Filed with the Securities and Exchange Commission on January 6, 2000.
1933 Act Registration File No. 33-91770
1940 Act File No. 811-9038
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ---------- o
Post-Effective Amendment No. ----9---- X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. --10--- X
THE OLSTEIN FUNDS
(Exact Name of Registrant as Specified in Charter)
4 Manhattanville Road, Purchase, NY 10577
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (914) 701-7565
Robert A. Olstein, President Copy to:
The Olstein Funds Michael P. O'Hare, Esq.
4 Manhattanville Road Stradley, Ronon, Stevens & Young, LLP
Purchase, NY 10577 2600 One Commerce Square
(Name and Address of Agent for Service) Philadelphia, PA 19103-7098
It is proposed that this filing will become effective
--X-- immediately upon filing pursuant to paragraph (b)
----- on pursuant to paragraph (b)
----- 60 days after filing pursuant to paragraph (a)(1)
----- on ------------------ pursuant to paragraph (a)(1)
----- 75 days after filing pursuant to paragraph (a)(2)
----- on -------------------- pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
----- This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
Registrant is deemed to have registered an indefinite amount of securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
Registrant filed the notice required by Rule 24f-2 for its fiscal year ended
August 31, 1999 on November 24, 1999.
CONTENTS
This Post-Effective Amendment No. 9 to Registration File No. 33-91770 includes
the following:
1. Facing Page
2. Contents Page
3. Part A - Prospectuses
4. Part B - Statement of Additional Information*<F1>
5. Part C - Other Information
6. Signatures
7. Exhibits
*<F1> The Statement of Additional Information dated December 29, 1999 is
incorporated herein by reference to the electronic filing of that
Statement of Additional Information made pursuant to Rule 485(b) on
December 28, 1999.
THE
OLSTEIN
FUNDS
THE
OLSTEIN
FINANCIAL
ALERT
FUND
CLASS C SHARES
PROSPECTUS
January 6, 2000
THE OLSTEIN FINANCIAL ALERT FUND
PROSPECTUS JANUARY 6, 2000
CLASS C SHARES A SERIES OF
THE OLSTEIN FUNDS
4 MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(800) 799-2113
The Fund seeks long-term capital appreciation through a proprietary cash flow
value-oriented approach to investing in common stocks, that cuts across all
investment disciplines. The Fund's inferential screening techniques were
originated in the 1970's by Robert A. Olstein, the president of the Fund's
investment manager, who co-authored the "Quality of Earnings Report" service, a
publication that served as a financial statement alert service for institutional
investors.
TABLE OF CONTENTS
FUND INFORMATION
Summary of the Fund 2
Past Performance 4
Fund Expenses 5
Additional Performance Information 6
Objectives, Strategies and Main Risks 7
Management of the Fund 10
Fund Distribution 11
Financial Highlights 12
SHAREHOLDER INFORMATION
Pricing of Fund Shares 12
How to Purchase Shares 13
How to Redeem Shares 15
Retirement Plans 18
Dividends, Capital Gains Distribution and Taxes 19
FOR MORE INFORMATION
The back cover tells you how to obtain more information about the
Fund.
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUSIS
ACCURATE OR COMPLETE. IT IS A CRIMINAL OFFENSE TO SUGGEST OTHERWISE.
FUND INFORMATION
SUMMARY OF THE FUND
INVESTMENT OBJECTIVES
The Fund's primary investment objective is long-term capital appreciation and
its secondary objective is income. The Fund was created so that the public could
invest according to the financial statement alert philosophy developed and
utilized for over thirty years by Robert A. Olstein, the president of the Fund's
investment manager, Olstein & Associates, L.P. The Fund is designed for
investors with at least a three to five year investment horizon.
INVESTMENT PHILOSOPHY AND STRATEGY
The Fund seeks to achieve its primary objective by investing in a diversified
portfolio of under-valued equity securities as determined by the investment
manager for the Fund. The manager believes that achieving the Fund's investment
objective is correlated with minimizing investment errors as opposed to
selecting companies with the highest appreciation potential without regard to
downside risk. The stock selection strategy emphasizes a detailed inferential
look behind the numbers of financial statements to assess financial strength and
screen for potential problems in order to assess downside risk -"defense first"-
before considering a stock's potential for capital appreciation. The first line
of defense against investment errors is to select companies for the portfolio
that generate excess cash flow after capital expenditures and working capital
needs. In addition to purchasing under-valued securities, if the investment
manager determines that a security is over-valued, the Fund may engage in short
sales of the security.
