDSC may apply. These transactions must meet the
minimum purchase amounts described herein for automatic investments.
For purposes of the Exchange Privilege, exchanges into and out of
the Money Market Fund will be treated as the same Class of shares owned of the
Fund. For example, if an investor who owned Class A shares of the Fund moved an
investment from the Fund to the Money Market Fund and then decided at a later
date to move the investment back to the Fund, he or she would be deemed, once
again, to own Class A shares of the Fund and may do so without the imposition of
any additional sales charges, so long as the investment has been continuously
invested in shares of the Money Market Fund during the period between withdrawal
and re-investment. In addition, if an investor owned Class B shares of the Fund
and exchanged those shares into the Money Market Fund, the CDSC would not be
paid at the time of the exchange. Instead, the shares of the Money Market Fund
would be deemed "Class B shares" for the purpose of determining the applicable
holding period for payment of the CDSC, and for purposes of assessing the CDSC
payable upon the sale of the exchanged shares, the holding period of the shares
exchanged into the Money Market Fund will be added to the holding period of the
original Class B shares. For example, suppose an investor purchased 100 Class B
shares on January 1, 1997 and exchanged those shares into the Money Market Fund
on June 1, 1997. Suppose further that the shareholder exchanged those same
shares back into the Fund on February 1, 1998. For purposes of calculating the
CDSC holding period as of February 1, 1998, the shareholder can include both the
eight months in which he was a sahreholder of the Money Market Fund as well as
the five months in which he was a shareholder of the Fund. Thus, if the
shareholder sold the 100 Class B shares on February 2, 1998, he would pay the
CDSC applicable to shareholders that have held their shares for more than one
year.
With respect to Class B shares subject to a CDSC, if less than all
of an investment is exchanged out of the Fund, shares subject to the lowest CDSC
will be the first to be exchanged. In this regard, any portion of the
investment attributable to capital appreciation and/or reinvested dividends or
capital gains distributions will be exchanged first, and thereafter any portions
exchanged will be from the earlier investment made in the Fund. Shareholders
should take into account the effect of any exchange on the applicability of any
CDSC that may be imposed upon any subsequent redemption.
All accounts opened as a result of using the exchange privilege must
be registered in the same name and taxpayer identification number as a
shareholder's existing account with the Fund. Remember that each exchange
represents the sale of shares of one fund and the purchase of shares of another.
Therefore, shareholders may realize a taxable gain or loss on the transaction.
Before making an exchange request, an investor should consult a tax or other
financial adviser to determine the tax consequences of a particular exchange.
The Distributor is entitled to receive a fee from the Money Market Fund for
certain support services at the annual rate of .02 of 1% of the average daily
net asset value of the shares for which it is the holder or dealer of record.
Because excessive trading can hurt the Fund's performance and shareholders, the
Fund reserves the right to temporarily or permanently limit the number of
exchanges or to otherwise prohibit or restrict shareholders from using the
exchange privilege at any time, without notice to shareholders. In particular,
a pattern of exchanges with a "market timing" strategy may be disruptive to the
Fund and may thus be restricted or refused. The Fund also believes that
excessive use of the exchange privilege is more than five exchanges per calendar
year. The restriction or termination of the exchange privilege does not affect
the rights of shareholders to redeem shares, as discussed herein under "How to
Redeem."
The Money Market Fund is managed by Firstar Investment Research and
Management Company, an affiliate of Firstar Trust Company. The Portico Funds,
including the Money Market Fund, are unrelated to the Jefferson Fund Group
Trust.
DISTRIBUTOR AND DISTRIBUTION AND SERVICING PLANS
Rodman & Renshaw is the principal underwriter of the Fund shares and
in that capacity makes distribution and servicing payments to participating
brokers in connection with the sale of Class B Shares, servicing payments for
Class A Shares (in the case of Class A Shares, participating brokers are
compensated based on the amount of the front-end sales charge, except in cases
where Class A Shares are sold without a front-end sales charge) and, pursuant to
a Distribution Agreement with respect to the Fund's Class A and
Class B Shares, bears various other promotional and sales related expenses,
including the cost of printing and mailing prospectuses to persons other than
shareholders.
CLASS A SERVICING FEES: As compensation for services rendered and
expenses borne by the Distributor in connection with personal services rendered
to Class A shareholders of the Fund and the maintenance of Class A shareholder
accounts, the Fund pays the Distributor servicing fees of up to .25% annually
(calculated as a percentage of the Fund's average daily net assets attributable
to Class A Shares).
CLASS B DISTRIBUTION AND SERVICING FEES: As compensation for
services rendered and expenses borne by the Distributor in connection with the
distribution of Class B Shares of the Fund and in connection with personal
services rendered to Class B shareholders of the Fund and the maintenance of
Class B shareholder accounts, the Fund pays the Distributor annual distribution
and servicing fees of up to .75% and .25%, respectively, (calculated as a
percentage of the Fund's average daily net assets attributable to Class B
Shares).
The Class A servicing fees and Class B servicing and distribution
fees paid to the Distributor are made under Distribution and Servicing Plans
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The distribution fee applicable to Class B Shares may be spent by
the Distributor on any activities or expenses primarily intended to result in
the sale of Class B Shares of the Fund, including compensation to, any expenses
(including overhead and telephone expenses) of, financial consultants or other
employees of the Distributor or of participating or introducing brokers who
engage in distribution of Class B Shares, printing of prospectuses and reports
for other than existing Class B shareholders, advertising and preparation,
printing and distribution of sales literature. The servicing fee, applicable to
both Class A and Class B Shares of the Fund, may be spent by the Distributor on
personal services rendered to shareholders of the Fund and the maintenance of
shareholder accounts, including compensation to, and expenses (including
telephone and overhead expenses) of, financial consultants or other employees
of the Distributor or of participating or introducing brokers who aid in the
processing of purchase or redemption requests or the processing of dividend
payments, who provide information periodically to shareholders showing their
positions in the Fund's shares, who forward communications from the Fund to
shareholders, who render ongoing advice concerning the suitability of particular
investment opportunities offered by the Fund in light of the shareholders'
needs, who respond to inquiries from shareholders relating to such services,
or who train personnel in the provision of such services. Distribution and
servicing fees may also be spent on interest relating to unreimbursed
distribution or servicing expenses from prior years.
The Distributor may from time to time pay additional cash bonuses or
other incentives to selected participating brokers in connection with the sale
or servicing of Class A and/or Class B Shares of the Fund. On some occasions,
such bonuses or incentives may be conditioned upon the sale of a specified
minimum dollar amount of the Shares of the Fund or a particular class of Shares,
during a specific period of time. The Distributor currently expects that such
additional bonuses or incentives will not exceed .25% of the amount of any sale.
The Distributor has entered into a consulting agreement with Matrix
Venture Funds, Inc., a company controlled by Lawrence Kujawski, the President
and a Trustee of the Fund, pursuant to which Matrix Venture Funds, Inc. provides
certain marketing and strategic planning advice to Distributor in return for a
consulting fee.
RETIREMENT PLANS
The Fund offers the following retirement plans that may be funded
with purchases of Shares and may allow investors to shelter some of their income
from taxes:
INDIVIDUAL RETIREMENT ACCOUNT ("IRA"). Individuals who receive
compensation or earned income, even if they are active participants in a
qualified retirement plan (or certain similar retirement plans), may establish
their own tax-sheltered IRA. The Fund offers a prototype IRA plan which may be
adopted by individuals. There is currently no charge for establishing an
account, although there is an annual maintenance fee of $12.50. The minimum
initial IRA investment is $250 and the minimum subsequent IRA investment is
$100.
Earnings on amounts held in an IRA are not taxed until withdrawal.
However, the amount of deduction, if any, allowed for IRA contributions is
limited for individuals who are active participants in an employer maintained
retirement plan and whose incomes exceed specific limits.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP/IRA"). The Fund also offers
a prototype SEP/IRA for employers, including self-employed individuals, who wish
to purchase Shares with tax-deductible contributions not exceeding annually for
any one participant the lesser of $22,500 or 15% of earned income. Under this
plan, employer contributions are made directly to the IRA accounts of eligible
participants.
DEFINED CONTRIBUTION RETIREMENT PLAN (KEOGH OR CORPORATE PROFIT-
SHARING AND MONEY-PURCHASE PLANS).
A prototype defined contribution retirement plan is available for employers,
including self-employed individuals, who wish to purchase Shares with tax-
deductible contributions not exceeding annually for any one participant the
lesser of $30,000 or 25% of earned income.
CASH OR DEFERRED 401(K) PLAN. A prototype cash or deferred 401(k)
plan is available for employers who wish to allow employees to elect to reduce
their compensation and have such amounts contributed to the plan, not to exceed
$9,240 annually (as adjusted for cost-of-living increases).
A description of applicable service fees and certain limitations on
contributions and withdrawals, as well as application forms, are available from
the Fund upon request. The IRA documents contain a disclosure statement which
the Internal Revenue Service requires to be furnished to individuals who are
considering adopting an IRA. Because a retirement program involves commitments
covering future years, it is important that the investment objective of the Fund
be consistent with the participant's retirement objectives. Premature
withdrawals from a retirement plan will result in adverse tax consequences. The
amounts eligible for investment in retirement plans may change at any time due
to changes in the Internal Revenue Code or any regulation promulgated
thereunder.
DIVIDEND REINVESTMENT
Shareholders may elect to have all income dividends and capital
gains distributions reinvested or paid in cash, or to have dividends reinvested
and capital gains distributions paid in cash or capital gains distributions
reinvested and income dividends paid in cash. Shareholders having dividends
and/or capital gains distributions paid in cash may choose to have such amounts
automatically deposited to their checking or savings accounts. See the Share
purchase application form included at the back of this Prospectus for further
information. If a shareholder does not specify an election, all income
dividends and capital gains distributions will automatically be reinvested in
full and fractional Shares calculated to the nearest 1,000th of a Share. Shares
are purchased at the net asset value in effect on the business day after the
dividend record date and are credited to the shareholder's account on the
dividend payment date. Shareholders will be advised of the number of Shares
purchased and the price following each reinvestment. An election to reinvest or
receive dividends and distributions in cash will apply to all Shares registered
in the same name, including those previously purchased. See "DIVIDENDS,
DISTRIBUTIONS AND TAXES" for tax consequences.
A shareholder may change an election at any time by notifying the
Fund in writing. If such a notice is received between a dividend declaration
date and payment date, it will become effective on the day following the payment
date. The Fund may modify or terminate its dividend reinvestment program at any
time on thirty days' written notice to participants.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to qualify annually for and elect tax treatment
applicable to a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). Pursuant to the requirements of
the Code, the Fund intends to distribute substantially all of its net investment
income and net realized capital gains, if any, less any available capital loss
carry-over, to its shareholders annually so as to avoid paying income tax on its
net investment income and net realized capital gains or being subject to a
federal excise tax on undistributed net investment income and net realized
capital gains. For federal income tax purposes, distributions by the Fund,
whether invested in additional Shares or received in cash, will be taxable to
the Fund's shareholders except those shareholders that are not subject to tax on
their income.
Shareholders will be notified annually as to the federal tax status
of dividends and distributions. For federal income tax purposes, a
shareholder's original cost for his Shares continues as his basis and on
redemption his gain or loss is the difference between such basis and the
redemption price. Distributions and redemptions may also be taxed under
state and local tax laws which may differ from the Code.
Dividends paid in cash by the Fund with respect to its Class A and
Class B Shares are calculated in the same manner and at the same time and will
be in the same amount relative to the aggregate net asset value of the Shares in
each class, except that dividends on Class B Shares are expected to be lower
than dividends on Class A shares as a result of the distribution fee applicable
to Class B Shares. Currently, the Fund declares and pays dividends quarterly
and distributes capital gains annually.
The foregoing is only a brief summary of some of the important
federal income tax considerations generally affecting the Fund and its
shareholders, is not intended as a substitute for careful tax planning and is
based on tax laws and regulations which are in effect on the date of this
Prospectus. Such laws and regulations may be changed by legislative or
administrative action. Accordingly, investors in the Fund should consult their
tax advisers with specific reference to their own tax situation.
BROKERAGE TRANSACTIONS
The Agreement authorizes the Adviser to select the brokers or
dealers that will execute the purchases and sales of the Fund's portfolio
securities. In placing purchase and sale orders for the Fund, it is the policy
of the Adviser to seek the best execution of orders at the most favorable price
in light of the overall quality of brokerage and research services provided.
The Agreement permits the Adviser to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting
securities transactions in excess of the amount another broker would have
charged for executing the transaction, provided the Adviser believes this to be
in the best interests of the Fund. In effecting purchases and sales of the
Fund's portfolio securities, the Adviser may replace orders with, and pay
brokerage commissions to, the Distributor or investment dealers, if any, with
which the Distributor executes sales agreements when it reasonably believes the
commissions and the transaction quality are comparable to that available from
other qualified brokers. In selecting among firms to handle a particular
transaction, the Adviser may take into account whether the firm has sold, or is
selling, shares of the Fund.
CAPITAL STRUCTURE
The Fund's authorized capital consists of an unlimited number of
Shares. Shareholders are entitled: (i) to one vote per full Share; (ii) to
such distributions as may be declared by the Fund's Trustees out of funds
legally available; and (iii) upon liquidation, to participate ratably in the
assets available for distribution. There are no conversion or sinking fund
provisions applicable to the Shares, and the holders have no preemptive rights
and may not cumulate their votes in the election of Trustees. Consequently, the
holders of more than 50% of the Shares voting for the election of Trustees can
elect all the Trustees, and in such event, the holders of the remaining Shares
voting for the election of Trustees will not be able to elect any persons as
Trustees. The Fund does not anticipate holding an annual meeting in any year in
which the election of Trustees is not required to be acted on by shareholders
under the Investment Company Act of 1940. The Fund's Trust Instrument contains
provisions for the removal of Trustees by the shareholders.
The Shares are redeemable and are transferable. All Shares issued
and sold by the Fund will be fully paid and nonassessable. Fractional Shares
entitle the holder to the same rights as whole Shares. Firstar Trust Company,
615 East Michigan Street, Milwaukee, Wisconsin 53202 acts as the Fund's transfer
agent and dividend disbursing agent.
The Fund will not issue certificates evidencing Shares purchased.
Each shareholder's account will be credited with the number of Shares purchased,
relieving shareholders of responsibility for safekeeping of certificates and the
need to deliver them upon redemption. Written confirmations are issued for all
purchases of Shares.
Pursuant to the Trust Instrument, the Trustees may establish and
designate one or more separate and distinct series of Shares, each of which
shall be authorized to issue an unlimited number of Shares. In addition, the
Trustees may, without obtaining any prior authorization or vote of shareholders,
redesignate or reclassify any issued Shares of any series. In the event that
more than one series is established, each Share outstanding, regardless of
series, would still entitle its holder to one (1) vote. As a general matter,
Shares would be voted in the aggregate and not by series, except where class
voting would be required by the Investment Company Act of 1940 (e.g., change in
investment policy or approval of an investment advisory agreement). All
consideration received from the sale of Shares of any series, together with all
income, earnings, profits and proceeds thereof, would belong to that series and
would be charged with the liabilities in respect of that series and of that
series' share of the general liabilities of the Fund in the proportion that the
total net assets of the series bear to the total net assets of all series. The
net asset value of a Share of any series would be based on the assets belonging
to that series less the liabilities charged to that series, and dividends could
be paid on Shares of any series only out of lawfully available assets belonging
to that series. In the event of liquidation or dissolution of the Fund, the
shareholders of each series would be entitled, out of the assets of the Fund
available for distribution, to the assets belonging to that series.
The Fund's Trust Instrument contains an express disclaimer of
shareholder liability for its acts or obligations and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Fund or its Trustees. The Trust Instrument provides for
indemnification and reimbursement of expenses out of the Fund's property for any
shareholder held personally liable for its obligations. The Trust Instrument
also provides that the Fund shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon.
The Trust Instrument further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Trust Instrument protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
SHAREHOLDER REPORTS
Shareholders will be provided at least semi-annually with a report
showing the Fund's portfolio and other information and annually after the close
of the Fund's fiscal year, which ends October 31st, with an annual report
containing audited financial statements. Shareholders who have questions about
the Fund should write to: The Jefferson Fund Group Trust, c/o Firstar Trust
Company, Mutual Funds Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
Overnight and express mail should be sent to: The Jefferson Fund Group Trust,
c/o Firstar Trust Company, Mutual Fund Services, 3rd Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202. Questions about individual accounts may be
directed toll free to Firstar Trust Company at (800) 216-9785.
PERFORMANCE INFORMATION
The Fund may provide from time to time in advertisements, reports to
shareholders and other communications with shareholders its average annual
compounded rate of return as well as its total return and cumulative total
return. An average annual compounded rate of return refers to the rate of return
which, if applied to an initial investment at the beginning of a stated period
and compounded over the period, would result in the redeemable value of the
investment at the end of the stated period assuming reinvestment of all
dividends and distributions and reflecting the effect of all recurring fees.
Total return and cumulative total return similarly reflect net investment income
generated by, and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments of the Fund for the stated period,
assuming the reinvestment of all dividends and distributions and reflecting the
effect of all recurring fees. Total return figures are not annualized or
compounded and represent the aggregate percentage of dollar value change over
the period specified. Cumulative total return reflects the Fund's total return
since inception. An investor's principal in the Fund and the Fund's return are
not guaranteed and will fluctuate according to market conditions.
The Fund may compare its performance to other mutual funds with
similar investment objectives and to the industry as a whole, as reported by
Value Line, Weisberger's Encyclopedia of Institutional Funds, Lipper Analytical
Services, Inc., Morningstar, Inc., Money Manager Review, Money, Forbes, Business
Week and Barron's magazines, The Wall Street Journal and Investor's Business
Daily. (Value Line, Lipper Analytical Services, Inc., Morningstar, Inc. and
Money Manager Review are independent fund ranking services that rank mutual
funds based upon total return performance.) The Fund may also compare its
performance to the Dow Jones Industrial Average, NASDAQ Composite Index, NASDAQ
Industrials Index, Value Line Composite Index, the Standard & Poor's 500 Stock
Index and the Consumer Price Index. Such comparisons may be made in
advertisements, shareholder reports or other communications to shareholders.
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
---------------------------------
As set forth under the caption "INVESTMENT OBJECTIVES AND POLICIES,"
the Fund may invest a portion of its total assets in publicly distributed debt
securities assigned one of the six highest ratings of either Standard & Poor's
Corporation ("Standard & Poor's") or Moody's Investors Services, Inc.
("Moody's"). A brief description of the ratings symbols and their meanings
follows.
STANDARD & POOR'S DEBT RATINGS: A Standard & Poor's corporate debt
------------------------------
rating is a current assessment of the creditworthiness of an obligor with
respect to a specific obligation. This assessment may take into consideration
obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer
or obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform any audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and repayment of
principal in accordance with the terms of the obligation;
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of the
obligation in the event of bankruptcy, reorganization or other
arrangement under the laws of bankruptcy and other laws
affecting creditors' rights;
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's. 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 the higher rated
categories.
BBB -- Debt rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
BB, B -- Debt rated BB and B are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
MOODY'S BOND RATINGS:
--------------------
Aaa - Bonds which are rated Aaa are judged to be 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 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 rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B -- Bonds 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.
Moody's bond rating symbols may contain numerical modifiers of a
generic rating classification. The modifier 1 indicates that the bond ranks at
the higher end of its category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
(JEFFERSON GROWTH & INCOME FUND LOGO)
PURCHASE APPLICATION
Send completed application to: The Jefferson Fund Group Trust, c/o Mutual Fund
Services
Mail address: P.O. Box 701, Milwaukee, WI 53201-0701
Overnight courier address: 615 East Michigan St., Milwaukee, WI 53202
1. INVESTOR NAME
[ ] Individual:
- ------------------------------------------------------------------------------
Name Birth date
- ------------------------- ------------------------ -----------------------
Social Security No. Citizen of [ ] U.S. [ ] Other
[ ] Joint owner:
- ------------------------------------------------------------------------------
Name Birth date
- ------------------------- ------------------------ -----------------------
Social Security No. Citizen of [ ] U.S. [ ] Other
[ ] Gift to minor:
- ------------------------------------------------------------------------------
Name of Custodian
- ------------------------------------------------------------------------------
Minor's Name Birth date
- ------------------------- ------------------------ -----------------------
Social Security No. Citizen of [ ] U.S. [ ] Other
[ ] Corporation, partnership, or other entity (A corporate resolution is
required).
- ------------------------------------------------------------------------------
Name of entity
- ------------------------------------------------------------------------------
Taxpayer Identification Number
2. MAILING ADDRESS.
- ------------------------------------------------------------------------------
Street, Apt. City/State/Zip
- ------------------------------------------------------------------------------
Daytime phone ( )
SEND DUPLICATE STATEMENT TO:
- ------------------------------------------------------------------------------
Daytime phone ( )
- ------------------------------------------------------------------------------
Street, Apt. City/State/Zip
3. INVESTMENT, PAYMENT FOR INITIAL PURCHASE AND DISTRIBUTION. The minimum
initial investment is $2,500 for shares of Jefferson Growth and Income Fund.
Minimum additions to the Fund are $100.
My initial investment is $------------------.
My investment is being sent
[ ] by check. (Payable to Jefferson Growth and Income Fund).
[ ] by wire. (The establishment of a new account by wire transfer should be
preceded by a telephone call to Firstar Trust Company at 1-800-216-9785 to
provide information for the setting up of the account. Please see the
prospectus for complete Federal wire instructions. A completed share purchase
application must also be sent to The Jefferson Fund Group Trust at the above
address immediately following the investment.)
I am selecting the following Class of Shares:
[ ] Class A Shares (Initial sales charge).
[ ] Class B Shares (Contingent deferred sales charge).
I am choosing the following Distribution Option (If no dividend option is
checked, dividends and capital gains will be reinvested):
[ ] Capital gains and dividends reinvested
[ ] Capital gains reinvested and dividends in cash*<F1>
[ ] Capital gains in cash*<F1> and dividends reinvested
[ ] Capital gains and dividends in cash*<F1>
*<F1>If you would like your cash payments automatically deposited to your
checking or savings account, please check this box [ ]. Also check "Fund Link
Redemption" box and provide appropriate bank information in item 5 (Telephone
Options) on the reverse side of this form.
4. LETTER OF INTENT. (This option available for Class A shares only). I agree
to the Letter of Intent conditions stated in the current prospectus. I intend
to invest within a 13-month period beginning on ------------------ (initial
purchase date) in shares of the Fund purchased with this application, an
aggregate amount which, together with the value of shares of the Fund owned by
me on the initial purchase date, will be at least equal to:
[ ] $50,000 [ ] $100,000 [ ] $500,000 [ ] $1,000,000 [ ] $3,000,000
(If no date is specified, the initial purchase date will be the date of this
purchase).
5.TELEPHONE OPTIONS. You will automatically have certain telephone exchange and
redemption privileges described below for yourself and your dealer
representative, unless you decline such privileges below.
[ ] Telephone Redemption. The proceeds will be mailed to the address of record
or deposited to your bank account. $1,000 minimum/$50,000 maximum telephone
redemption. (Complete bank account information below).
[ ] Fund Link Redemption*<F2>. Permits the liquidation of my shares with
proceeds electronically sent to your bank account. (Complete bank account
information below).
[ ] Fund Link Purchase*<F2>. Permits the purchase of shares using your bank
account to clear the transaction. (Complete bank account information below).
[ ] I do not wish to allow telephone transactions on my accounts.
- ------------------------------------------------------------------------------
Name of bank account:
- ------------------------------------------------------------------------------
Bank name Account number
- ------------------------------------------------------------------------------
Bank address City/State/Zip
*<F2>For Fund Link options, your signed application must be received at least 15
business days prior to initial transaction. To assure proper
crediting/debiting of your bank account, please attach a voided check or deposit
slip.
6. AUTOMATIC INVESTMENT PLAN. Please start my Automatic Investment Plan as
described in the Prospectus beginning (month) ---------------- (year) ------- .
I hereby instruct Firstar Trust Company, Transfer Agent for The Jefferson Fund
Group Trust, to automatically transfer $------------- (minimum $100) directly
from my checking, NOW, or savings account named below on the -------- day of
each month or the first business day thereafter. I understand that I will be
assessed a $20 fee if the automatic purchase cannot be made due to insufficient
funds, stop payment, or for any other reason.
- ------------------------------------------------------------------------------
Name(s) on bank account
- ------------------------------------------------------------------------------
Bank name Account number
- ------------------------------------------------------------------------------
Bank address City/State/Zip
- ------------------------------------------------------------------------------
Signature of bank account owner Signature of joint owner
Your signed application must be received at least 15 business days prior to
initial transaction/ An unsigned voided check (for checking accounts) or a
savings account deposit slip is required with your application.
7. SIGNATURES AND CERTIFICATION. I am (we are) of legal age, have received and
read the Prospectus, and agree to the terms therein. I (we) certify that (1)
the Social Security or Taxpayer Identification Number provided above is correct
and (2) that the IRS has never notified me (us) that I am (we are) subject to
31% backup withholding.
- ------------------------------------------------------------------------------
Signature of individual Date
- ------------------------------------------------------------------------------
Signature of joint owner Date
- ------------------------------------------------------------------------------
Signature of authorized officers, partners, trustees or others Date
8.DEALER INFORMATION. (Please be sure to complete representative's first name
and middle initial).
- ------------------------------------------------------------------------------
Dealer name Dealer name
DEALER HEAD OFFICE
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Telephone number
REPRESENTATIVE'S BRANCH OFFICE
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Telephone number Rep's A.E. number
(JEFFERSON GROWTH & INCOME FUND LOGO)
SUPPLEMENTAL APPLICATION
This supplemental application may be used to add special investment options
described in the Prospectus.
It must be accompanied by a completed purchase application if an account has not
been established.
Send completed application to: The Jefferson Fund Group Trust, c/o Mutual Fund
Services
Mail address: P.O. Box 701, Milwaukee, WI 53201-0701
Overnight courier address: 615 East Michigan St., Milwaukee, WI 53202
1. ACCOUNT REGISTRATION ADDRESS.
- ------------------------------------------------------------------------------
Investor name Social Security number
- ------------------------------------------------------------------------------
Account number (if existing account) Daytime phone number (Area code)
- ------------------------------------------------------------------------------
Address City/State/Zip
2. AUTOMATIC INVESTMENT PLAN. Please start my Automatic Investment Plan as
described in the Prospectus beginning
(month) ----------------- (year) ------ . I hereby instruct Firstar Trust
Company, Transfer Agent for The Jefferson Fund Group Trust, to automatically
transfer $------------- (minimum $100) directly from my checking, NOW, or
savings account named below on the ----------- day of each month or the first
business day thereafter. I understand that I will be assessed a $20 fee if the
automatic purchase cannot be made due to insufficient funds, stop payment, or
for any other reason.
- ------------------------------------------------------------------------------
Name(s) on bank account
- ------------------------------------------------------------------------------
Bank name Account number
- ------------------------------------------------------------------------------
Bank address City/State/Zip
- ------------------------------------------------------------------------------
Signature of bank account owner Signature of joint owner
Your signed application must be received at least 15 business days prior to
initial transaction. AN UNSIGNED VOIDED CHECK (FOR CHECKING ACCOUNTS) OR A
SAVINGS ACCOUNT DEPOSIT SLIP IS REQUIRED WITH YOUR APPLICATION.
3. SYSTEMATIC WITHDRAWALS. A balance of at least $10,000 is required for this
option.
I would like to withdraw from Jefferson Growth & Income Fund $-------------
($100 minimum) as follows:
[ ]I would like to have payments made to me on or about the -----th day of each
month, OR
[ ]I would like to have payments made to me on or about the -----th day of the
months that I have circled below:
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
[ ]I would like to have my payments automatically deposited to my checking or
savings account. I have attached a voided check or deposit slip. (A check will
be mailed to the above Account registration address if this box is not checked)
4.TELEPHONE OPTIONS. You will automatically have certain telephone exchange and
redemption privileges described below for yourself and your dealer
representative, unless you decline such privileges below.
[ ]Telephone Redemption. The proceeds will be mailed to the address of record
or deposited to your bank account.
$1,000 minimum/$50,000 maximum telephone redemption. (Complete bank account
information below).
[ ]Fund Link Redemption*<F3>. Permits the liquidation of my shares with proceeds
electronically sent to your bank account.
(Complete bank account information below).
[ ]Fund Link Purchase*<F3>. Permits the purchase of shares using your bank
account to clear the transaction.
(Complete bank account information below).
[ ]I do not wish to allow telephone transactions on my accounts.
- ------------------------------------------------------------------------------
Name of bank account:
- ------------------------------------------------------------------------------
Bank name Account number
- ------------------------------------------------------------------------------
Bank address City/State/Zip
*<F3>For Fund Link options, your signed application must be received at least 15
business days prior to initial transaction.
To assure proper crediting/debiting of your bank account, please attach a voided
check or deposit slip.
5. SIGNATURES. Please sign exactly as your name(s) appear(s) on your account.
- ------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------
Joint owner signature (if any) Title (if officer, trustee, custodian, etc)
- ------------------------------------------------------------------------------
Date
- ------------------------------------------------------------------------------
Signature(s) guaranteed by
(A guarantee is required to add telephone options to existing accounts. Your
signature should be guaranteed by your banker or broker-dealer. A notary
public is not acceptable.)
(JEFFERSON GROWTH & INCOME FUND LOGO)
INDIVIDUAL RETIREMENT ACCOUNT (IRA) APPLICATION
Send completed application to: The Jefferson Fund Group Trust, c/o Firstar Trust
Company
Mail address: P.O. Box 701, Milwaukee, WI 53201-0701
Overnight courier address: 615 East Michigan St., Milwaukee, WI 53202
1. INVESTOR INFORMATION.
- ------------------------------------------------------------------------------
Investor name Daytime phone
- ------------------------------------------------------------------------------
Address City/State/Zip
- ------------------------------------------------------------------------------
Social Security number Birth date
2. BENEFICIARY DESIGNATION (OPTIONAL). If no beneficiary is named, in the event
of your death your IRA will be payable to your estate.
- ------------------------------------------------------------------------------
Beneficiary name Relationship
- ------------------------------------------------------------------------------
Address City/State/Zip
- ------------------------------------------------------------------------------
Social Security number Birth date
3.TYPE OF IRA. Check one box only.
[ ] Individual Retirement Account ($250 minimum)
[ ] Spousal Account for non-working spouse. ($250 minimum) (One application
must be completed for each individual).
[ ] SEP Account. (IRS Form 5305-SEP is required with your application).
[ ] Rollover Account. (You had physical receipt of assets for less than 60 days
or you have authorized a direct rollover from a qualified plan). If Rollover
Account, please specify the type of account held by previous custodian below).
[ ] IRA to IRA [ ] Employee-sponsored plan to IRA
[ ] Transfer Account. Check this box if assets are direct transfer from current
custodian (you will not have personal receipt of assets) and complete an IRA
Transfer Form.
4.CLASS OF SHARES I am selecting the following Class of Shares:
[ ] Class A Shares (Initial sales charge).
[ ] Class B Shares (Contingent deferred sales charge).
5.IRA CONTRIBUTION.
[ ] Regular IRA contribution $------------ contribution for tax year 19---.
[ ] Rollover contribution or transfer $---------------.
6.SIGNATURES. I adopt the Jefferson Growth and Income Fund Individual
Retirement Account and appoint Firstar Trust Company to perform custodial and
other administrative services specified in the IRA Custodial Agreement. I have
received and read the Prospectus for the Fund and have read and understood the
IRA Custodial Agreement and Disclosure Statement. I certify under penalties of
perjury that my Social Security number (above) is correct, and that I am of
legal age. If I am opening this IRA with a distribution from an employer-
sponsored retirement plan or another individual retirement account, I certify
that the distribution qualifies as a rollover contribution. I understand that
the fees relating to my IRA may be separately billed or collected by redeeming
sufficient shares from my Fund account balance. I agree to provide the Internal
Revenue Service with information as required. I further agree to follow all of
the terms and conditions of the IRA Custodial Agreement.
- ------------------------------------------------------------------------------
Signature Date
Appointment as custodian accepted:
- ------------------------------------------------------------------------------
Firstar Trust Company Date
7.DEALER INFORMATION. (Please be sure to complete representative's first name
and middle initial).
- ------------------------------------------------------------------------------
Dealer name Dealer name
DEALER HEAD OFFICE
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Telephone number
REPRESENTATIVE'S BRANCH OFFICE
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City/State/Zip
- ------------------------------------------------------------------------------
Telephone number Rep's A.E. number
(JEFFERSON GROWTH & INCOME FUND LOGO)
INDIVIDUAL RETIREMENT ACCOUNT (IRA) TRANSFER FORM
Use this form to transfer assets from an existing IRA to the Jefferson Growth
and Income Fund. Please call 800-216-9785 if you have any questions.
Send completed application along with your IRA application or existing Jefferson
Growth and Income Fund account number to: The Jefferson Fund Group Trust, c/o
Firstar Trust Company.
Mail address: P.O. Box 701, Milwaukee, WI 53201-0701
Overnight courier address: 615 East Michigan St., Milwaukee, WI 53202
1. INVESTOR INFORMATION.
- ------------------------------------------------------------------------------
Investor name Social Security number
- ------------------------------------------------------------------------------
Address City/State/Zip
- ------------------------------------------------------------------------------
Daytime phone Evening phone
2. PLEASE TRANSFER MY IRA FROM.
- ------------------------------------------------------------------------------
Name of current custodian (bank, mutual fund, etc.)
- ------------------------------------------------------------------------------
Address City/State/Zip
- ------------------------------------------------------------------------------
Acc't No. or Certificate of Deposit (CD) Maturity date (if applicable)
If Certificate of Deposit, please transfer [ ] immediately [ ] at maturity
3. PLEASE CHECK ONE: (If you are opening a new account, you will need to
accompany this form with a completed IRA Application).
[ ] Invest in my existing Jefferson Growth and Income Fund IRA, account number
[ ] Open a new Jefferson Growth and Income Fund [ ] IRA [ ] SEP.
4. SIGNATURES. (exactly as registered)
To current Custodian: Please consider this your authority to sell [ ] all of my
assets or [ ] $-------- of my assets in the account identified in section 2
above and prepare a check to The Jefferson Growth and Income Fund. It is my
intention to transfer these assets to the above-named fund, for which Firstar
Trust Company acts as Custodian. I understand a check will be sent regular mail
unless I inform you to send the proceeds via an alternative method. I certify
that I have received and read the prospectus for the fund into which I am
transferring my IRA. Thank you for your prompt handling.
- ------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------
Signature guarantee Date
- ------------------------------------------------------------------------------
Signature(s) guaranteed by
(A guarantee is required to add telephone options to existing accounts. Your
signature should be guaranteed by your banker or broker-dealer. A notary
public is not acceptable.)
5. ACCEPTANCE. (This portion is to be completed by Firstar Trust Company,
Trustee/Custodian for the Jefferson Growth and Income fund).
Please be advised that Firstar Trust Company has been appointed to serve as
successor custodian of this IRA. Please send the check or Federal Wire
representing the liquidation of the investments indicated above along with a
copy of this form to identify the check as a transfer of assets to: The
Jefferson Fund Group Trust, c/o Firstar Trust Company.