The main thrust of the Fund's philosophy is to identify stocks selling below
the investment manager's proprietary calculation of private market value. The
stock selection process concentrates on the common stocks of companies that the
investment manager believes can deliver investor returns over a five year time
period that are at least fifty percent higher than the yield on three to five
year U.S. Treasury notes over the same time period. When evaluating stocks for
the Fund's portfolio, the investment manager emphasizes an inferential analysis
of financial statements, as opposed to more conventional analytical
methodologies such as macro-economic analysis, management contact or market
timing techniques. The objective of the inferential analysis is to alert the
investment manager to positive or negative factors affecting a company's future
free cash flow that may or may not be recognized by the financial markets.
The Fund's investment philosophy is based on the belief that an intensive
inferential analysis of a company's financial statements, supporting documents,
disclosure practices, and financial statement footnotes, is the best way to
analyze the capabilities of management, the economic reality of the information
provided, the conservatism of the accounting and disclosure practices, the
company's financial strength, and finally, the value of the company.
When screening investments for the Fund's portfolio, the investment manager
believes that the quality of a company is associated with the following
characteristics:
o its financial strength
o its ability to provide excess cash flow
o the quality of its earnings
o the predictability of the earnings based on the company's unique business
fundamentals
The Fund will invest in companies without regard to whether they are
conventionally categorized as small, medium, or large capitalization or whether
they are characterized as growth, cyclical, technology, or any other category.
Similarly, the Fund does not focus on characteristics such as number of years in
business, sensitivity to economic cycles, industry categorization, or the
volatility of a company's stock price. The Fund believes that value
opportunities can develop across all categories, and the restriction of
investments according to artificial barriers could inhibit the Fund from
reaching its capital gain objective.
The Fund's investment philosophy and value-oriented approach to the goal of
long-term capital appreciation requires investors who are willing to accept
fluctuations in market psychology and who have the patience to follow a value
investing discipline. Therefore, the Fund is designed for investors with a
longer-term investment outlook of at least three-to-five years. The Fund
believes that value investing requires a disciplined, patient approach because
anticipated stock values often take time to emerge.
The Fund will purchase stocks that meet its value criteria and, if the
manager concludes that suitable under-valued securities are not available, the
Fund may invest all or a portion of its assets in short-term fixed income or
money market securities, until suitable equity securities are available. At
such times, the Fund will pursue its secondary investment objective of income.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investing in common stocks has inherent risks which could cause you to lose
money. Some of the risks of investing in this Fund are:
o Stock prices may decline over short, or even extended periods.
o The investment manager may be incorrect in its judgement of the value of
particular stocks.
o Stock prices may not climb to anticipated levels for an unexpectedly long
time.
o The Fund engages in short sales of stocks when the investment manager
believes that their price is over-valued and may decline. Short-selling is
a technique that may be considered speculative and involves risk beyond the
amount of money used to secure each transaction.
PAST PERFORMANCE
The bar chart and table shown below illustrate the variability of the Fund's
returns. The bar chart indicates the risks of investing in the Fund by showing
the changes in the Fund's performance from year to year (on a calendar year
basis). The table shows how the Fund's average annual returns compare with
those of the S&P 500 Index and the Lipper Mid-Cap Value Funds Index, both of
which represent broad measures of market performance. The Fund's past
performance is not necessarily an indication of how the Fund will perform in the
future.
TOTAL RETURN AS OF 12/31 1<F20>
1996 24.36%
1997 34.83%
1998 15.01%
1999 34.89%
BEST QUARTER: Q4 1998 27.67%
WORST QUARTER: Q3 1998 -16.07%
1<F20> The above returns do not reflect the maximum 2.50% contingent deferred
sales charge (CDSC) which is imposed if an investor redeems within the
first year of purchase. There is no CDSC if shares are redeemed more
than two years after they are purchased. If the CDSC was reflected,
returns would be less than those shown above.