Mail address: P.O. Box 701, Milwaukee, WI 53201-0701
Overnight courier address: 615 East Michigan St., Milwaukee, WI 53202
- ------------------------------------------------------------------------------
Accepted by
P R O S P E C T U S
THE JEFFERSON FUND GROUP TRUST
JEFFERSON GROWTH AND
INCOME FUND
A MUTUAL FUND
SEEKING LONG-TERM
CAPITAL APPRECIATION AND
CURRENT INCOME
BOARD OF TRUSTEES
Lawrence Kujawski
Milwaukee, Wisconsin
Richard Imperiale
Milwaukee, Wisconsin
F.L. Kirby
Chicago, Illinois
John Komives
Milwaukee, Wisconsin
J. Michael Borden
Delavan, Wisconsin
Dennis Lasser
Binghamton, New York
James Stanko
Rancho Santa Fe, California
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
Suite 3300
330 North Wabash Avenue
Chicago, Illinois 60611
DISTRIBUTOR
RODMAN & RENSHAW, INC.
233 S. Wacker Drive
Suite 4500
Chicago, Illinois 60606
INVESTMENT ADVISER
UNIPLAN, INC.
839 North Jefferson Street
Milwaukee, Wisconsin 53202
THE JEFFERSON FUND GROUP TRUST
(800) 216-9785
STATEMENT OF ADDITIONAL INFORMATION February 28, 1997
-----------------------------------
THE JEFFERSON FUND GROUP TRUST
JEFFERSON GROWTH AND INCOME FUND
This Statement of Additional Information is not a Prospectus and
should be read in conjunction with the Prospectus of The Jefferson Fund Group
Trust's Jefferson Growth and Income Fund dated February 28, 1997. Requests for
copies of the Prospectus should be made in writing to The Jefferson Fund Group
Trust, c/o Firstar Trust Company, Mutual Fund Services, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701, or by calling (800) 216-9785.
THE JEFFERSON FUND GROUP TRUST
JEFFERSON GROWTH AND INCOME FUND
Table of Contents
-----------------
Page No.
--------
INVESTMENT RESTRICTIONS -1-
INVESTMENT CONSIDERATIONS -4-
CONTINGENT DEFERRED SALES CHARGE (CLASS B SHARES)
AND INITIAL SALES CHARGE (CLASS A SHARES) -17-
EXCHANGE PRIVILEGE -18-
DISTRIBUTOR AND DISTRIBUTION AND SERVICING PLANS -19-
TRUSTEES AND OFFICERS OF THE FUND -22-
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS -25-
INVESTMENT ADVISOR, ADMINISTRATOR, CUSTODIAN,
TRANSFER AGENT AND ACCOUNTING SERVICES AGENT -26-
DETERMINATION OF NET ASSET VALUE -28-
CALCULATION OF TOTAL RETURN -29-
ALLOCATION OF PORTFOLIO BROKERAGE -31-
TAXES -33-
SHAREHOLDER MEETINGS -34-
INDEPENDENT ACCOUNTANTS -35-
FINANCIAL STATEMENTS -36-
No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus dated February 28, 1997, and, if given or made,
such information or representations may not be relied upon as having been
authorized by The Jefferson Fund Group Trust.
This Statement of Additional Information does not constitute
an offer to sell securities.
INVESTMENT RESTRICTIONS
As set forth in the prospectus dated February 28, 1997 of The
Jefferson Fund Group Trust relating to its mutual fund, the Jefferson Growth and
Income Fund (the "Fund") under the caption "INVESTMENT OBJECTIVES AND POLICIES",
the primary investment objectives of the Fund are to produce long-term capital
appreciation and current income principally through investing in equity
securities.
Fundamental Investment Restrictions
Consistent with its investment objectives, the Fund has adopted the
following investment restrictions which are matters of fundamental policy and
cannot be changed without approval of the holders of the lesser of: (i) 67% of
the Fund's shares present or represented at a shareholder's meeting at which the
holders of more than 50% of such shares are present or represented; or (ii) more
than 50% of the outstanding shares of the Fund.
1. The Fund will not purchase securities on margin or
participate in a joint-trading account.
2. The Fund will not borrow money or issue senior
securities, except for temporary bank borrowings for emergency or extraordinary
purposes (but not for the purpose of purchase of investments) and then only in
an amount not in excess of 5% of the value of its total assets and will not
pledge any of its assets except to secure borrowings. The Fund will not
purchase securities while it has any outstanding borrowings.
3. The Fund will not make short sales of securities or
maintain a short position for the account of the Fund unless at all times when a
short position is open the Fund owns an equal amount of such securities or owns
securities which, without payment of any further consideration, are convertible
into or exchangeable for securities of the same issue as, and equal in amount
to, the securities sold short.
4. The Fund will not make investments for the purpose of
exercising control or management of any company.
5. The Fund will limit its purchases of securities of
any issuer (other than the United States or an instrumentality of the United
States) in such a manner that it will satisfy at all times the requirements of
Section 5(b)(1) of the Investment Company Act of 1940 (i.e., that at least 75%
of the value of its total assets is represented by cash and cash items
(including receivables), U.S. Government Securities, securities of other
investment companies, and other securities for the purpose of the foregoing
limited in respect of any one issuer to an amount not greater than 5% of the
value of the total assets of the Fund and to not more than 10% of the
outstanding voting securities of such issuer.)
6. Excluding U.S. Government securities (including securities
issued or guaranteed by agencies and instrumentalities thereof), the Fund will
not concentrate 25% or more of the value of its total assets, determined at the
time an investment is made, in securities issued by companies engaged in the
same industry.
7. The Fund will not acquire or retain any security issued by a
company if (a) an officer or director of such company is an officer or trustee
of the Fund or an officer, director or other affiliated person of its investment
advisor; or (b) officers or trustees of the Fund or officers or directors of its
investment adviser owning beneficially more than one-half of one percent of its
securities together own beneficially more than five percent of its securities.
8. The Fund will not write (sell) or purchase options except that
the Fund may (a) write covered call options or covered put options on securities
that it is eligible to purchase (and on stock indices) and enter into closing
purchase transactions with respect to such options, and (b) in combination
therewith, or separately, purchase put and call options on securities it is
eligible to purchase; provided that the premiums paid by the Fund on all
outstanding options it has purchased do not exceed 5% of its total assets. The
Fund may enter into closing sale transactions with respect to options it has
purchased.
9. The Fund will not act as an underwriter or distributor of
securities other than shares of the Fund.
10. The Fund will not purchase any interest in any oil, gas or any
other mineral exploration or development lease or program.
11. The Fund will not purchase or sell real estate, real estate
mortgage loans or real estate limited partnerships.
12. The Fund will not purchase or sell commodities or commodities
contracts, except that the Fund may purchase and sell financial futures
contracts and related options.
13. The Fund will not make loans, except by purchase of debt
obligations or by entering into repurchase agreements or through the lending of
the Fund's portfolio securities with respect to not more than 25% of its total
assets.
Non-Fundamental Investment Restrictions
It is contrary to the Fund's present policy, which may be changed by
the trustees without shareholder approval, to:
1. Purchase securities of other investment companies except (a) as
part of a plan of merger, consolidation or reorganization approved by the
shareholders of the Fund or (b) securities of registered investment companies
where no commission or profit results, other than the usual and customary
broker's commission and where as a result of such purchase the Fund would hold
less than 3% of any class of securities, including voting securities, of any
registered investment company and less than 5% of the Fund's assets, taken at
current value, would be invested in securities of registered investment
companies. All assets of the Fund invested in securities of registered
investment companies will be included in the daily net assets of the Fund for
purposes of calculating the monthly advisory fees payable to the Advisor. In
such event, shareholders of the Fund will in effect pay two advisory fees on the
assets invested in investment companies.
2. Invest in warrants or rights excluding options (other than
warrants or rights acquired by the Fund as a part of a unit or attached to
securities at the time of purchase) if, as a result, such investments (valued at
the lower of cost or market) would exceed 5% of the value of the Fund's net
assets; provided that not more than 2% of the Fund's net assets may be invested
in warrants not listed on the New York or American Stock Exchanges.
3. Invest in securities of an issuer, which, together with any
predecessors or controlling persons, has been in operation for less than three
consecutive years and in equity securities for which market quotations are not
readily available (excluding restricted securities) if, as a result, the
aggregate of such investments would exceed 5% of the value of the Fund's net
assets; provided, however, that this restriction shall not apply to any
obligation of the U.S. Government or its instrumentalities or agencies. (Debt
securities having equity features are not considered "equity securities" for
purposes of this restriction.)
4. Invest in (a) securities which at the time of such investment
are not readily marketable, (b) securities the disposition of which is
restricted under federal securities laws, (c) repurchase agreements maturing in
more than seven days, and (d) OTC options, if, as a result, more than 10% of a
Fund's net assets (taken at current value) would then be invested in securities
described in Section 3, 4(a), 4(b), 4(c), and 4(d) above. For the purpose of
this restriction securities subject to a 7-day put option or convertible into
readily saleable securities are not included with subsections (a) or (b).
All percentage limitations on investments set forth herein and in
the Prospectus will apply at the time of the making of an investment and shall
not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. If violated, the Fund
will immediately liquidate such investment so that no excess or deficiency
remains.
The phrase "shareholder approval," as used herein, means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or (2) 67% or more of the shares of the Fund present at a meeting if
more than 50% of the outstanding shares are represented at the meeting in person
or by proxy.
INVESTMENT CONSIDERATIONS
DEBT SECURITIES
---------------
As set forth in the Prospectus under the caption
"Investment Objectives and Policies," the Fund may invest in corporate debt
securities of domestic or foreign issuers that are assigned one of the six
highest ratings of either Standard & Poor's Corporation ("Standard & Poor's") or
Moody's Investors Service, Inc. ("Moody's"), or if unrated, are of comparable
quality in the opinion of the Fund's Advisor. A description of the ratings
categories used is set forth in "Description of Securities Ratings" located in
the Fund's Prospectus.
Securities rated Baa and BBB are the lowest which are considered
"investment grade" obligations. Moody's describes securities rated Baa as
"medium-grade" obligations; they are "neither highly protected nor poorly
secured . . . [i]nterest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any general length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well." S&P describes securities rated BBB as "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 than in
higher rated categories."
High yield securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of high yield securities have been found to be less
sensitive to interest rate changes than higher-rated investments, but more
sensitive to adverse economic downturns or individual corporate developments.
A projection of an economic downturn or of a period of rising interest rates,
for example, could cause a decline in high yield security prices because the
advent of a recession could lessen the ability of a highly leveraged company
to make principal and interest payments on its debt securities. If an issuer
of high yield securities defaults, in addition to risking payment of all or a
portion of interest and principal, the Fund may incur additional expenses to
seek recovery. In the case of high yield securities structured as zero-coupon
or pay-in-kind securities, their market prices are affected to a greater extent
by interest rate changes, and therefore tend to be more volatile than
securities which pay interest periodically and in cash.
The secondary market on which high yield securities are traded may
be less liquid than the market for higher grade securities. Less liquidity in
the secondary trading market could adversely affect the price at which the Fund
could sell a high yield security, and could adversely affect the daily net asset
value of the shares. Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and liquidity of high
yield securities especially in a thinly-traded market. When secondary markets
for high yield securities are less liquid than the market for higher grade
securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater
role in the valuation because there is less reliable, objective data available.
The Advisor will seek to minimize the risks of investing in all debt securities
through diversification, in-depth credit analysis and attention to current
developments in interest rates and market conditions.
Securities are purchased and sold principally in response to current
assessments of future changes in business conditions and the levels of interest
rates on debt securities of varying maturities, the availability of new
investment opportunities at higher relative yields, and current evaluations of
an issuer's continuing ability to meet its obligations in the future. The
average maturity or duration of the fixed-income securities in the Fund's
portfolio may be varied in response to anticipated changes in interest rates and
to other economic factors, although under normal circumstances the Fund's debt
securities will be primarily those with more than one year remaining to
maturity. Securities may be bought and sold in anticipation of a decline or a
rise in market interest rates. In addition, a security may be sold and another
of comparable quality and maturity (usually, but not always, of a different
issuer) purchased at approximately the same time to take advantage of what are
believed to be short-term differentials in values or yields.
DEPOSITORY RECEIPTS
-------------------
The Fund may invest in foreign securities in the form of American
Depositary Receipts (ADR's) convertible into securities of foreign issuers.
These securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADR's are receipts typically
issued by a United States bank or trust company evidencing ownership of the
underlying foreign securities. Generally, ADR's, in registered form, are
designed for use in the United States securities market.
WARRANTS
---------
The Fund may invest up to 5% of its net assets in
warrants or rights (valued at the lower of cost or market) which entitle the
holder to buy equity securities at a specific price for a specified period of
time, provided that no more than 2% of its net assets are invested in warrants
not listed on the New York or American Stock Exchanges. The Fund may invest in
warrants or rights acquired by the Fund as part of a unit or attached to
securities at the time of purchase without limitation.
PORTFOLIO TURNOVER
------------------
A change in securities held by the Fund is known as "portfolio
turnover" and almost always involves the payment by the Fund of brokerage
commissions or dealer markup and other transaction costs on the sale of
securities as well as on the reinvestment of the proceeds in other securities.
As a result of the investment policies of the Fund, under certain market
conditions its portfolio turnover may be higher than those of many other
investment companies. It is, however, impossible to predict portfolio turnover
in future years. For purposes of reporting portfolio turnover rates, all
securities the maturities of which at the time of purchase are one year or less
are excluded. High portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by the Fund.
FORWARD COMMITMENTS
-------------------
The Fund may make contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if the
Fund either (i) holds, and maintains until the settlement date in a segregated
account, cash or high grade debt obligations in an amount sufficient to meet the
purchase price or (ii) enters into an offsetting contract for the forward sale
of securities of equal value that it owns. Forward commitments may be
considered securities in themselves. They involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date, which
risk is in addition to the risk of decline in value of the Fund's other assets.
The Fund may dispose of a commitment prior to settlement and may realize short-
term profits or losses upon such disposition.
REPURCHASE AGREEMENTS
---------------------
The Fund may enter into repurchase agreements with domestic
commercial banks or registered broker/dealers with respect to not more than 25%
of its total assets (taken at current value), except that no such limit applies
when the Fund is investing for temporary defensive purposes. A repurchase
agreement is a contract under which the Fund would acquire a security for a
relatively short period (usually not more than one week) subject to the
obligation of the seller to repurchase and the Fund to resell such security at a
fixed time and price (representing the Fund's cost plus interest). The value of
the underlying securities (or collateral) will be at least equal at all times to
the total amount of the repurchase obligation, including the interest factor.
The Fund bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations and the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities. The Advisor
will monitor the creditworthiness of the counterparties.
SECURITIES LOANS
----------------
The Fund may make secured loans of its portfolio securities
amounting to no more than 25% of its total assets. The risks in lending
portfolio securities, as with other extensions of credit, consist of possible
delay in recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. However, such loans will be made only to
broker-dealers that are believed by the Advisor to be of relatively high credit
standing. Securities loans are made to broker-dealers pursuant to agreements
requiring that loans be continuously secured by collateral in cash, U.S.
Government securities or other high quality debt securities at least equal at
all times to the market value of the securities lent. The borrower pays to the
lending Fund an amount equal to any dividends or interest received on the
securities lent. The Fund may invest the cash collateral received in interest-
bearing, short-term securities or receive a fee from the borrower. Although
voting rights or rights to consent with respect to the loaned securities pass
to the borrower, the Fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be voted
by the Fund if the holders of such securities are asked to vote upon or consent
to matters materially affecting the investment. The Fund may also call such
loans in order to sell the securities involved.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
---------------------------------------------
The Fund may enter into agreements with banks or broker-dealers for
the purchase of securities at an agreed-upon price on a specified future date.
Such agreements might be entered into, for example, when the Fund anticipates a
decline in interest rates and is able to obtain a more advantageous yield by
committing currently to purchase securities to be issued later. When the Fund
purchases securities on a when-issued or delayed delivery basis, it is required
either: (i) to create a segregated account with the Fund's custodian and to
maintain in that account cash, U.S. Government securities or other high grade
debt obligations in an amount equal on a daily basis to the amount of the Fund's
when-issued or delayed delivery commitments; or (ii) to enter into an offsetting
forward sale of securities it owns equal in value to those purchased.
The Fund will only make commitments to purchase securities on a when-
issued or delayed-delivery basis with the intention of actually acquiring
the securities. However, the Fund may sell these securities before the
settlement date if it is deemed advisable as a matter of investment strategy.
When the time comes to pay for when-issued or delayed-delivery securities, the
Fund will meet its obligations from then available cash flow or the sale of
securities, or, although it would not normally expect to do so, from the sale of
the when-issued or delayed-delivery securities themselves (which may have a
value greater or less than the Funds's payment obligation).
OPTIONS TRANSACTIONS
--------------------
The Fund will not write options that are not "covered." A written
call option is "covered" if the Fund owns the underlying security subject to the
call or has an absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of other
securities held in its portfolio. A call option is also covered if the Fund
holds on a share-for-share basis a call on the same security as the call written
where the exercise price of the call held is equal to or less than the exercise
price of the call written or greater than the exercise price of the call written
if the difference is maintained by the Fund in cash, Treasury bills or other
high grade short-term obligations in a segregated account with its custodian. A
written put option is "covered" if the Fund maintains cash, Treasury bills or
other high grade obligations with a value equal to the exercise price in a
segregated account with its custodian, or holds on a share-for-share basis a put
on the same security as the put written where the exercise price of the put held
is equal to or greater than the exercise price of the put written. The premium
paid by the purchaser of an option will reflect, among other things, the
relationship of the exercise price to the market price and volatility of the
underlying security, the remaining term of the option, and supply and demand
interest rates.
If the writer of an option wishes to terminate his obligations, he
may effect a "closing purchase transaction." This is accomplished by buying an
option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be cancelled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he has been notified of the exercise of an option. Likewise, an investor
who is the holder of an option may liquidate his position by effecting a
"closing sale transaction." This is accomplished by selling an option of the
same series as the option previously purchased. There is no guarantee that the
Fund will be able to effect a closing purchase or a closing sale transaction at
any particular time.
Effecting a closing transaction in the case of a written call option
will permit the Fund to write another call option on the underlying security
with either a different exercise price or expiration date or both, or in the
case of a written put option will permit the Fund to write another put option to
the extent that the exercise price thereof is secured by depositing cash or high
grade obligations. Also, effecting a closing transaction will permit the cash
or proceeds from the concurrent sale of any securities subject to the option to
be used for other Fund investments. If the Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.
The Fund will realize a profit from a closing transaction if the
price of the transaction is less than the premium received from writing the
option or is more than the premium paid to purchase the option; the Fund will
realize a loss from a closing transaction if the price of the transaction is
more than the premium received from writing the option or is less than the
premium paid to purchase the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
The Fund may write options in connection with buy-and-write
transactions; that is, the Fund will purchase a security and then write a call
option against that security. The exercise price of the call the Fund
determines to write will depend upon the expected price movement of the
underlying security. The exercise price of a call option may be below
("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money")
the current value of the underlying security at the time the option is
written. Buy-and-write transactions using in-the-money call options may be
used when it is expected that the price of the underlying security will
remain flat or decline moderately during the option period. Buy-and-write
transactions using at-the-money call options may be used when it is expected
that the price of the underlying security will remain fixed or advance
moderately during the option period. Buy-and-write transactions using out-of-
the-money call options may be used when it is expected that the premiums
received from writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be greater than the
appreciation in the price of the underlying security alone. If the call options
are exercised in such transactions, the Fund's maximum gain will be the premium
received by it for writing the option, adjusted upwards or downwards by the
difference between the Fund's purchase price of the security and the exercise
price. If the options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in part, or
entirely, by the premium received.
The writing of covered put options is similar in terms of
risk/return characteristics to buy-and-write transactions. If the market price
of the underlying security rises or otherwise is above the exercise price, the
put option will expire worthless and the Fund's gain will be limited to the
premium received. If the market price of the underlying security declines or
otherwise is below the exercise price, the Fund may elect to close the position
or take delivery of the security at the exercise price. In that event, the
Fund's return will be the premium received from the put option minus the cost of
closing the position or, if it chooses to take delivery of the security, the
premium received from the put option minus the amount by which the market price
of the security is below the exercise price. Out-of-the-money, at-the-money and
in-the-money put options may be used by the Fund in the same market environments
that call options are used in equivalent buy-and-write transactions.
The extent to which the Fund will be able to write and
purchase call and put options will also be restricted by the Fund's
intention to qualify the Fund as a regulated investment company under the
federal income tax law. See "Taxes."
OTC Options. The Fund will enter into over-the-counter ("OTC")
options transactions only with primary dealers in U.S. Government securities and
only pursuant to agreements that will assure that the Fund will at all times
have the right to repurchase the option written by it from the dealer at a
specified formula price. The Fund will treat the amount by which such formula
price exceeds the intrinsic value of the option (i.e., the amount, if any, by
which the market price of the underlying security exceeds the exercise price of
the option) as an illiquid investment.
It is the present policy of the Fund not to enter into any OTC
option transaction if, as a result, more than 15% of the Fund's net assets would
be invested in (i) OTC options purchased by the Fund and other illiquid
investments.
LIMITATIONS ON THE USE OF OPTIONS STRATEGIES
--------------------------------------------
The Fund's ability to engage in the options strategies described
above will depend on the availability of liquid markets in such instruments.
Markets in certain options are relatively new and still developing. It is
impossible to predict the amount of trading interest that may exist in various
types of options. Therefore no assurance can be given that the Fund will be able
to utilize these instruments effectively for the purposes set forth above.
Furthermore, the Fund's ability to engage in options transactions may be limited
by tax considerations.
RISK FACTORS IN OPTIONS TRANSACTIONS
------------------------------------
The option writer has no control over when the underlying securities
must be sold, in the case of a call option, or purchased, in the case of a put
option, since the writer may be assigned an exercise notice at any time prior to
the termination of the obligation. If an option expires unexercised, the writer
realizes a gain in the amount of the premium. Such a gain, of course, may, in
the case of a covered call option, be offset by a decline in the market value of
the underlying security during the option period. If a call option is
exercised, the writer realizes a gain or loss from the sale of the underlying
security. If a put option is exercised, the writer must fulfill the obligation
to purchase the underlying security at the exercise price, which will usually
exceed the then market value of the security.
An exchange-traded option may be closed out only on a national
securities exchange (an "Exchange") which generally provides a liquid secondary
market for an option of the same series. An over-the-counter option may be
closed out only with the other party to the option transaction. If a liquid
secondary market for an exchange-traded option does not exist, it might not be
possible to effect a closing transaction with respect to a particular option
with the result that the Fund would have to exercise the option in order to
realize any profit. If the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise. Reasons for the absence of a liquid secondary market on an Exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an Exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforseen circumstances may
interrupt normal operations on an Exchange; (v) the facilities of an Exchange or
the Options Clearing Corporation may not at all times be adequate to handle
current trading volume; or (vi) one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on the Exchange (or in that class or series of options)
would cease to exist, although outstanding options on the Exchange that had been
issued by the Options Clearing Corporation as a result of trades on that
Exchange would continue to be exercisable in accordance with their terms.
The Exchanges have established limitations governing the maximum
number of options which may be written by an investor or group of investors
acting in concert. It is possible that the Fund and other clients of the
Advisor may be considered to be such a group. These position limits may
restrict the Funds' ability to purchase or sell options on a particular
security.
FUTURES TRANSACTIONS
--------------------
The Fund may sell futures contracts, purchase put options on futures
contracts and write call options on futures contracts for the purpose of hedging
its portfolio. Information concerning futures contracts and options on futures
contracts is set forth below.
FUTURES CONTRACTS. A futures contract sale creates an obligation
by the seller to deliver the type of commodity or financial instrument called
for in the contract in a specified delivery month for a stated price. A futures
contract purchase creates an obligation by the purchaser to take delivery of the
underlying commodity or financial instrument in a specified delivery month at a
stated price. The specific instruments delivered or taken, respectively, at
settlement date are not determined until at or near that date. The
determination is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. An index futures contract is
similar except that the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the
securities index value at the close of the last trading day of the contract and
the price at which the futures contract is originally struck. Futures contracts
are traded only on commodity exchanges -- known as "contract markets" --
approved for such trading by the Commodity Futures Trading Commission ("CFTC"),
and must be executed through a futures commission merchant or brokerage firm
which is a member of a contract market.
Although futures contracts by their terms call for actual delivery
or acceptance of commodities or securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery.
Closing out of a futures contract sale is effected by purchasing a futures
contract for the same aggregate amount of the specific type of financial
instrument or commodity and the same delivery date. If the price of the initial
sale of the futures contract exceeds the price of the offsetting purchase, the
seller is paid the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the offsetting purchase, the seller
is paid the difference and realizes a gain. Conversely, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes a
loss. Similarly, the closing out of a futures contract purchase is effected by
the purchaser entering into a futures contract sale. If the offsetting sale
price exceeds the purchase price, the purchaser realizes a gain, and if the
purchase price exceeds the offsetting sale price, he realizes a loss.
The purchase (that is, assuming a long position in) or sale (that
is, assuming a short position in) of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or received.
Instead, an amount of cash or U.S. Treasury bills generally not exceeding 5% of
the contract amount must be deposited with the broker. This amount is known as
initial margin. Subsequent payments to and from the broker, known as variation
margin, are made on a daily basis as the price of the underlying futures
contract fluctuates making the long and short positions in the futures contract
more or less valuable, a process known as "marking to market." At any time
prior to the settlement date of the futures contract, the position may be closed
out by taking an opposite position which will operate to terminate the position
in the futures contract. A final determination of variation margin is then
made, additional cash is required to be paid to or released by the broker, and
the purchaser realizes a loss or gain. In addition, a commission is paid on
each completed purchase and sale transaction.
The Fund may engage in transactions in futures contracts for the
purpose of hedging against changes in the values of securities it owns or
intends to acquire. The Fund may sell such futures contracts in anticipation of
a decline in the value of its investments. The risk of such a decline can be
reduced without employing futures as a hedge by selling long-term securities and
either reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. This strategy, however, entails increased transaction
costs in the form of brokerage commissions and dealer spreads. The sale of
futures contracts provides an alternative means of hedging the Fund against a
decline in the value of its investments in fixed-income securities. As such
values decline, the value of the Fund's position in the futures contracts will
tend to increase, thus offsetting all or a portion of the depreciation in the
market value of the Fund's fixed-income securities which are being hedged.
While the Fund will incur commission expenses in establishing and closing out
futures positions, commissions on futures transactions may be significantly
lower than transaction costs incurred in the purchase and sale of fixed-income
securities. Employing futures as a hedge may also permit the Fund to assume a
defensive posture without reducing its yield on its investments.
CALL OPTIONS ON FUTURES CONTRACTS. The purchase of a call option on
a futures contract is similar in some respects to the purchase of a call option
on an individual security. Depending on the pricing of the option compared to
either the futures contract upon which it is based, or upon the price of the
underlying debt securities, it may or may not be less risky than ownership of
the futures contract or underlying debt securities. As with the purchase of a
futures contract, the Fund may purchase a call option on a futures contract to
hedge against a market advance when the Fund is not fully invested.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the securities or commodities which
are deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's portfolio holdings.
PUT OPTIONS ON FUTURES CONTRACTS. The purchase of put options on a
futures contract is similar in some respects to the purchase of protective put
options on portfolio securities. The Fund may purchase put options on futures
contracts to hedge the Fund's portfolio against the risk of rising interest
rates or declines in stock market prices. The Fund may purchase put options on
futures contracts in circumstances where it would sell futures contracts.
The Fund may write a put option on a futures contract as a partial
hedge against increasing prices of the assets which are deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is higher than the exercise price, the Fund will retain the full amount
of the option premium which provides a partial hedge against any increase in the
price of assets that the Fund intends to purchase.
INDEX FUTURES. A securities index assigns relative values to the
securities comprising the index. An index futures contract is a bilateral
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between
the index value at the close of the last trading day of the contract and the
price at which the futures contract is originally struck. No physical delivery
of the underlying securities in the index is made.
The Fund will engage in transactions in index futures contracts only
as a hedge against changes resulting from market conditions in the values of
securities held in the Fund's portfolio or which the Fund intends to purchase.
In connection with its purchase of index futures contracts, the Fund will
deposit an amount of cash and cash equivalents, equal to the market value of the
futures contracts, in a segregated account with its Custodian and/or in the
margin account with a broker.
LIMITATIONS ON THE USE OF OPTIONS AND FUTURES PORTFOLIO STRATEGIES
------------------------------------------------------------------
The Fund will not "over-hedge," that is the Fund will not make open
short positions in futures contracts if, in the aggregate, the value of its open
positions (marked to market) exceeds the current market value of its securities
portfolio plus or minus the unrealized gain or loss on such open positions,
adjusted for the historical volatility relationship between the portfolio and
futures contracts.
The Fund's ability to engage in the options and futures strategies
described above will depend on the availability of liquid markets in such
instruments. Markets in certain options and futures are relatively new and
still developing. It is impossible to predict the amount of trading interest
that may exist in various types of options or futures. Therefore no assurance
can be given that the Fund will be able to utilize these instruments effectively
for the purposes set forth above. Furthermore, the Fund's ability to engage in
options and futures transactions may be limited by tax considerations and CFTC
rules.
RISK FACTORS IN FUTURES TRANSACTIONS
------------------------------------
Investment by the Fund in futures contracts involves risk. Some of
that risk may be caused by an imperfect correlation between movements in the
price of the futures contract and the price of the security or other investment
being hedged. The hedge will not be fully effective where there is such
imperfect correlation. For example, if the price of the futures contract moves
more than the price of the hedged security, the Fund would experience either a
loss or gain on the future which is not completely offset by movements in the
price of the hedged securities. To compensate for imperfect correlations, the
Fund may purchase or sell futures contracts in a greater dollar amount than the
hedged securities if the volatility of the hedged securities is historically
greater than the volatility of the futures contracts. Conversely, the Fund may
purchase or sell fewer contracts if the volatility of the price of the hedged
securities is historically less than that of the futures contracts. The risk of
imperfect correlation generally tends to diminish as the maturity date of the
futures contract approaches.
Futures contracts on U.S. Government securities historically have
reacted to an increase or decrease in interest rates in a manner similar to that
in which the underlying U.S. Government securities reacted.
Futures contracts may be used to hedge against a possible increase
in the price of securities which the Fund anticipates purchasing, or options
thereon. In such instances, it is possible that the market may instead decline.
If the Fund does not then invest in such securities because of concern as to
possible further market decline or for other reasons, the Fund may realize a
loss on the futures contract that is not offset by a reduction in the price of
the securities purchased.
The amount of risk the Fund assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The liquidity of a secondary market in a futures contract may be
adversely affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a futures contract price
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. Prices have in the past
exceeded the daily limit on a number of consecutive trading days.
The successful use of transactions in futures and related options
also depends on the ability of the Adviser to forecast correctly the direction
and extent of interest rate movements within a given time frame. To the extent
interest rates remain stable during the period in which a futures contract or
related option is held by the Fund or such rates move in a direction opposite to
that anticipated, the Fund may realize a loss on the hedging transaction which
is not fully or partially offset by an increase in the value of portfolio
securities. As a result, the Fund's total return for such period may be less
than if it had not engaged in the hedging transaction.
CONTINGENT DEFERRED SALES CHARGE (CLASS B SHARES)
AND INITIAL SALES CHARGE (CLASS A SHARES)
As described in the Prospectus under the caption "How to Redeem,"
the contingent deferred sales shares is waived on redemptions of Class B shares
for certain classes of individuals or entities on account of: (i) the fact that
the Fund's sales-related expenses are lower for certain of such classes than for
classes for which the contingent deferred sales load is not waived; (ii) waiver
of the contingent deferred sales load with respect to certain of such classes is
consistent with certain Internal Revenue Code policies concerning the favored
tax treatment of accumulations; and (iii) with respect to certain of such
classes, considerations of fairness, and competitive and administrative factors.
As described in the Prospectus under the caption
"Alternative Purchase Arrangements--Initial Sales Charge Alternative - Class A
Shares," Class A shares of the Fund are sold pursuant to an initial sales
charge, which declines as the amount of purchase reaches certain defined levels.
EXCHANGE PRIVILEGE
As described in the Prospectus under the caption "Exchange
Privilege," a shareholder may exchange shares of the Fund for shares of the
Portico Money Market Fund at their current net asset values. With respect to
Class B shares, the original purchase date(s) of shares exchanged will carry
over to the investment in the new fund for purposes of calculating any
contingent deferred sales charge. For example, if a shareholder invests in the
Class B shares of the Fund and 6 months later exchanges those shares for shares
of another fund, no sales charge would be imposed upon the exchange but the
investment in the other fund would be subject to the 5% contingent deferred
sales charge until one year after the date of the shareholder's investment in
the first Fund, as described in the Prospectus under "Alternative Purchase
Arrangements." With respect to Class B shares subject to a contingent deferred
sales charge, if less than all of an investment is exchanged out of the Fund,
any portion of the investment attributable to capital appreciation and/or
reinvested dividends or capital gains distributions will be exchanged first, and
thereafter any portions exchanged will be from the earliest investment made in
the Fund from which the exchange was made. The Fund reserves the right to
modify or discontinue the exchange privilege at any time. Orders for exchanges
received after the close of regular trading on the Exchange on any business day
will be executed at the respective net asset values determined at the close of
the next business day.
DISTRIBUTOR AND DISTRIBUTION AND SERVICING PLANS
As stated in the text of the Prospectus under the caption
"Distributor and Distribution and Servicing Plans," shares of the Fund are
continuously offered through firms ("participating brokers") which are members
of the National Association of Securities Dealers, Inc. and which have dealer
agreements with the Distributor, or which have agreed to act as introducing
brokers for the Distributor ("introducing brokers"). Under the Distribution
Agreement between the Fund and the Distributor (the "Distribution Agreement"),
the Distributor is not obligated to sell any specific amount of shares of the
Fund and will purchase shares for resale only against orders for shares.
Pursuant to the Distribution and Servicing Plans described in the
Prospectus, in connection with the distribution of Class B shares of the Fund,
the Distributor receives certain distribution fees from the Fund, and in
connection with personal services rendered to Class A and Class B shareholders
of the Fund and the maintenance of shareholder accounts, the Distributor
receives certain servicing fees from the Fund. Subject to the percentage
limitations on these distribution and servicing fees set forth in the
Prospectus, the distribution and servicing fees may be paid in respect of
services rendered and expenses borne in the past with respect to each such class
as to which no distribution and servicing fees were paid on account of such
limitations. As described in the Prospectus, the Distributor pays all or a
portion of the distribution and servicing fees it receives from the Fund to
participating and introducing brokers.
Each Distribution and Servicing Plan may be terminated with respect
to the class of shares of the Fund by vote of a majority of the trustees who are
not interested persons of the Fund (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of the Plan or the
Distribution Agreement (the "Independent Trustees"), or by vote of a majority of
the outstanding voting securities of that class. Any change in either Plan that
would materially increase the cost to the class of shares of the Fund requires
approval by the affected class of shareholders of the Fund. The trustees review
quarterly a written report of such costs and the purposes for which such costs
have been incurred. The Plan may be amended by vote of the trustees, including
a majority of the Independent trustees, cast in person at a meeting called for
the purpose. For so long as the Plan is in effect, selection and nomination of
those Trustees who are not interested persons of the Fund shall be committed to
the discretion of such disinterested persons.