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
(one year Fund return assumes redemption and deduction of applicable CDSC which
expires after two years)
SINCE
INCEPTION
1 YEAR 9/21/95
Olstein Financial Alert Fund with redemption)1<F21> 32.39% 25.77%
S&P 500 Index with dividends reinvested)2<F22> 21.04% 26.07%
Lipper Mid-Cap Value Funds Index 3<F23> 11.94% 12.38%
1<F21> The 1-year average annual total return for 1999 assumes that the
shareholder redeemed at the end of the first year and paid the maximum
CDSC of 2.50%. The average annual total return since inception does not
include the CDSC because there is no CDSC if shares are held longer than
2 years.
2<F22> The S&P 500 Index is an unmanaged index created by Standard & Poor's
Corporation that is considered to represent U.S. stock market
performance in general, and is not an investment product available for
purchase. The Fund returns presented above include operating expenses
such as management fees, transaction costs, etc.) that reduce returns,
while the return of the S&P 500 Index does not. An individual who
purchases an investment product which attempts to mimic the performance
of the S&P 500 Index will incur expenses such as management fees,
transaction costs, etc. that reduce returns.
3<F23> The Lipper Mid-Cap Value Funds Index consists of the average return of
the 30 largest mid-cap value funds tracked by Lipper Analytical Services.
Performance is presented after the deduction of all fees.
FUND EXPENSES
The following tables describe the fees and expenses that you would pay if you
buy and hold shares of the Fund.
SHAREHOLDER TRANSACTION FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge on Purchases None
Maximum Contingent Deferred Sales Charge 2.50% 1<F24>
Maximum Sales Charge on Reinvested Dividends None
Redemption Fees None 2<F25>
1<F24> There is no CDSC if you redeem Fund shares after two years of purchase.
Shares may be subject to a CDSC of 2.50% if redeemed within one year of
purchase, or 1.25% if redeemed during the second year following
purchase. The CDSC may be waived under certain circumstances.
2<F25> The transfer agent charges a $12.00 fee for each wire redemption.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.00%
Distribution and Service 12b-1) Fees 1.00%
Other Expenses 0.19%
-----
TOTAL ANNUAL OPERATING COSTS 2.19%
EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of each period. The Example also
assumes that you earn a 5% return, with no change in Fund expense levels.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$479 $685 $1,175 $2,524
You would pay the following expenses if you did not redeem your shares and,
therefore, did not pay a CDSC:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$222 $685 $1,175 $2,524
ADDITIONAL PERFORMANCE INFORMATION
FUND PERFORMANCE
The following table shows the performance of the Class C Shares of the Fund,
the Lipper Mid-Cap Value Funds Index and the S&P 500 Index from the Fund's
inception on September 21, 1995 through December 31, 1999.
<TABLE>
LIPPER
OLSTEIN FINANCIAL MID-CAP VALUE S&P 500
PERIOD ALERT FUND FUNDS INDEX 2<F27> INDEX 3<F28>
-------------------------------------
If no redemption If redemption at (DIVIDENDS
at end of period end of period 1<F26> REINVESTED)
<S> <C> <C> <C> <C>
ONE YEAR TOTAL RETURN
(calendar year ended 12/31/99) 34.89% 32.39% 11.94% 21.04%
AVERAGE ANNUAL TOTAL RETURN
SINCE INCEPTION OF THE FUND
(9/21/95 - 12/31/99) 25.77% 25.77% 12.38% 26.07%
</TABLE>
1<F26> This One Year Total Return for 1999 assumes that the shareholder
redeemed at the end of the first year and paid the maximum CDSC of
2.50%. The average annual total return since inception does not
include the CDSC because there is no CDSC if shares are held longer
than 2 years.
2<F27> The Lipper Mid-Cap Value Funds Index consists of the average return of
the 30 largest mid-cap value funds tracked by Lipper Analytical
Services. Performance is presented after the deduction of all fees.