The Distribution Agreement may be terminated with respect to the
Fund or class of shares thereof at any time on 60 days' written notice without
payment of any penalty either by the Distributor or by the Fund by vote of a
majority of the outstanding voting securities of the Fund or that class, as the
case may be, or by vote of a majority of the Independent Trustees.
The Distribution Agreement and the Distribution and Servicing Plans
will continue in effect with respect to the Fund and each class of shares
thereof for successive one-year periods, provided that each such continuance is
specifically approved: (i) by the vote of a majority of the Independent
Trustees; and (ii) by the vote of a majority of the entire Board of Trustees
cast in person at a meeting called for that purpose.
If the Distribution Agreement or the Distribution and Servicing
Plans are terminated (or not renewed) with respect to the Fund, they may
continue in effect with respect to any class of the Fund as to which they have
not been terminated (or have been renewed).
The trustees believe that the Distribution Plans provide benefits to
the Fund. The trustees believe that the Plans result in greater sales and/or
fewer redemptions of Fund shares, although it is impossible to know for certain
the level of shares and redemptions of Fund shares in the absence of the Plan or
under an alternative distribution scheme. The effect on sales and/or
redemptions is believed to benefit the Fund by reducing Fund expense ratios
and/or by affording greater flexibility to Fund managers.
The Distributor has undertaken to reimburse the Fund to the extent
that the aggregate annual operating expenses, including the investment advisory
fee but excluding interest, taxes, brokerage commissions and extraordinary
items, exceed that percentage of the average net assets of the Fund for such
year, as determined by valuations made as of the close of each business day of
the year, which is the most restrictive percentage provided by the state laws of
the various states in which the Common Stock is qualified for sale. As of the
date of this Statement of Additional Information the percentage applicable to
the Fund is 21/2% on the first $30,000,000 of its average daily net assets, 2%
on the next $70,000,000 of its average daily net assets and 11/2% of its average
daily net assets in excess of $100,000,000. The Fund monitors its expense ratio
at least on a monthly basis. If the accrued amount of the expenses of the Fund
exceeds the expense limitation, the Fund creates an account receivable from the
Distributor for the amount of such excess.
In addition to any reimbursement requirement required under the most
restrictive applicable expense limitation of state securities commissions
described above, the Distributor has undertaken to reimburse the Fund for
expenses in excess of 1.15% and 1.90% of average net assets of Class A Shares
and Class B Shares, respectively. Such reimbursements to the Fund may only be
modified or discontinued by the Distributor by amending the Distribution
Agreement. For the fiscal year ended October 31, 1996 and from September 1,
1995 (commencement of operations) to October 31, 1995, total expenses of the
Fund would have exceeded 1.15% and 1.90% of the average net assets of Class A
Shares and Class B Shares, respectively. As a result, the Distributor
reimbursed the Fund $144,639 and $27,342, respectively, for the same periods.
TRUSTEES AND OFFICERS OF THE FUND
The name, address, principal occupations during the past five years
and other information with respect to each of the trustees and officers of the
Fund are as follows:
LAWRENCE KUJAWSKI*<F14>
- ------------------
13255 West Bluemound Road
Brookfield, Wisconsin 53005
(PRESIDENT, TREASURER AND A
TRUSTEE OF THE FUND)
Mr. Kujawski has been the President of Matrix Venture Funds, Inc., a
firm specializing in the valuation of closely held securities, acquisitions,
venture capital financing and consulting, since he founded Matrix Venture Funds,
Inc. in 1982.
RICHARD IMPERIALE*<F14>
- ------------------
839 N. Jefferson Street
Milwaukee, Wisconsin 53202
(CHAIRMAN, SECRETARY AND
A TRUSTEE OF THE FUND)
Mr. Imperiale has been the President of Uniplan, Inc., the Fund's
investment advisor, since he founded Uniplan, Inc. in 1985.
F. L. KIRBY*<F14>
- ------------
233 S. Wacker Drive
Suite 4500
Chicago, Illinois 60603
(TRUSTEE OF THE FUND)
Mr. Kirby is an Executive Vice President, a Director, and an
Executive Committee member of Rodman & Renshaw, Inc., the Fund's Distributor,
positions he has held since 1994. In these capacities, he is in charge of all
retail sales for Rodman & Renshaw, Inc. From 1993 through 1994, Mr. Kirby was a
senior vice president at Oppenheimer & Co., another broker-dealer. From 1991
through 1993, he was a senior vice president, a director and an Executive
Committee member of Rodman & Renshaw, Inc.
JOHN L. KOMIVES
- ---------------
101 S. Second Street
Milwaukee, Wisconsin 53204
(TRUSTEE)
Dr. Komives is the President of Lakeshore Group Ltd., a position he
has held since he founded the firm in 1975. Dr. Komives is a member of the
board of directors of the following firms: F.W. Boelter Cos., Inc., Milwaukee,
Wisconsin; Eagle Technology, Inc., Mequon, Wisconsin; Ebert and Associates,
Inc., Milwaukee, Wisconsin; Ft. Kincaid Industries, Inc., Milwaukee, Wisconsin;
Metrix Customer Support Systems (MCSS), Waukesha, Wisconsin; Metal Processing
Co., Milwaukee, Wisconsin; Orthokinetics, Inc., Pewaukee, Wisconsin; Premier
Plastics, Inc., Waukesha, Wisconsin; Renquist Associates, Inc., Racine,
Wisconsin; World Venture Management, Inc., Milwaukee, Wisconsin; Zigman,
Joseph & Stephenson, Inc., Milwaukee, Wisconsin. He also serves as a member of
the following boards: Acme Institute of Technology, West Allis, Wisconsin;
Board of Governors, Mount Mary College, Wauwatosa, Wisconsin; and Board of
Governors of the Center for Entrepreneurial Studies, Marquette University,
Milwaukee, Wisconsin.
J. MICHAEL BORDEN
- -----------------
2938 North Shore Drive
Delavan, Wisconsin 53115
(TRUSTEE)
Since 1988, Mr. Borden has been the president of Total Quality
Plastics, Inc., a manufacturer of injection molding, the president of Rock
Valley Trucking, and the president of Freedom Plastics, Inc. Mr. Borden has
been the president and chief executive officer of Hufcor, Inc., a manufacturer
of movable walls and accordion partitions, since 1978. From 1980 through 1994,
he was also a member of the board of directors, a member of the executive
committee, the chairman of the finance and executive committees and a vice
president of Catholic Knights Insurance Society.
DENNIS J. LASSER
- ----------------
Binghampton, New York
(TRUSTEE)
Mr. Lasser is an Associate Professor of Finance, School of
Management, SUNY-Binghamton, New York, a position he has held since 1988.
JAMES L. STANKO
- ----------------
Rancho Santa Fe, California
(TRUSTEE)
Mr. Stanko is Chairman of Winstar Associates, a company he founded
in 1992. From 1982 until 1992 he was a Managing Director of Oppenheimer & Co.
From 1976 until 1982, Mr. Stanko was Chairman of Carroll McEntee and McGinley
Money Markets, Inc.
*<F14>Messrs. Kujawski, Imperiale and Kirby are trustees who are "interested
persons" of the Fund as that term is defined in the Investment Company Act of
1940.
The Fund's standard method of compensating trustees is to pay each
trustee who is not an officer of the Fund a fee of $250 for each meeting of the
trustees attended. The Fund also may reimburse its trustees for travel expenses
incurred in order to attend meetings of the trustees. For the fiscal year ended
October 31, 1996, officers and trustees received $5,000 in the aggregate
remuneration from the Fund and received $2,952 as reimbursements for travel
expenses.
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
Name and Address Percent of Percent of
Of Beneficial Owner Number of Shares Class Total Fund
- ------------------- --------------- ---- ---------
Firstar Trust Company - Custodian for
Sidney Shindell - IRA Rollover
929 N. Astor Street
Milwaukee, Wisconsin 53202-3454 76,793.753 16.24% 14.65%
National Investor Services Corp.
for the exclusive benefit of our
customers 55 Water Street, Floor 32
New York, New York 10041-3299 55,123.154 11.65% 10.52%
Marshall & Ilsley Trust Company, trustee
FBO Hough Mfg Corp.
Retirement Trust
1000 N. Water Street
Milwaukee, Wisconsin 53202-3197 51,874.361 10.97% 9.9%
Clarke & Co.
235 West Schrock Rd.
Westerville, Ohio 43081-2874 47,409.495 10.04% 9.06%
Firstar Trust Co. - Custodian for
Carlisle F. Meredith IRA
40344 Charleston Pike
Hamilton, Virginia 20158-3216 45,616.515 9.64% 8.70%
Officers and Trustees as a Group 1<F15>
(7 persons) 35,262.344 7.46% 6.72%
By virtue of its stock ownership, Sindney Shindell is deemed to "control," as
that term is defined in the Investment Company Act of 1940, the Fund. Although
Sindney Shindell controls the Fund, it does not control The Jefferson Fund Group
Trust. No other person owns of record or beneficially 5% or more of the
outstanding securities of any class of the Fund.
1<F15> This includes shares held by Uniplan Inc., as well as shares held by
Mr. Imperiale in his capacity as trustee of the Uniplan Inc. Profit Sharing
Plan and by Mr. Imperiale in his capacity as custodian for Emily
Imperiale under the Uniform Transfer to Minors Act.
INVESTMENT ADVISOR, ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT AND ACCOUNTING
SERVICES AGENT
As set forth in the Prospectus under the caption "MANAGEMENT OF THE
FUND" the investment adviser to the Fund is Uniplan, Inc. (the "Advisor").
Pursuant to an investment advisory agreement between the Fund and the Advisor
(the "Advisory Agreement") the Advisor furnishes continuous investment advisory
services and management to the Fund. The Advisor is controlled by Richard P.
Imperiale, who owns 90% of its outstanding capital stock. Mr. Imperiale is also
a trustee of the Fund.
The Advisory Agreement will remain in effect for two years until
August 4, 1997 and thereafter as long as its continuance is specifically
approved at least annually, by (i) the trustees of the Fund, or by the vote of a
majority (as defined in the Investment Company Act of 1940) of the outstanding
shares of the Fund, and (ii) by the vote of a majority of the trustees of the
Fund who are not parties to the Advisory Agreement or interested persons of the
Advisor, cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement provides that it may be terminated at any time
without the payment of any penalty, by the trustees of the Fund or by vote of a
majority of the Fund's shareholders, on sixty days written notice to the
Advisor, and by the Advisor on the same notice to the Fund and that it shall be
automatically terminated if it is assigned.
The Advisory Agreement provides that the Advisor shall not be liable
to the Fund or its shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations or duties. The
Advisory Agreement also provides that the Advisor and its officers, directors
and employees may engage in other businesses, devote time and attention to any
other business whether of a similar or dissimilar nature, and render investment
advisory services to others. For the fiscal year ended October 31, 1996 and for
the period from September 1, 1995 (commencement of operations) through October
31, 1995, the fees paid under the Advisory Agreement were $18,010 and $1000,
respectively.
As set forth in the Prospectus under the caption "MANAGEMENT OF THE
FUND," the administrator to the Fund is Firstar Trust Company (the
"Administrator"), 615 East Michigan Street, Milwaukee, Wisconsin 53202. The
administration agreement entered into between the Fund and the Administrator
(the "Administration Agreement") will remain in effect until terminated by
either party. The Administration Agreement may be terminated at any time,
without the payment of any penalty, by the trustees of the Fund upon the giving
of ninety (90) days' written notice to the Administrator, or by the
Administrator upon the giving of ninety (90) days' written notice to the Fund.
Under the Administration Agreement, the Administrator is not liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of the Administration Agreement, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Administrator in the performance of its duties or from its reckless
disregard of its duties and obligations under the Administration Agreement. For
its services, the Administrator is entitled to receive fees, payable monthly,
based on the total annual rate of $20,000 in the event that the average net
assets of the Fund is less than $10,000,000 and increasing by $4,000 for every
$2,000,000 increase in average net assets of the Fund until the Fund reaches
$20,000,000 in average net assets. At such time, the fee is .3% of the average
net assets of the Fund; such fee decreases to .2% of the average net assets when
average net assets reach $25,000,000 and decreases to .15% of the average net
assets when average net assets reach $30,000,000. At such time as the average
net assets reach $200,000,000, the fees are .06% on the first $200,000,000, .05%
on the next $300,000,000 and .03% on all net assets exceeding $500,000,000. For
the fiscal year ended October 31, 1996 and for the period from September 1, 1995
(commencement of operations) though October 31, 1995, the fees earned by the
Administrator were $36,538 and $5620, respectively.
Firstar Trust Company also serves as custodian of the Fund's assets
pursuant to a Custody Agreement. Under the Custody Agreement, Firstar Trust
Company has agreed to (i) maintain a separate account in the name of the Fund,
(ii) make receipts and disbursements of money on behalf of the Fund, (iii)
collect and receive all income and other payments and distributions on account
of the Fund's portfolio investments, (iv) respond to correspondence from
shareholders, security brokers and others relating to its duties and (v) make
periodic reports to the Fund concerning the Fund's operations. Firstar Trust
Company does not exercise any supervisory function over the purchase and sale of
securities. For its services as custodian, Firstar Trust company is entitled to
receive a fee, payable quarterly, based on the annual rate of .02% of the net
assets of the Fund (subject to a minimum annual $3000 fee). In addition,
Firstar Trust Company, as custodian, is entitled to certain charges for
securities transactions and reimbursement for expenses. For the fiscal year
ended October 31, 1996 and for the period from September 1, 1995 (commencement
of operations) through October 31, 1995, the fees earned by the custodian were
$7440 and $533, respectively.
Firstar Trust Company also serves as transfer agent and dividend
disbursing agent for the Fund under a Shareholder Servicing Agent Agreement. As
transfer and dividend disbursing agent, Firstar Trust Company has agreed to (i)
issue and redeem shares of the Fund, (ii) make dividend and other distributions
to shareholders of the Fund, (iii) respond to correspondence by Fund
shareholders and others relating to its duties, (iv) maintain shareholder
accounts, and (v) make periodic reports to the Fund. For its transfer agency and
dividend disbursing services, Firstar Trust company is entitled to receive fees
based on the average net assets in the Fund (subject to a minimum annual fee of
$15,000). Also, Firstar Trust Company is entitled to certain other transaction
charges and reimbursement for expenses. For the fiscal year ended October 31,
1996 and for the period September 1, 1995 (commencement of operations) through
October 31, 1995, the fees earned under the Shareholder Servicing Agreement were
$ 35,605 and $4,218, respectively.
In addition the Fund has entered into a Fund Accounting Servicing
Agreement with Firstar Trust company pursuant to which Firstar Trust Company has
agreed to maintain the financial accounts and records of the Fund and provide
other accounting services to the Fund. For it accounting services, Firstar
Trust Company is entitled to receive fees, payable monthly, based on the total
annual rate of $22,000 for the first $20,000,000 in average net assets of the
Fund; .17% of average net assets when the Fund exceeds $20,000,000 but is less
than $25,000,000; .12% of average net assets when the Fund exceeds $25,000,000
but is less than $30,000,000; and when the Fund exceeds $30,000,000, the fees
are $27,500 for the first $40,000,000 in average net assets of the Fund, .01% on
the next $200,000,000 of average net assets of the Fund and .005% on all net
assets exceeding $240,000,000. Firstar Trust Company is also entitled to
certain out of pocket expenses, including pricing expenses. For the fiscal year
ended October 31, 1996 and for the period September 1, 1995 (commencement of
operations) through October 31, 1995, the fees earned under the Fund Accounting
Servicing Agreement were $26,799 and $3738, respectively.
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the caption "DETERMINATION OF
NET ASSET VALUE," the net asset value of the Fund will be determined as of the
close of regular trading (currently 4:00 p.m. Eastern time) on each day the New
York Stock Exchange is open for trading. The Trust expects the New York Stock
Exchange to be open for trading Monday through Friday except New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Additionally, if any of the aforementioned
holidays falls on a Saturday, the Fund expects that the New York Stock Exchange
will not be open for trading on the preceding Friday and when any such holiday
falls on a Sunday, the Trust expects that the New York Stock Exchange will not
be open for trading on the succeeding Monday, unless unusual business conditions
exist, such as the ending of a monthly or the yearly accounting period. The
Fund's portfolio securities for which market quotations are readily available
are valued at the most recent bid price. Notwithstanding the above sentence,
certain of the Fund's holdings of debt securities are valued by a pricing
service. The pricing service relies on one or more of the following factors:
valuations obtained from recognized dealers, information on transactions for
similar securities, general market information, and matrix comparisons of
various characteristics of debt securities, such as quality, yield maturity.
CALCULATION OF TOTAL RETURN
Total Return with respect to the Fund's Class A and Class B shares
is a measure of the change in value of an investment in a class of shares of the
Fund over the period covered (in the case of Class A shares, giving effect to
the maximum initial sales charge), which assumes any dividends or capital gains
distributions are reinvested in that class of the Fund's shares immediately
rather than paid to the investor in cash. The formula for Total Return used
herein includes four steps: (1) adding to the total number of shares purchased
by a hypothetical $1,000 investment in the class (deducting in the case of Class
A shares of the maximum applicable initial sales charge) all additional shares
which would have been purchased if all dividends and distributions paid or
distributed during the period had been immediately reinvested; (2) calculating
the value of the hypothetical initial investment of $1,000 as of the end of the
period by multiplying the total number of shares in the class owned at the end
of the period by the net asset value per share of the class on the last trading
day of the period; (3) assuming redemption at the end of the period (deducting
any applicable contingent deferred sales charge); and (4) dividing this account
value for the hypothetical investor by the initial $1,000 investment and
annualizing the result for the periods of less than one year. Specifically, the
Total Return formula is as follows:
n
P (1 + T) = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five, or ten-year period at the end of
the one, five, or ten-year period (or fractional portion thereof).