3<F28> The S&P 500 Index is an unmanaged index created by Standard & Poor's
Corporation that is considered to represent U.S. stock market
performance in general, and is not an investment product available for
purchase. The Fund returns presented above include operating expenses
(such as management fees, transaction costs, etc.) that reduce returns,
while the return of the S&P 500 Index does not. An individual who
purchases an investment product which attempts to mimic the performance
of the S&P 500 Index will incur expenses such as management fees,
transaction costs, etc. that reduce returns.
OLSTEIN & ASSOCIATES MANAGED ACCOUNT PERFORMANCE
The following table provides information about the performance record
established by the Olstein & Associates portfolio management team while managing
individual client accounts at Smith Barney Inc. from December 31, 1990 through
the quarter immediately preceding the commencement of Fund operations. The
accounts whose performance is shown were managed according to the same
investment objectives, strategy and philosophy, and were subject to
substantially similar investment policies and techniques, as those used by the
Fund.
THE RESULTS PRESENTED ARE NOT INTENDED TO PREDICT OR SUGGEST THE RETURN TO BE
EXPERIENCED BY THE FUND OR THE RETURN THAT AN INDIVIDUAL INVESTOR MIGHT ACHIEVE
BY INVESTING IN THE FUND. The Fund's results may be different from the
composite of separate accounts shown because of, among other things, differences
in fees and expenses, and because private accounts are not subject to certain
investment limitations, diversification requirements, and other restrictions
imposed by the Investment Company Act of 1940, as amended, and the Internal
Revenue Code, as amended, which, if applicable, may have adversely affected the
performance of such accounts.
NET MANAGED S&P 500 INDEX 3<F31>
ACCOUNT PERFORMANCE 2<F30> (DIVIDENDS REINVESTED)
1991 +32.26% +30.48%
1992 +12.29% +7.77%
1993 +11.63% +10.07%
1994 +4.90% +1.32%
1995 1st six mos.)1<F29> +15.09% +20.25%
1<F29> The Fund commenced operations in the third quarter of 1995, at
which time Olstein & Associates discontinued managing separate
accounts. The Smith Barney clients' investment performance was
calculated on a quarterly basis, and therefore no performance was
calculated for the third quarter of 1995.
2<F30> The results shown above represent a composite of discretionary, fee
paying, separate accounts, reflect the reinvestment of any
dividends or capital gains, and are shown after deduction of fees
of 3.0%, which represents the highest possible account management
fee (including all investment management, transaction,
administrative and custodial fees) charged to such accounts by
Smith Barney Inc. The method used to calculate the performance
shown differs from the standard SEC method which is used to
calculate returns for mutual funds.
3<F31> The S&P 500 Index reflects the reinvestment of dividends and
capital gains, but represents a "gross" return, without the
deduction of any fees.
OBJECTIVES, STRATEGIES AND MAIN RISKS
OBJECTIVES
The Fund's primary investment objective is long-term capital appreciation.
The Fund seeks to achieve this objective through investment in a diversified
portfolio of common stocks selected according to the value-oriented investment
philosophy described in the Summary of the Fund section of this prospectus. If
the investment manager determines that securities meeting the Fund's value
criteria are not available, the Fund may invest all or a portion of its assets
in short-term fixed income or money market securities in order to pursue the
Fund's secondary objective of income.
The Fund's investment philosophy and value-oriented approach to the goal of
long-term capital appreciation requires investors who are willing to accept
fluctuations in market psychology and who have the patience to follow a value
investing discipline. Therefore, the Fund is designed for investors with a
longer-term investment outlook of at least three-to-five years. The Fund
believes that value investing requires a disciplined, patient approach because
anticipated stock values often take time to emerge.
STRATEGIES
The Fund seeks to achieve its objective by investing primarily in a
diversified portfolio of common stocks of U.S.- based companies that are
selected because their financial characteristics are consistent with the Fund's
unique value philosophy. When evaluating a potential company for investment,
the investment manager performs an intensive, inferential analysis of the
historical and current information contained in the company's publicly disclosed
financial statements and accompanying footnotes, shareholder reports and other
required disclosure filings. The manager scrutinizes the company's corporate
accounting and reporting techniques in an effort to "look behind the numbers"
to obtain an accurate understanding of the company's business fundamentals and
business characteristics.
The manager believes that the true quality and value of a company is
associated with its financial strength, its ability to provide excess cash flow,
and the quality and predictability of its earnings based on the company's unique
business and financial fundamentals. The manager believes that, in order to
achieve long-term capital appreciation, downside risk should be considered
before upside potential in the stock selection process. The first line of
defense for protecting against downside risk is to only select companies for the
portfolio that generate positive excess cash flow.
OLSTEIN & ASSOCIATES IDENTIFIES AND SELECTS
COMPANIES WHICH, IN THE MANAGER'S OPINION:
o generate more cash flow than necessary
to sustain the business
o avoid aggressive accounting practices
(such as capitalizing regular expenses)
o demonstrate balance sheet fundamentals that are
consistent with the Fund's "defense first" approach
o are selling at a discount to the private market value
as estimated by Olstein & Associates
Companies that generate excess cash flow have the potential to:
o Raise their dividend payments
o Re-purchase company shares
o Make strategic acquisitions
o Ride out rough times without adopting short-term strategies not in the
long-term interest of the company in order to alleviate cash shortages
o Be acquired as a result of their strong financial position
The manager considers aggressive accounting practices to include: (i) "front
end" accounting techniques that immediately flow non-recurring revenues such as
up-front franchising fees through the company's income statement; (ii) "purchase
accounting" techniques that use non-recurring cost write offs associated with
corporate acquisitions to enable the company to increase reported earnings;
(iii) capitalization of research and development, advertising or promotional
payments, based on unjustified optimism; and (iv) reversing previously
established reserves to achieve earnings growth targets. In addition, the
investment manager usually avoids companies that use accounting techniques to
report higher profits to shareholders than those reported to the IRS for tax
purposes. For example, firms that capitalize excessive marketing costs for
shareholder reporting purposes and expense such costs for tax reporting purposes
can report materially higher earnings figures to shareholders.
If the manager identifies companies that engage in aggressive accounting
practices, carry excessive debt or are over-leveraged, and the manager believes
that their stock price is overvalued, the Fund may sell the stock short. Short
sales allow the Fund to realize profits if the stock price declines below the
level where the Fund sold the stock short.
The investment manager calculates the "private market value" of a company by
considering the amount of excess cash flow expected to be generated by the
company over five years after taking into account all working capital needs and
capital expenditures. The manager next calculates the return that could be
generated by an investment in the company based on the anticipated excess cash
flows. This return is then compared to the available rates of return on three-
to-five year U.S. Treasury notes. The Fund seeks investments that could provide
returns over a five year time period that are at least fifty percent higher than
the yield on such U.S. Treasury notes. This approach differs from the
traditional value investing technique which relies on an analysis of the price-
to-earnings ratios reported by companies.
Once suitable investments are identified as described above, the Fund seeks
to buy the companies' common stock at prices that reflect a discount to the
manager's calculation of the stock's "private market value." The Fund believes
that stock prices often fall below the "private market value" as a result of
analysts and investors who focus on the short-term and overreact to a company's
failure to fully meet quarterly earnings estimates, or to other negative
information. The Fund also believes that negative market psychology can cause
stocks to be temporarily unpopular or improperly valued. The Fund intends to
capitalize on market volatility and valuation extremes, by purchasing stocks at
prices that the manager believes can result in above average capital
appreciation if and when the deviation in stock prices are corrected by market
forces. The investment manager believes that an attempt to capitalize on
valuation extremes requires patience, sometimes as long as three to five years,
because anticipated stock values often take time to emerge.
In addition to common stocks, the Fund may invest in other equity securities
or securities that have an equity component, such as warrants, rights or
securities that are convertible into common stock. The Fund may also purchase
and sell American Depository Receipts ("ADRs"), which are receipts typically
issued by a U.S. bank or trust company which evidence ownership of underlying
foreign securities, although the Fund does not expect to invest more than 5% of
its assets in ADRs. The Fund may also enter into equity swap agreements for the
purpose of attempting to obtain a desired return or exposure to certain equity
securities or equity indices in an expedited manner or at a lower cost to the
Fund than if the Fund had invested directly in such securities and, indirectly,
to better manage the Fund's ability to experience taxable gains or losses in an
effort to maximize the after-tax returns for shareholders.