The manner in which Total Return of the Class A and Class B shares
will be calculated for public use is described above.
The total return for the one year ended October 31, 1996 was 11.50%
and 10.49% for Class A Shares and Class B Shares, respectively. The total
return for the period from September 1, 1995 (commencement of operations)
through October 31, 1995 was 0.40% for the Class A Shares and 0.30% for Class B
Shares. On an annualized basis, those returns would have been 2.40% and 1.80%,
respectively.
Performance information is computed separately for the Fund's Class
A and Class B shares. The Fund may from time to time include the total Return
of its Class A and Class B shares in advertisements or in information furnished
to represent or prospective shareholders. The Fund may from time to time
include in advertisements the total return of each class and the ranking of
those performance figures relative to such figures for groups of mutual funds
categorized by Lipper Analytical Services as having the same investment
objectives.
Information provided to any newspaper or similar listing of the
Fund's net asset values and public offering prices will separately present the
Class A and Class B shares.
The Total Return of each class may also be used to compare the
performance of the Funds' Class A and Class B shares against certain widely
acknowledged standards or indices for stock and bond market performance against
the cost of living (inflation) index, and against hypothetical results based on
a fixed rate of return.
The Standard & Poor's composite Index of 500 stocks (the "S&P 500")
is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
New York Stock Exchange, although the common stocks of a few companies listed on
the American Stock Exchange or traded over-the-counter are included. The 500
companies represented include 385 industrial, 15 transportation, 45 utilities
and 55 financial services concerns. The S&P 500 represents about 77% of the
market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Price Index (the "NASDAQ Index") is a market value-
weighted and unmanaged index showing the changes in the aggregate market value
of approximately 3,500 stocks relative to the base measure of 100.00 on February
5, 1971. The NASDAQ Index is composed entirely of common stocks of companies
traded over-the-counter and often through the National Association of Securities
Dealers Automated Quotations ("NASDAQ") system. Only those over-the-counter
stocks have only one market maker or traded on exchanges are excluded.
The Russell 2000 Small Stock Index is an unmanaged index of
the 2000 smallest securities in the Russell 3000 Index, representing
approximately 7% of the Russell 3000 Index. The Russell 3000 Index represents
approximately 98% of the U.S. equity market by capitalization.
From time to time, articles or reports about the Fund concerning
performance, rankings and other characteristics of the Fund may appear in
national publications and services including, but not limited to, the Wall
Street Journal, Forbes, Fortune, Money Magazine, Morningstar's Mutual Fund
Values, CDA Investment Technologies and The Donoghue Organization. In
particular, some or all of these publications may publish their own rankings or
performance reviews of mutual funds, including the Fund. References to or
reprints of such articles may be used in the Fund's promotional literature.
References to articles regarding personnel of the Advisor who have portfolio
management responsibility may also be used in the Fund's promotional literature.
From time to time, the Fund may use, in its advertisements or
information furnished to present or prospective shareholders, data concerning
the performance and ranking of certain countries' stock markets, including
performance and ranking data based on annualized returns over one, three, five
and ten-year periods.
From time to time, the Fund may set forth in its advertisements and
other materials information about the growth of a certain dollar amount
invested in the Fund over a specified period of time and may use charts and
graphs to display that growth.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made by the
Advisor subject to review by the Fund's trustees. In placing purchase and sale
orders for portfolio securities for the Fund, it is the policy of the Advisor to
seek the best execution of orders at the most favorable price in light of the
overall quality of brokerage and research services provided, as described in
this and the following paragraph. In selecting brokers to effect portfolio
transactions, the determination of what is expected to result in best execution
at the most favorable price involves a number of largely judgmental
considerations. Among these are the Advisor's evaluation of the broker's
efficiency in executing and clearing transactions, block trading capability
(including the broker's willingness to position securities) and the broker's
financial strength and stability. The most favorable price to the Fund means
the best net price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities are generally purchased and
sold directly with principal market makers who retain the difference in their
cost in the security and its selling price. In some instances, the Advisor
feels that better prices are available from non-principal market makers who are
paid commissions directly. The Advisor may allocate portfolio brokerage on the
basis of whether the broker has sold or is currently selling Shares of the Fund
and may also allocate portfolio brokerage to the Distributor, but, in each case,
only if the Advisor reasonably believes the commissions and transaction quality
are comparable to that available from other qualified brokers. Under the
Investment Company Act of 1940, the Distributor is prohibited from dealing with
the Fund as a principal in the purchase and sale of securities. Since
transactions in the over-the-counter securities market generally involve
transactions with dealers acting as principal for their own account, the
Distributor may not serve as the Fund's dealer in connection with such
transactions. All allocations of portfolio brokerage to the Distributor, if
any, will be conducted in compliance with procedures adopted in accordance with
Rule 17e-1 under the Investment Company Act of 1940. The Distributor, when
acting as a broker for the Fund in any of its portfolio transactions executed on
a securities exchange of which the Distributor is a member, will act in
accordance with the requirements of Section 11(a) of the Securities Exchange Act
of 1934 and the rules of such exchanges.
In allocating brokerage business for the Fund, the Advisor also
takes into consideration the research, analytical, statistical and other
information and services provided by the broker, such as general economic
reports and information, reports or analyses of particular companies or industry
groups, market timing and technical information, and the availability of the
brokerage firm's analysts for consultation. While the Advisor believes these
services have substantial value, they are considered supplemental to the
Advisor's own efforts in the performance of its duties under the Advisory
Agreement. Other clients of the Advisor may indirectly benefit from the
availability of these services to the Advisor, and the Fund may indirectly
benefit from services available to the Advisor as a result of transactions for
other clients. The Advisory Agreement provides that the Advisor may cause the
Fund to pay a broker which provides brokerage and research services to the
Advisor a commission for effecting a securities transaction in excess of the
amount another broker would have charged for effecting the transaction, if the
Advisor determines in good faith that such amount of commission is reasonable in
relation to the value of brokerage and research services provided by the
executing broker viewed in terms of either the particular transaction or the
Advisor's overall responsibilities with respect to the Fund and the other
accounts as to which he exercises investment discretion.
Pursuant to conditions set forth in rules of the Securities and
Exchange Commission, the Fund may purchase securities from an underwriting
syndicate of which the principal underwriter of the Fund or its affiliates are
members (but not from the principal underwriter itself). Such conditions relate
to the price and amount of the securities purchased, the commission or spread
paid, and the quality of the issuer. The rules further require that such
purchases take place in accordance with procedures adopted and reviewed
periodically by the Trustees, particularly those trustees who are not
"interested persons" of the Fund. Investments by other clients of the
Distributor and the Adviser may limit the ability of the Fund to purchase
securities from such a syndicate.
For the fiscal year ended October 31, 1996 and for the period
September 1, 1995 (commencement of operations) through October 31, 1995,
respectively, the Fund paid brokerage commissions of $21,288 on total
transactions of $5,619,286 and $1,532 on total transactions of $545,152
(excluding short-term investments). For the fiscal year ended October 31, 1996,
$700 of the total brokerage commissions paid represented brokerage commissions
paid to the Distributor. Some of the brokers to whom commissions were paid
provided research services to the Advisor.
TAXES
As set forth in the Prospectus under the caption "DIVIDENDS,
DISTRIBUTIONS AND TAXES, the Fund intends to qualify annually for and elect tax
treatment applicable to a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). Sixty percent of any
gain or loss realized by the Fund: (i) from net premiums from expired listed
options and from closing purchase transactions; and (ii) with respect to listed
options upon the exercise thereof, generally will constitute long-term capital
gains or losses and the balance will be short-term gains or losses.
Distributions of long-term capital gains, if designated as such by the Fund, are
taxable to shareholders as long-term capital gain, regardless of how long a
shareholder has held shares. Dividends from the Fund's net investment income
and distributions from the Fund's net realized short-term capital gains are
taxable to shareholders as ordinary income, whether received in cash or in
additional Fund shares. The 70% dividends-received deduction for corporations
will apply to such dividends and distributions, subject to proportionate
reductions if the aggregate dividends received by the Fund from domestic
corporations in any year are less than 100% of the Fund's gross income.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and capital gain net income. The Fund intends to make
sufficient distributions of ordinary taxable income and any capital gain net
income with respect to each calendar year to avoid liability for this excise
tax.
If for any taxable year the Fund does not qualify for the special
federal income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate rates
(without any deduction for distributions to its shareholders).
Any dividend or capital gains distribution paid shortly after a
purchase of Fund shares will have the effect of reducing the per share net asset
value of such shares by the amount of the dividend or distribution.
Furthermore, if the net asset value of the Fund shares immediately after a
dividend or distribution is less than the cost of such shares to the
shareholder, the dividend or distribution will be taxable to the shareholder
even though it results in a return of capital to him.
The Fund may be required to withhold Federal income tax at a rate of
31% ("backup withholding") from dividend payments and redemption proceeds if a
shareholder fails to furnish the Fund with his social security or other tax
identification number and certify under penalty of perjury that such number is
correct and that he is not subject to backup withholding due to the under
reporting of income. The certification form is included as part of the share
purchase application and should be completed when the account is opened.
SHAREHOLDER MEETINGS
It is contemplated that the Fund will not hold an annual meeting of
shareholders in any year in which the election of trustees is not required to be
acted on by shareholders under the Investment Company Act of 1940. The Fund's
Trust Instrument and Bylaws also contain procedures for the removal of trustees
by the Fund's shareholders. At any meeting of shareholders, duly called and at
which a quorum is present, the shareholders may, by the affirmative vote of the
holders of at least two-thirds (2/3) of the outstanding shares, remove any
trustee or trustees.
Upon the written request of the holders of shares entitled to not
less than ten percent (10%) of all the votes entitled to be cast at such
meeting, the Secretary of the Fund shall promptly call a special meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee. Whenever ten or more shareholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at least
one percent (1%) of the total outstanding shares, whichever is less, shall apply
to the Fund's Secretary in writing, stating that they wish to communicate with
other shareholders with a view to obtaining signatures to a request for a
meeting as described above and accompanied by a form of communication and
request which they wish to transmit, the Secretary shall within five business
days after such application either: (1) afford to such applicants access to a
list of the names and addresses of all shareholders as recorded on the books of
the Fund; or (2) inform such applicants as to the approximate number of
shareholders of record and the approximate cost of mailing to them the proposed
communication and form of request.
If the Secretary elects to follow the course specified in clause (2)
of the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be mailed
and of the reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all shareholders of record at their addresses as recorded
on the books unless within five business days after such tender the Secretary
shall mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may, and if
demanded by the trustees or by such applicants shall, enter an order either
sustaining one or more of such objections or refusing to sustain any of them.
If the Securities and Exchange Commission shall enter an order refusing to
sustain any of such objections, or if, after the entry of an order sustaining
one or more of such objections, the Securities and Exchange Commission shall
find, after notice and opportunity for hearing, that all objections so sustained
have been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all shareholders with reasonable promptness after the
entry of such order and the renewal of such tender.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 411 E. Wisconsin Avenue, Milwaukee,
Wisconsin 53202, has been selected as the independent accountants for the Fund.
Coopers & Lybrand L.L.P. conducts an annual audit of the Fund, assists in the
preparation of the Fund's federal and state tax returns and consults with the
Fund as to matters of accounting and Federal and State income taxation.
FINANCIAL STATEMENTS
The following financial statements are incorporated by reference to
the Jefferson Growth and Income Fund Annual Report dated October 31, 1996 (File
No. 811-8958), as filed with the Securities and Exchange Commission on December
31, 1996:
The Jefferson Fund Group Trust
Statement of Assets and Liabilities
Schedule of Investments
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
----------------------------------
(a) Financial Statements (financial highlights included in Part A and all
other Financial Statements included in Part B are all incorporated by reference
to the Jefferson Growth and Income Fund Annual Report dated October 31, 1996
(File No. 811-8958) (as filed with the Securities and Exchange Commission on
December 31, 1996))
The Jefferson Fund Group Trust
Statement of Assets and Liabilities
Schedule of Investments
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
(b) Exhibits
1.1 Registrant's Certificate of Trust (Exhibit 1.1 to Registrant's
Registration Statement on Form N-1A, which was filed on
January 25, 1995 ("Form N-1A") is incorporated by reference).
1.2 Registrant's Trust Instrument (Exhibit 1.2 to Form
N-1A is incorporated by reference).
2 Registrant's Bylaws (Exhibit 2 to Form N-1A is
incorporated by reference).
3 None
4 None
5 Investment Advisory Agreement (Exhibit 5 to Form N-1A is
incorporated by reference).
6.1 Distribution Agreement (Exhibit 6.1 to Form N-1A is
incorporated by reference).
6.2 Form of Sales Agreement (Exhibit 6.2 to Form N-1A
is incorporated by reference).
7 None
8 Custodian Agreement with Firstar Trust Company
(Exhibit 8 to Post-Effective Amendment No. 1 to Registrant's
Form N-1A, which was filed on August 14, 1995 ("Amendment No.
1") is incorporated by reference)
9.1 Administration Agreement with Firstar Trust Company
(Exhibit 9.1 to Amendment No. 1 is incorporated by reference)
9.2 Transfer Agent Agreement with Firstar Trust Company
(Exhibit 9.2 to Amendment No. 1 is incorporated by reference)
9.3 Accounting Services Agreement With Firstar Trust
Company (Exhibit 9.3 to Amendment No. 1 is incorporated by
reference)
10 Opinion of Foley & Lardner, counsel for Registrant
(Exhibit 10 to Amendment No. 1 is incorporated by reference)
11 Consent of Coopers & Lybrand L.L.P.
12 None
13 Subscription Agreement (Exhibit 13 to Form N-1A is
incorporated by reference)
14.1 Restated Form of Individual Retirement Custodial
Account
14.2 Revised Form of Defined Contribution Retirement
Plan (Exhibit 14.2 to Amendment No. 1 is incorporated by
reference)
15.1 Distribution and Servicing Plan of Class A Shares
(Exhibit 15.1 to Form N-1A is incorporated by reference)
15.2 Distribution and Servicing Plan of Class B Shares
(Exhibit 15.2 to Form N-1A is incorporated by reference)
15.3 Distribution Assistance Agreement (Class A)
(Exhibit 15.3 to Form N-1A is incorporated by reference)
15.4 Distribution Assistance Agreement (Class B)
(Exhibit 15.4 to Form N-1A is incorporated by reference)
16 Schedule for Computation of Performance Quotation
17.1 Powers of Attorney for Lawrence Kujawski, John
Komives, Michael Borden, Dennis Lasser and James L. Stanko,
Trustees of the Trust. (Exhibit 17 to Post-Effective
Amendment No. 2 to Registrant's Form N-1A,
which was filed on February 28, 1996 ("Amendment No. 2")
is incorporated by reference.)
17.2 Power of Attorney for F.L. Kirby.
18 Plan pursuant to Rule 18f-3 For Operation of a
Multi Class System. (Exhibit 18 to Amendment No. 2 is
incorporated by reference.)
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
As of February 3, 1997, Registrant neither controls any person nor is
under common control with any other person.
Item 26. Number of Holders of Securities
---------------------------------
Number of Record Holders
Title of Class as of February 3, 1997
-------------- -----------------------
Class A Shares of Beneficial Interest,
no par value 195
Class B Shares of Beneficial Interest,
no par value 57
Item 27. Indemnification
---------------
Pursuant to Chapter 38 of Title 12 of the Delaware Code, the
Registrant's Trust Instrument, dated January 20, 1995, contains the following
article, which is in full force and effect and has not been modified or
cancelled:
ARTICLE X
---------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
Section 10.1. Limitation of Liability. A Trustee, when acting in
------------ -----------------------
such capacity, shall not be personally liable to any person other than the Trust
or a beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
Section 10.2. Indemnification.
-------------- ----------------
(a) Subject to the exceptions and limitations contained in Section
10.2(b) below:
(i) every Person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 10.2 may be paid by the Trust or Series from time
to time prior to final disposition thereof upon receipt of an undertaking by or
on behalf of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 10.2; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust is insured against losses arising out of any such advance payments
or (c) either a majority of the Trustees who are neither Interested Persons of
the Trust nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available facts
(as opposed to a trial-type inquiry or full investigation), that there is reason
to believe that such Covered Person will be found entitled to indemnification
under this Section 10.2.
Section 10.3. Shareholders. In case any Shareholder or former
------------ ------------
Shareholder of any Series shall be held to be personally liable solely by reason
of his being or having been a Shareholder of such Series and not because of his
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets belonging to the
applicable Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Trust, on behalf of the affected
Series, shall, upon request by the Shareholder, assume the defense of any claim
made against the Shareholder for any act or obligation of the Series and satisfy
any judgment thereon from the assets of the Series.
Insofar as indemnification for and with respect to liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a director, officer or controlling person or
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
-----------------------------------------------------
Uniplan, Inc. ("Adviser") was organized as a Wisconsin corporation
in 1985 and is registered as an investment adviser under the Investment Advisers
Act of 1940. Adviser does not manage any other mutual fund; however, Adviser
does manage various individual, profit-sharing, pension and institutional
accounts.
Set forth below are the substantial business engagements during the
two last fiscal years of each director or officer of Adviser.