If the investment manager determines that suitable undervalued equity
securities are not available, the Fund may seek income by investing all or a
portion of its assets in other types of securities, including preferred stock,
debt securities issued or guaranteed as to principal by the United States
government, its agencies or instrumentalities, and/or other high-quality,
investment grade debt securities (commercial paper, repurchase agreements,
bankers' acceptances, certificates of deposit and other fixed income
securities, including non-convertible and convertible bonds, debentures and
notes issued by U.S. corporations and certain bank obligations and loan
participations). The Fund may also invest in money market mutual funds within
the limitations imposed by the 1940 Act.
MAIN RISKS
STOCK MARKET AND MANAGER RISK
Olstein & Associates makes all decisions regarding the Fund's investments.
Therefore the Fund's investment success depends on the skill of Olstein &
Associates in evaluating, selecting and monitoring the Fund's assets. Like all
mutual funds, an investment in the Fund is subject to the risk that prices of
securities may decline over short, or even extended periods, or that the
investments chosen by the investment manager may not perform as anticipated. In
addition, because the Fund uses a value-oriented approach, there is a risk that
the market will not recognize a stock's intrinsic value for an unexpectedly long
time, or that the investment manager's calculation of the underlying value will
not be reflected in the market price.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE
LONG-TERM CAPITAL APPRECIATION.
SHORT SELLING
If the Fund anticipates that the price of a company's stock is overvalued and
will decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund may realize a profit
or loss depending upon whether the market price of a security decreases or
increases between the date of the short sale and the date on which the Fund
replaces the borrowed security. Short selling is a technique that may be
considered speculative and involves risk beyond the initial capital necessary to
secure each transaction. Whenever the Fund sells short, it is required to
deposit collateral in segregated accounts to cover its obligation, and to
maintain the collateral in an amount at least equal to the market value of the
short position. As a hedging technique, the Fund may purchase call options to
buy securities sold short by the Fund. Such options would lock in a future
purchase price and protect the Fund in case of an unanticipated increase in the
price of a security sold short by the Fund.
PORTFOLIO TURNOVER
The Fund intends to follow a strict "buy and sell" discipline, under which
it will purchase or sell stocks whenever the Fund's value criteria are met. This
practice may result in a portfolio turnover rate higher than that reached by
many capital appreciation funds. High portfolio turnover involves additional
transaction costs (such as brokerage commissions), which are borne by the Fund,
and might involve adverse tax effects.
YEAR 2000 ISSUES
Like all mutual funds, the Fund and its service providers utilize systems
that must accurately process date related information on or after January 1,
2000. If the systems used by the Fund or its service providers (investment
manager and distributor, transfer agent, custodian, administrator and others)
are negatively affected by Year 2000 issues, the Fund may not be able to handle
securities trades, payments of interest and dividends, or pricing and account
services. Although, at this time, there can be no assurance that there will be
no adverse impact on the Fund, the Fund's service providers have advised the
Fund that they have been actively working on necessary changes to their computer
systems to prepare for the year 2000 and expect that their systems, and those of
other parties they deal with, will be adapted in time for that event. The Year
2000 issue could also adversely affect the companies in which the Fund invests,
and therefore, could affect their stock prices. The manager attempts to
determine the effect the Year 2000 issue may have on a company when choosing
securities for investment.
MANAGEMENT OF THE FUND
The Fund's investments and business operations are managed by Olstein &
Associates, L.P., subject to supervision by a Board of Trustees. The members of
the Board of Trustees are fiduciaries for the Fund's shareholders and establish
policy for the operation of the Fund.
As investment manager, Olstein & Associates selects investments for the Fund
and supervises the Fund's portfolio transactions to buy and sell securities, all
according to the Fund's stated investment objectives and policies. The
investment manager is also responsible for selecting brokers and dealers to
execute the Fund's portfolio transactions. The investment manager may place
transactions through itself or Fund affiliates, subject to SEC rules designed to
ensure fairness of commissions. The firm also manages the day-to-day operation
of the business of the Fund. The investment manager will provide on a
reimbursable basis, administrative and clerical services, office space and other
facilities for the Fund and keep certain books and records for the Fund. To
date, the investment manager has chosen not to accrue or seek reimbursement for
such expenses from the Fund. For its services the investment manager receives an
annual fee equal to 1.00% of the Fund's average daily net assets.