NAME BUSINESS AND OTHER CONNECTIONS
---- ------------------------------
Richard Imperiale President and Treasurer of Adviser
Member of Board of Directors of Adviser
Jeffrey DeCora Vice President and Secretary of Adviser
Member of Board of Directors of Adviser
Item 29. Principal Underwriters
----------------------
(a) Rodman and Renshaw (the "Distributor") acts as the Registrant's
principal underwriter.
(b) Information with respect to directors and officers of
Distributor is as follows:
Positions and
Names and Principal Offices with Positions and
Addresses Principal Officers with
Underwriter Registrant
- ------------------- ------------- -------------
Joseph P. Shanahan President, Director Not Applicable
Peter Boneparth Executive Vice Not Applicable
President
Francis L. Kirby Executive Vice Trustee
President
Gilbert R. Ott, Jr. General Counsel and Not Applicable
Secretary
Robert A. Bade Senior Vice Not Applicable
President-Compliance
Item 30. Location of Accounts and Records
---------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the physical possession of Registrant,
Registrant's Custodian and Registrant's Administrator as follows: the documents
required to be maintained by paragraphs (5) and (11) of Rule 31a-1(b) will be
maintained by the Registrant; the documents required to be maintained by
paragraphs (3) and (7) of Rule 31a-1(b) will be maintained by Registrant's
Custodian; and all other records will be maintained by Registrant's
Administrator.
Item 31. Management Services
-------------------
All management-related service contracts entered into by
Registrant are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
------------
Registrant undertakes to, if requested to do so by the
holders of at least 10% of Registrant's outstanding shares, call a meeting of
shareholders for the purpose of voting upon the question of removal of a trustee
or trustees and assist in communications with other shareholders as required by
Section 16(c) of the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amended Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amended Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milwaukee and State of
Wisconsin on the 25th day of February, 1997.
THE JEFFERSON FUND GROUP TRUST
(Registrant)
By: /s/ Lawrence Kujawski
----------------------------------------
Lawrence Kujawski
President, Treasurer and Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Amended Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Name Title Date
---- ----- ----
/s/ Lawrence Kujawski Principal Executive, February 25, 1997
- ------------------------- Financial and Accounting
Lawrence Kujawski Officer, President, Treasurer,
and Trustee
/s/ Richard Imperiale Chairman, Secretary February 25, 1997
- ------------------------- and Trustee
Richard Imperiale
*<F16> Trustee February 25, 1997
- -------------------------
F. L. Kirby
*<F16> Trustee February 25, 1997
- -------------------------
John Komives
*<F16> Trustee February 25, 1997
- -------------------------
J. Michael Borden
*<F16> Trustee February 25, 1997
- -------------------------
Dennis Lasser
*<F16> Trustee February 25, 1997
- -------------------------
James L. Stanko
*<F16>By Richard Imperiale, Attorney-in-fact
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Page No.
- ----------- ------- --------
(1.1) Registrant's Certificate of Trust*<F17>
(1.2) Registrant's Trust Instrument*<F17>
(2) Registrant's Bylaws*<F17>
(3) None
(4) None
(5) Investment Advisory Agreement*<F17>
(6.1) Distribution Agreement*<F17>
(6.2) Form of Sales Agreement*<F17>
(7) None
(8) Custodian Agreement with Firstar*<F17>
Trust Company
(9.1) Administration Agreement with
Firstar Trust Company*<F17>
(9.2) Transfer Agent Agreement with
Firstar Trust Company*<F17>
(9.3) Accounting Services Agreement
with Firstar Trust Company*<F17>
(10) Opinion of Foley & Lardner,
counsel for Registrant*<F17>
(11) Consent of Coopers & Lybrand L.L.P.
(12) None
(13) Subscription Agreement*<F17>
(14.1) Restated Form of Individual
Retirement Custodial
Account
(14.2) Revised Form of Defined
Contribution
Retirement Plan*<F17>
(15.1) Distribution and Servicing
Plan of Class A Shares*<F17>
(15.2) Distribution and Servicing
Plan of Class B Shares*<F17>
(15.3) Distribution Assistance
Agreement (Class A)*<F17>
(15.4) Distribution Assistance
Agreement (Class B)*<F17>
(16) Schedule for Computation
of Performance Quotation
(17.1) Power of Attorney for Lawrence
Kujawski, John Komives, Michael Borden, Dennis Lasser and
James Stanko, Trustees of the Trust.*<F17>
(17.2) Power of Attorney for F.L. Kirby
(18) Plan pursuant to Rule 18f-3 For
Operation of Multi Class System*<F17>
*<F17>Incorporated herein by reference.
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Jefferson Fund Group Trust
We consent to the incorporation by reference in Post-Effective
Amendment NO. 3 to the Registration Statement of The Jefferson Fund
Group Trust on Form N-1A of our report dated November 22, 1996 on our
audit of the financial statements and financial highlights of
Jefferson Growth and Income Fund, a series of The Jefferson Fund Group
Trust, which report is included in the Annual Report to Shareholders
for the year ended October 31, 1996 which is also incorporated by
reference in the Registration Statement. We also consent to the
reference to our Firm under the caption "Independent Accountants" in
the Statement of Additional Information and under the caption
"Financial Highlights" in the Prospectus.
/s/ Coopers & Lybrand
Milwaukee, Wisconsin
February 27, 1997
EXHIBIT 14.1
THE JEFFERSON FUND GROUP TRUST
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an
Individual Retirement Account (under Section 408(a) of the
Internal Revenue Code) between the Depositor and the Custodian.
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)4, 403(b), 403(b)(8), 408(d)(3), or an employer contribution to a
simplified employee pension plan as described in Section 408(k). Rollover
contributions before January 1, 1993, include rollovers described in Section
402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described in
Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets
of the custodial account be commingled with other property except in a
common trust fund or common investment fund (within the meaning of Section
408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of Section 408(m)) except as otherwise permitted by Section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of the state.
ARTICLE IV
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
Section 408(a)(6) and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section 1.401(a)(9)-
2, the provisions of which are herein incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under Paragraph 3, or to the surviving spouse under Paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as
to the Depositor and the surviving spouse and shall apply to all subsequent
years. The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, April 1
following the calendar year end in which the Depositor reaches age 70-1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows.
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with Paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the beneficiary or
beneficiaries, either:
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life expec-tancy of the designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the beneficiary is not the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in which
the Depositor would have turned age 70-1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the Depositor's
required beginning date, even though payments may actually have been made before
that date.
(d) If the depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under Paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70-1/2.
In the case of a distribution in accordance with Paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under Section 408(i)
and Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribes by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) and related
regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with
the provisions of the Code and related regulations.
ARTICLE VIII
1. Investment of Account Assets (a) All contributions to the custodial
----------------------------
account shall be invested in the shares of The Jefferson Fund Group Trust or, if
available, any other series of The Jefferson Fund Group Trust or other
regulated investment companies for which Uniplan, Inc. serve as the investment
advisor or designates as being eligible for investment ("Investment Company").
Shares of stock of an Investment Company shall be referred to as "Investment
Company Shares". To the extent that two or more funds are available for
investment, contributions shall be invested in accordance with the Depositor's
investment election.
(b) Each contribution to the custodial account shall identify the
Depositor's account number and be accompanied by a signed statement directing
the investment of that contribution. The custodian may return to the Depositor,
without liability for interest thereon, any contribution which is not
accompanied by adequate account identification or an appropriate signed
statement directing investment of that contribution.
(c) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner such shares are offered to the
public. All distributions received on Investment Company Shares, including both
dividend and capital gain distributions, held in the custodial account shall be
reinvested in like shares. If any distribution of Investment Company Shares may
be received in additional like shares or in cash or other property, the
Custodian shall elect to receive such distribution in additional like Investment
Company Shares.
(d) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its nominee. The Depositor shall be
the beneficial owner of all Investment Company Shares held in the custodial
account and the Custodian shall not vote any such shares, except upon written
direction of the Depositor, timely received, in a form acceptable to the
Custodian. The Custodian agrees to forward to the Depositor each prospectus,
report, notice, proxy and related proxy soliciting materials applicable to
Investment Company Shares held in the custodial account received by the
Custodian.
(e) The Depositor may, at ant time, by written notice to the Custodian, in
a form acceptable to the Custodian, redeem any number of shares held in the
custodial account and reinvest the proceeds in the shares of any other
Investment Company upon the terms and within the limitations imposed by then
current prospectus of such other Investment Company in which the Depositor
elects to invest. By giving suchinstructions, the Depositor will be deemed to
have acknowledged receipt of such prospectus. Such redemptions and reinvestments
shall be done at the price and in the manner such shares are then being
redeemed or offered by the respective InvestmentCompanies.
2. Amendment and Termination (a) Uniplan, Inc. the investment advisor for
-------------------------
The Jefferson Fund Group Trust, may amend the Custodial Account (including
retroactive amendments) by delivering to Custodian and to the Depositor written
notice of such amendment setting forth the substance and effective date of the
amendment. The Custodian and the shall be deemed to have consented to any such
amendment not subject to in writing by the Custodian or Depositor as applicable
within thirty (30) days of the receipt the notice, provided that no amendment
shall cause or permit any part of the assets of the custodial account to be
diverted to purposes other than for the exclusive benefit of the Depositor or
his or her beneficiaries.
(b) The Depositor may terminate the custodial account at any time by
delivering to the Custodian a written notice of such termination.
(c) The custodial account shall automatically terminate upon distribution
to the Depositor or his or her beneficiaries of its entire balance.
3. Taxes and Custodial Fees. Any income taxes or other taxes levied or
------------------------
assessed upon or in respect of the assets or income of the custodial account and
any transfer taxes incurred shall be paid from the custodial account. All
administrative expenses incurred by the Custodian in the performance of its
duties, including fees for legal services rendered to the Custodian, in
connection with the custodial account, and the Custodian's compensation shall be
paid from the custodial account, unless otherwise paid by the Depositor or his
or her beneficiaries. Sufficient shares will be liquidated from the custodial
account to pay such fees and expenses.
The Custodian's fees are set forth in a schedule provided to the Depositor.
Extraordinary charges resulting from unusual administrative responsibilities not
contemplated by the schedule will be subject to such additional charges as will
reasonably compensate the Custodian. Fees for refund or excess contributions,
transferring to a successor trustee or custodian, or redemption/reinvestment of
Investment Company Shares will be deducted from the refund or redemption
proceeds and the remaining balance will be remitted to the Depositor, or
reinvested or transferred in accordance with the Depositor's instructions.
4. Reports and Notices. (a) The Custodian shall keep adequate records of
--------------------
transactions it is required to perform hereunder. After the close of each
calendar year, the Custodian shall provide to the Depositor or his or her legal
representative a written report or reports reflecting the transactions effected
by it during such year and the assets and liabilities of the Custodial Account
at the close of the year.
(b) All communications or notices shall be deemed to be given upon receipt
by the Custodian at: Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
53201-0701 or the Depositor at his or her most recent address shown in the
Custodian's records. The Depositor agrees to advise the Custodian promptly, in
writing, of any change of address.
5. Designation of Beneficiary. The Depositor may designate a beneficiary
--------------------------
or beneficiaries to receive benefits from the custodial account in the event of
the Depositor's death. In the event the Depositor has not designated a
beneficiary, or if all beneficiaries shall predecease the Depositor, the
following persons shall take in the order named:
(a) The spouse of the Depositor;
(b) If the spouse shall predecease the Depositor or if the Depositor does
not have a spouse, then to the Depositor's estate.
The Depositor may also change or revoke any previously made designation of
beneficiary. A designation or change or revocation of a designation shall be
made by written notice in a form acceptable to and filed with the Custodian,
prior to the complete distribution of the balance in the custodial account. The
last such designation on file at the time of the Depositor's death shall govern.
If a beneficiary dies after the Depositor, but prior to receiving his or her
entire interest in the custodial account, the remaining interest in the
custodial account shall be paid to the beneficiary's estate.
6. Multiple Individual Retirement Accounts. In the event the Depositor
---------------------------------------
maintains more than one individual retirement account (as defined in Section
408(a) and elects to satisfy his or her minimum distribution requirements
described in Article IV above by making a distribution for another individual
retirement account in accordance with Paragraph 6 thereof, the Depositor shall
be deemed to have elected to calculate the amount of his or her minimum
distribution under this custodial account in the same manner as under the
individual retirement account from which the distribution is made.
7. Inalienability of Benefits. The benefits provided under this
--------------------------
custodial account nor the assets held therein shall be subject to alienation,
assignment, garnishment, attachment, execution or levy of any kind and any
attempt to cause such benefits or assets to be so subjected shall not be
recognized except to the extent as may be required by law.
8. Rollover Contributions and Transfers. The Custodian shall have the
------------------------------------
right to receive rollover contributions and to receive direct transfers from
other custodians or trustees. All contributions must be made in cash or check.
9. Conflict in Provisions. To the extent that any provisions of this
----------------------
Article VIII shall conflict with the provisions of Article IV, V and/or VII, the
provisions of this Article VIII shall govern.
10. Applicable State Law. This custodial account shall be construed,
--------------------
administered and enforced according to the laws of the State of Wisconsin.
11. Resignation or Removal of Custodian. The Custodian may resign at
-----------------------------------
any time upon thirty (30) days notice in writing to the Investment Company. Upon
such resignation, the Investment Company shall notify the Depositor, and shall
appoint a successor custodian under this agreement. The Depositor or the
Investment Company at any time may remove the Custodian upon thirty (30) days
written notice to the effect in a form acceptable to and filed with the
Custodian. Such notice must include designation of a successor custodian. The
successor custodian shall satisfy the requirements of Section 408(h) of the
Code. Upon receipt by the Custodian of written acceptance of such appointment by
the successor custodian, the Custodian shall transfer and pay over to such
successor the assets of and records relating to the Custodial Account. The
Custodian is authorized, however, to reserve such sum of money as it may deem
advisable for payment of all its fees, compensation, costs and expenses, or for
payment of any other liability constituting a charge on or against the assets of
the Custodial Account or on or against the Custodian, and where necessary may
liquidate shares in the Custodial Account for such payments. Any balance of such
reserve remaining after the payment of all such items shall be paid over to the
successor Custodian. The Custodian shall not be liable for the acts or omissions
of any predecessor or successor custodian or trustee.
12. Limitation on Custodian Responsibility. The Custodian will not
--------------------------------------
under any circumstances be responsible for the timing, purpose or propriety of
any contribution or of any distributions made hereunder, nor shall the Custodian
incur any liability or responsibility for any tax imposed on account of any such
contribution or distribution. Further, the custodian shall not incur any
liability or responsibility in taking or omitting to take any action based on
any notice, election, or instruction or any written instrument believed by the
custodian t be genuine and to have been properly executed. The Custodian shall
be under no duty of inquiry with respect to any such notice, election,
instruction, or written instrument, but in its discretion may request any tax
waivers, proof of signatures or other evidence which it reasonably deems
necessary for its protection. The Depositor and the successor of the Depositor
including any executor or administrator to the Depositor shall, to the extent
permitted by law, indemnify the Custodian and its successors and assigns against
any and all claims, actions or liabilities of the Custodian to the Depositor or
the successor or beneficiaries of the Depositor whatsoever (including without
limitation all reasonable expenses incurred in defending against or settlement
of such claims, actions or liabilities) which may arise in connection with this
Agreement or the Custodial Account, except those due to the Custodian's own bad
faith, gross negligence or willful misconduct. The Custodian shall not be under
any duty to take any action not specified in this Agreement, unless the
Depositor shall furnish it with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian, or to
defend or engage in any suit with respect hereto unless it shall have first
agreed in writing to do so and shall have been fully indemnified to its
satisfaction.
THE JEFFERSON FUND GROUP TRUST
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
Please read the following information together with the Individual
Retirement Account Custodial Agreement and the Prospectus(es) for the fund(s)
you select for investment of your IRA contributions.
You may revoke this account any time within seven calendar days after
it is established by mailing or delivering a written request for revocation to:
The Jefferson Fund Group Trust, c/o Firstar Trust Company, 615 East Michigan
Street, 3rd Floor, Milwaukee, Wisconsin 53202, Attention: Mutual Fund
Department. If your revocation is mailed, the date of the postmark (or the date
of certification if sent by certified or registered mail) will be considered
your revocation date. Upon proper revocation, you will receive a full refund of
your initial contribution, without any adjustments for items such as
administrative fees or fluctuations in market value.
1. General. Your IRA is a custodial account created for your
-------
exclusive benefit, and Firstar Trust Company serves as custodian. Your interest
in the account is nonforfeitable.
2. Investments. Contributions made to your IRA will be invested in
-----------
one or more of the regulated investment companies for which Uniplan, Inc. serves
as investment advisor or any other regulated investment company designated by
The Jefferson Fund Group Trust. No part of your account may be invested in life
insurance contracts; further, the assets of your account may not be commingled
with other property.
3. Eligibility. Employees and self-employed individuals are
-----------
eligible to contribute to an IRA. Employers may also contribute to employer-
sponsored IRAs established for the benefit of their employees. You may also
establish an IRA to receive rollover contributions and transfers from another
IRA custodian or trustee or from certain other retirement plans.
4. Time of Contribution. You may make regular contributions to your
--------------------
IRA any time up to and including the due date for filing your tax return for the
year, not including extensions. You may continue to make regular contributions
to your IRA up to (but not including) the calendar year in which you reach 70-
1/2. Employer contributions to a SEP - IRA plan may be continued after you
attain age 70-1/2. Rollover contributions and transfers may be made at any
time, including after you reach age 70-1/2.
5. Amount of Contribution. You may make annual regular
----------------------
contributions to an IRA in any amount up to 100% of your compensation for the
year or $2,000, whichever is less. Qualifying rollover contributions and
transfers are not subject to this limitation. In addition, if you are married
and file a joint return, you may make contributions to your spouse's IRA.