Robert A. Olstein is the president of Olstein & Associates and is principally
responsible for the management of the Fund's portfolio of securities. Mr.
Olstein has been engaged in various aspects of securities research and portfolio
management for both institutional and retail clients since 1968. In 1971, he
co-founded the "Quality of Earnings Report" service, which pioneered the idea
of utilizing inferential screening of financial statements to identify early
warning alerts of potential changes in a company's future earnings power, and
thus, the value of its stock. Prior to forming Olstein & Associates, Mr.
Olstein managed portfolios for individuals, corporations and employee benefit
plans at Smith Barney Inc. and its predecessor companies between 1981 and 1995.
Mr. Olstein was a Senior Vice President/Senior Portfolio Manager at Smith Barney
where he managed approximately $158 million of individual and employee benefit
accounts, $73 million of which were managed under the Smith Barney Equity
Portfolio Management Program. Mr. Olstein is a senior member of the New York
Society of Securities Analysts and a fellow of the Financial Analysts
Federation. He is a past recipient of the Graham & Dodd and Gerald M. Loeb
Research Awards, has testified before the Senate Banking Committee on bank
accounting, and has been quoted in and is the author of numerous articles on
corporate reporting and disclosure practices in publications such as The Wall
Street Journal, Business Week, The New York Times, Barron's, etc. Mr. Olstein
periodically serves as co-host on CNBC's "Squawk Box" show.
MR. OLSTEIN HAS BEEN IN THE MANAGEMENT BUSINESS SINCE 1968
FUND DISTRIBUTION
Shares of the Fund are offered to investors through financial professionals
such as brokers, dealers, investment advisers and financial planners. Olstein
& Associates serves as the Fund's principal underwriter and national
distributor. In addition to its status as a registered investment adviser,
Olstein & Associates is registered as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc.
As distributor, Olstein & Associates selects brokers, dealers and others to
enter into agreements to sell the Fund's shares. Olstein & Associates also
provides marketing and shareholder servicing support for the Fund, and
coordinates the distribution activities of the Fund, its service providers and
selling dealers.
RULE 12B-1 PLAN
The Fund has adopted a Shareholder Servicing and Distribution Plan for Class
C pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended.
Under the Plan, the assets of Class C are subject to annual fees totaling 1.00%
of the average daily net assets of the Class. These fees are used to pay for
the sale of shares of the Class and for shareholder and distribution services
provided to Class shareholders. Because these fees are paid out of the assets
of the Class on an on-going basis, over time these fees may cost you more than
paying other types of sales charges.
Under the Plan, seventy five percent of the fee may be used to compensate the
distributor or others for distribution activities which may include the
preparation, printing and distribution of prospectuses, sales materials,
reports, advertising, media relations and other distribution-related expenses.
The fees also cover payments to selling dealers with respect to sales of Fund
shares.
The remaining twenty five percent of the fee is a shareholder servicing fee
used to compensate the distributor or others for ongoing servicing and
maintenance of shareholder accounts with the Fund. Such shareholder servicing
activities include responding to inquiries of shareholders of the Fund regarding
their ownership of shares of the Fund or providing other similar services not
otherwise required to be provided by the investment manager or the Fund's
administrator. Payments under the 12b-1 Plan are not tied exclusively to
distribution or shareholder servicing expenses actually incurred by the
distributor or others, and the payments may exceed the amount of expenses
actually incurred.
To promote the sale of the Fund's shares, Olstein & Associates makes up-front
payments to selling dealers in amounts up to 1.5% of the amount invested by the
dealers' clients in the Fund. Dealers also receive a portion of the ongoing
12b-1 fees associated with their clients' investments. Up-front payments to
selling dealers are financed solely by Olstein & Associates and there are no up-
front charges to investors or the Fund.