However, the maximum amount contributed to both your own and to your spouse's
IRA may not exceed 100% of your combined compensation or $4,000, whichever is
less. Moreover, the annual contribution to either your account or your spouse's
account may not exceed $2,000. Note that a different rule for spousal IRAs
applied for tax years beginning before January 1, 1997.
6. Rollovers and Transfers. You are allowed to "roll over" a
-----------------------
distribution or transfer your assets from one individual retirement account to
another without any tax liability. Rollovers between IRAs may be made once per
year and must be accomplished within 60 days after the distribution. Also,
under certain conditions, you may roll over (tax free) all or a portion of a
distribution received from a qualified plan or tax-sheltered annuity in which
you participate or in which your deceased spouse participated. However, strict
limitations apply to such rollovers, and you should seek competent advice in
order to comply with all of the rules governing rollovers.
Most distributions from qualified retirement plans will be subject to
a 20% withholding requirement. The 20% withholding can be avoided by directly
transferring the amount of the distribution to an individual retirement account
or to certain other types of retirement plans. You should receive more
information regarding these new withholding rules and whether your distribution
can be transferred to an IRA from the plan administrator prior to receiving your
distribution.
7. Tax Deductibility of Annual Contributions. Although you may make
-----------------------------------------
an IRA contribution within the limitations described above, all or a portion of
your contribution may be nondeductible. No deduction is allowed for a rollover
contribution or transfer. If you are not married and are not an "active
participant" in an employer-sponsored retirement plan, you may make a fully
deductible IRA contribution in any amount up to $2,000 or 100% of your
compensation for the year, whichever is less. The same limits apply if you are
married and file a joint return with your spouse and neither you nor your spouse
is an "active participant" in an employer-sponsored retirement plan.
An employer-sponsored retirement plan includes any of the following
types of retirement plans:
-- a qualified pension, profit-sharing, or stock bonus plan
established in accordance with IRC 401(a) or 401(k),
-- a Simplified Employee Pension Plan (SEP) (IRC 408(k)),
-- a deferred compensation plan maintained by a governmental
unit or agency,
-- tax-sheltered annuities and custodial accounts (IRC 403(b)
and 403(b)(7)),
-- a qualified annuity plan under IRC Section 403(a).
-- a Savings Incentive Match Plan for Employees of Small
Employers (SIMPLE Plan).
Generally, you are considered an "active participant" in a defined
contribution plan if an employer contribution or forfeiture was credited to your
account during the year. You are considered an "active participant" in a
defined benefit plan if you are eligible to participate in a plan, even though
you elect not to participate. You are also treated as an "active participant"
if you make a voluntary or mandatory contribution to any type of plan, even if
your employer makes no contribution to the plan.
If you (or your spouse, if filing a joint tax return) are covered by
an employer-sponsored retirement plan, your IRA contribution is fully deductible
if your adjusted gross income (or combined income if you file a joint tax
return) does not exceed certain limits. For this purpose, your adjusted gross
income (1) is determined without regard to the exclusions from income arising
under Section 135 (exclusion of certain savings bond interest), 137 (exclusion
of certain employer provided adoption expenses) and 911 (certain exclusions
applicable to U.S. citizens or residents living abroad) of the Code; (2) is
not reduced for any deduction that you may be entitled to for IRA contributions;
and (3) takes into account the passive loss limitations under Section 469 of the
Code and any taxable benefits under the Social Security Act and Railroad
Retirement Act as determined in accordance with Section 86 of the Code.
If you (or your spouse, if filing a joint tax return) are covered by
an employer-sponsored retirement plan, the deduction for your IRA contribution
is reduced proportionately for adjusted gross income which exceeds the
applicable dollar amount. The applicable dollar amount for an individual is
$25,000 and $40,000 for married couples filing a joint tax return. The
applicable dollar limit for married individuals filing separate returns if $0.
If your adjusted gross income exceeds the applicable dollar amount by $10,000 or
less, you may make a deductible IRA contribution. The deductible amount,
however, will be less than $2,000.
To determine the amount of your deductible contribution, use the
following calculations:
1) Subtract the applicable dollar amount from your adjusted
gross income. If the result is $10,000 or more, you can only make a
nondeductible contribution to your IRA.
2) Divide the above figure by $10,000, and multiply that percentage
by $2,000.
3) Subtract the dollar amount (result from #2 above) from $2,000 to
determine the amount which is deductible.
If the deduction limit is not a multiple of $10 then it should be
rounded up to the next $10. There is a $200 minimum floor on the deduction
limit if your adjusted gross income does not exceed $35,000 (for a single
taxpayer), $50,000 (for married taxpayers filing jointly) or $10,000 (for a
married taxpayer filing separately).
Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the contribution limitations described in Section
5 above. To the extent that your contribution exceeds the deductible limits, it
will be nondeductible. However, earnings on all IRA contributions are tax
deferred until distribution.
8. Excess Contributions. Contributions which exceed the allowable
--------------------
maximum for federal income tax purposes are treated as excess contributions. A
nondeductible penalty tax of 6% of the excess amount contributed will be added
to your income tax for each year in which the excess contribution remains in
your account.
9. Correction of Excess Contribution. If you make a contribution in
---------------------------------
excess of your allowable maximum, you may correct the excess contribution and
avoid the 6% penalty tax for that year by withdrawing the excess contribution
and its earnings on or before the date, including extensions, for filing your
tax return for the tax year for which the contribution was made. Any earnings
on the withdrawn excess contribution will be taxable in the year the excess
contribution was made and may be subject to a 10% early distribution penalty tax
if you are under age 59 1/2. In addition, in certain cases an excess
contribution may be withdrawn after the time for filing your tax return.
Finally, excess contributions for one year may be carried forward and applied
against the contribution limitation in succeeding years.
10. Simplified Employee Pension Plan. An IRA may also be used in
---------------------------------
connection with a Simplified Employee Pension Plan established by your employer
(or by you if you are self-employed.) Your employer (or you if self-employed)
may contribute to the IRA of each eligible participant up to a maximum of 15
percent of compensation or $22,500, whichever is less. In addition, if your SEP
Plan as in effect on December 31, 1996 permitted salary reduction contributions,
you may also elect to have your employer make salary reduction contributions
of up to $9,500 per year. The $9,500 limit applies for 1997 and is adjusted
periodically for cost of living increases. Certain lower limits may apply for
highly compensated participants. In any event, the combination of your
employer's contributions and your salary reduction contributions (if your SEP
Plan is eligible) may not exceed the lesser of 15 percent of compensation or
$30,000. A number of special rules apply to SEP/IRA, including a requirement
that contributions be made on behalf of all employees of the employer who
satisfy certain minimum participation requirements. It is your responsibility
and that of your employer to see that contributions in excess of normal IRA
limits are made under and in accordance with a valid SEP Plan.
11. Savings and Incentive Match Plan for Employees of Small Employers
-----------------------------------------------------------------
("SIMPLE"). An IRA may also be used in connection with a SIMPLE Plan
- ----------
established by your employer (or by you if you are self-employed). Under a
SIMPLE Plan, you may elect to have your employer make salary reduction
contributions of up to $6,000 per year to your SIMPLE IRA. The $6,000 limit
applies for 1997 and is adjusted periodically for cost of living increases. In
addition, your employer will contribute certain amounts to your SIMPLE IRA,
either as a matching contribution to those participants who make salary
reduction contributions or as a non-elective contribution to all eligible
participants whether or not making salary reduction contributions. A number of
special rules apply to SIMPLE Plans, including (1) a SIMPLE Plan generally is
available only to employers with fewer than 100 employees; (2) contributions
must be made on behalf of all employees of the employer (other than bargaining
unit employees) who satisfy certain minimum participation requirements; (3)
contributions are made to a special SIMPLE IRA that is separate and apart from
your other IRAs; (4) if you withdraw from your SIMPLE IRA during the 2 year
period during which you first began participation in the SIMPLE Plan, the early
distribution excise tax (if otherwise applicable) is increased to 25 percent;
and (5) during this two year period, any amount withdrawn may be rolled over
tax-free only into another SIMPLE IRA (and not to a "regular" IRA). It is your
responsibility and that of your employer to see that contributions in excess of
normal IRA limits are made under and in accordance with a valid SIMPLE Plan.
12. Form of Distributions. Distributions may be made in any one of
---------------------
three methods:
(a) a lump-sum distribution,
(b) installments over a period not extending beyond your life
expectancy (as determined by actuarial tables), or
(c) installments over a period not extending beyond the joint
life expectancy of you and your designated beneficiary (as determined by
actuarial tables).
You may also use your account balance to purchase an annuity
contract, in which case your custodial account will terminate.
13. Latest Time to Withdraw. You must begin receiving the assets in
-----------------------
your account no later than April 1 following the calendar year in which you
reach age 70-1/2 (your "required beginning date"). In general, the minimum
amount that must be distributed each year is equal to the amount obtained by
dividing the balance in your IRA on the last day of the prior year (or the last
day of the year prior to the year in which you attain age 70-1/2) by your life
expectancy, the joint life expectancy of you and your beneficiary, or the
specified payment term, whichever is applicable. A federal tax penalty may be
imposed against you if the required minimum distribution is not made for the
year you reach age 70-1/2 and for each year thereafter. The penalty is equal to
50% of the amount by which the actual distribution is less than the required
minimum.
Unless you or your spouse elects otherwise, your life expectancy
and/or the life expectancy of your spouse will be recalculated annually. An
election not to recalculate life expectancy(ies) is irrevocable and will apply
to all subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
If you have two or more IRAs, you may satisfy the minimum distribution
requirements by receiving a distribution from one of your IRAs in an amount
sufficient to satisfy the minimum distribution requirements for your other IRAs.
You must still calculate the required minimum distribution separately for each
IRA, but then such amounts may be totaled and the total distribution taken from
one or more of your individual IRAs.
Distribution from your IRA must satisfy the special "incidental death
benefit" rules of the Internal Revenue Code. These provisions set forth certain
limitations on the joint life expectancy of you and your beneficiary. If your
beneficiary is not your spouse, your beneficiary will be generally considered
to be no more than 10 years younger than you for the purpose of calculating the
minimum amount that must be distributed.
14. Distribution of Account Assets After Death. If you die before
-----------------------------------------
receiving the balance of your account, distribution of your remaining account
balance is subject to several special rules. If you die on or after your
required beginning date, distribution must continue in a method at least as
rapid as under the method of distribution in effect at your death. If you die
before your required beginning date, your remaining interest will, at the
election of your beneficiary or beneficiaries; (i) be distributed by December 31
of the year in which occurs the fifth anniversary of your death; or (ii)
commence to be distributed by December 31 of the year following your death over
a period not exceeding the life or life expectancy of your designated
beneficiary or beneficiaries.
Two additional distribution options are available if your spouse is
the beneficiary: (i) payments to your spouse may commence as late as December
31 of the year you would have attained age 70-1/2 and be distributed over a
period not exceeding the life or life expectancy of your spouse, or (ii)
your spouse can simply elect to treat your IRA as his or her own, in which case
distributions will be required to commence by April 1 following the calendar
year in which your spouse attains age 70-1/2.
15. Tax Treatment of Distributions. Amounts distributed to you are
------------------------------
generally included in your gross income in the taxable year you receive them and
are taxable as ordinary income. To the extent, however, that any part of a
distribution constitutes a return of your nondeductible contributions, it will
not be included in your income. The amount of any distribution excludable from
income is the portion that bears the same ratio as your aggregate nondeductible
contributions bear to the balance of your IRA at the end of the year (calculated
after adding back distributions during the year). For this purpose, all of
your IRAs are treated as single IRA. Furthermore, all distributions from an IRA
during a taxable year are to be treated as one distribution. The aggregate
amount of distributions excludable from income for all years cannot exceed
the aggregate nondeductible contributions for all calendar years.
No distribution to you or anyone else from your account can qualify
for capital gains treatment under the federal income tax laws. Similarly, you
are not entitled to the special five- or ten-year averaging rule for lump-sum
distributions available to persons receiving distributions from certain other
types of retirement plans. All distributions are taxed to the recipient
as ordinary income except the portion of a distribution which represents a
return of nondeductible contributions. The tax on excess distributions (but not
the additional estate tax payable with respect to excess accumulations) under
Section 4980A of the Code does not apply with respect to distributions made in
1997, 1998 and 1999.
Any distribution which is properly rolled over will not be included in
your gross income.
16. Early Distributions. Distributions from your IRA made before age
-------------------
59-1/2 will be subject to a 10% nondeductible penalty tax unless the
distribution is a return of nondeductible contributions or is made because of
your death, disability, as part of a series of substantially equal periodic
payments over your life expectancy or the joint life expectancy of you and
your beneficiary, or the distribution is made for medical expenses in excess of
7.5% of adjusted gross income, is made for reimbursement of medical premiums
while you are unemployed, or is an exempt withdrawal of an excess contribution.
The penalty tax may also be avoided if the distribution is rolled over to
another individual retirement account. See paragraph 11 above for special rules
applicable to distributions from a SIMPLE IRA.
17. Qualification of Plan. Your Individual Retirement Account
---------------------
Plan has been approved as to form by the Internal Revenue Service. The Internal
Revenue Service approval is a determination only as to the form of the Plan and
does not represent a determination of the merits of the Plan as adopted
by you. You may obtain further information with respect to your Individual
Retirement Account from any district office of the Internal Revenue Service.
18. Prohibited Transactions. If you engage in a "prohibited
-----------------------
transaction," as defined in section 4975 of the Internal Revenue Code, your
account will be disqualified, and the entire balance in your account will be
treated as if distributed to you and will be taxable to you as ordinary income.
Examples of prohibited transactions are:
(a) the sale, exchange, or leasing of any property between you and
your account,
(b) the lending of money or other extensions of credit between
you and your account,
(c) the furnishing of goods, services, or facilities between
you and your account.
If you are under age 59-1/2, you may also be subject to the 10%
penalty tax on early distributions.
19. Penalty for Pledging Account. If you use (pledge) all or
----------------------------
part of your IRA as security for a loan, then the portion so pledged will be
treated as if distributed to you and will be taxable to you as ordinary income
during the year in which you make such pledge. The 10% penalty tax on early
distributions may also apply.
20. Reporting for Tax Purposes. Deductible contributions to
---------------------------
your IRA may be claimed as a deduction on your IRS form 1040 for the taxable
year contributed. If any nondeductible contributions are made by you during a
tax year, such amounts must be reported on Form 8606 and attached to your
Federal Income Tax Return for the year contributed. If you report a
nondeductible contribution to your IRA and do not make the contribution, you
will be subject to a $100 penalty for each overstatement unless a reasonable
cause is shown for not contributing. Other reporting will be required by you in
the event that special taxes or penalties described herein are due. You must
also file Treasury Form 5329 with the IRS for each taxable year in which the
contribution limits are exceeded, a premature distribution takes place, or less
than the required minimum amount is distributed from your IRA.
21. Allocation of Earnings. The method of computing and
----------------------
allocating annual earnings is set forth in Article VIII, Section 1 of the
Individual Retirement Account Custodial Agreement. The growth in value of your
IRA is neither guaranteed or projected.
22. Income Tax Withholding. You must indicate on distribution
----------------------
requests whether or not federal income taxes should be withheld. Redemption
request not indicating an election not to have federal income tax withheld will
be subject to withholding.
23. Other Information. Information about the shares of each
-----------------
mutual fund available for investment by your IRA must be furnished to you in the
form of a prospectus governed by rules of the Securities and Exchange
Commission. Please refer to the prospectus for detailed information concerning
your mutual fund. You may obtain further information concerning IRAs from any
District Office of the Internal Revenue Service.
Fees and other expenses of maintaining your account may be
charged to you or your account. The Custodian's current fee schedule is
included as part of these materials.
EXHIBIT 16
JEFFERSON GROWTH AND INCOME FUND
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
TOTAL RETURN
WITHOUT SALES CHARGE: CLASS A SHARES
FOR THE PERIOD SEPTEMBER 1, 1995 (commencement of operations)
TO OCTOBER 31, 1995
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (1,004.00/1,000.00)-1
Total Return = 0.40%
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (1,120.48/1,004.00)-1
Total Return = 11.60%
WITHOUT CONTINGENT DEFERRED SALES CHARGE: CLASS B SHARES
FOR THE PERIOD SEPTEMBER 1, 1995 (commencement of operations)
TO OCTOBER 31, 1995
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (1,003.00/1,000.00)-1
Total Return = 0.30%
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (1,109.25/1,003)-1
Total Return = 10.59%
WITH MAXIMUM FRONT END SALES CHARGE
FOR THE PERIOD SEPTEMBER 1, 1995 (commencement of operations)
TO OCTOBER 31, 1995
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (948.96/1,000.00)-1
Total Return = -5.10%
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (1,059.28/1,004.00)-1
Total Return = 5.51%
WITH MAXIMUM CONTINGENT DEFERRED SALES CHARGE
FOR THE PERIOD SEPTEMBER 1, 1995 (commencement of operations)
TO OCTOBER 31, 1995
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (953.00/1,000.00)-1
Total Return = -4.70%
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
Total Return = (Ending Redeemable Value / Initial Value)-1
Total Return = (1,054.19/1,003.00)-1
Total Return = 5.10%
EXHIBIT 17.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that the undersigned hereby constitutes and
appoints Lawrence Kujawski and Richard Imperiale and each or either of them, as
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for him and in his name, place and stead, in any and all
capacities, to sign the Amended Registration Statement on Form N-1A of the
Jefferson Fund Group Trust and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, each in and about the premises,
as fully to all intents and purposes as he might or could do in person hereby
ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his or her substitutes, may lawfully do or cause to be done
by virtue thereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 14th day of February, 1997.
/s/ F.L. Kirby
-------------------------------------------
F.L. Kirby