CONTINGENT DEFERRED SALES CHARGE
If you elect to redeem your shares of the Fund within the first two years of
purchase you may be subject to a contingent deferred sales charge (CDSC). A
CDSC of 2.50% of the amount redeemed is charged if shares are redeemed within
the first year of purchase; 1.25% if the shares are redeemed in the second year
after purchase, and there is no CDSC if shares are redeemed more than two years
after purchase. The CDSC is waived for certain categories of investors (see
"HOW TO REDEEM SHARES").
FINANCIAL HIGHLIGHTS
The following table includes selected per share data and other performance
information for the Fund throughout each period and is derived from the audited
financial statements of the Fund. It should be read together with the Fund's
financial statements, notes and the unqualified report of independent auditors,
Ernst & Young, LLP, along with management's discussion and analysis of the
Fund's performance, appearing in the Fund's Annual Report to Shareholders for
the year ended August 31, 1999. The Fund's Annual Report may be obtained without
charge by writing or calling the Fund at the address or number listed on the
prospectus cover.
<TABLE>
FOR THE FOR THE FOR THE FOR THE PERIOD
FISCAL YEAR FISCAL YEAR FISCAL YEAR SEPTEMBER 21, 1995+<F32>
ENDED ENDED ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.88 $ 14.79 $ 11.21 $ 10.00
------- ------- ------- -------
INVESTMENT OPERATIONS:
Net investment loss (0.11)1<F35> (0.06)1<F35> (0.05) (0.07)
Net realized and unrealized gain
(loss) on investments 7.31 (0.95) 4.66 1.29
------- ------- ------- -------
Total from investment operations 7.20 (1.01) 4.61 1.22
------- ------- ------- -------
DISTRIBUTIONS:
From net realized gain on investments (0.65) (2.90) (1.03) (0.01)
------- ------- ------- -------
NET ASSET VALUE - END OF PERIOD $ 17.43 $ 10.88 $ 14.79 $ 11.21
------- ------- ------- -------
TOTAL RETURN++<F33> 67.99% (9.33)% 43.61% 12.22%
------- ------- ------- -------
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses2<F36> 2.19% 2.25% 2.38% 2.43%*<F34>
Net investment loss (0.74)% (0.39)% (0.45)% (0.68)%*<F34>
Interest expense and dividends
on short positions 0.10% 0.00% -- --
Portfolio turnover rate 179.33% 187.44% 164.92% 139.77%*<F34>
Net assets at end of period ($000 omitted) $349,157 $204,323 $175,602 $109,005
</TABLE>
+<F32> Commencement of Operations.
++<F33> Total returns do not reflect any deferred sales charge. The total
return for the period September 21, 1995 through August 31, 1996, has
not been annualized.
*<F34> Annualized.
1<F35> Net investment loss per share represents net investment loss divided
by average shares outstanding throughout the period.
2<F36> The expense ratio excludes interest expense on equity swap contracts
and dividends on short positions. The ratio including interest
expense on equity swap contracts and dividends on short positions for
the period ended August 31, 1999 was 2.29%.
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
The price for Class C shares is the net asset value per share ("NAV"), which
is determined by the Fund as of the close of regular trading (generally 4:00
p.m. eastern time) on each day that the New York Stock Exchange is open for
unrestricted trading. Purchase and redemption requests are priced at the next
NAV calculated after receipt and acceptance of a completed purchase or
redemption request. The NAV is determined by dividing the value of the Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets - liabilities/# of shares = NAV). The NAV
takes into account the expenses and fees of the Fund, including management,
distribution and shareholder servicing fees, which are accrued daily. Each
class of shares of the Fund will have its own NAV which reflects any variations
in distribution and shareholder servicing fees among the classes.
The Fund's portfolio securities are valued each day at their market value,
which usually means the last quoted sale price on the security's principal
exchange that day. If market quotations are not readily available, securities
will be valued at their fair market value as determined in good faith, or under
procedures approved by, the Board of Trustees. The Fund may use independent
pricing services to assist in calculating NAV.
The SAI contains additional information regarding the pricing of the Fund
shares.
HOW TO PURCHASE SHARES
You may purchase shares at the first NAV calculated after the Fund's transfer
agent receives and accepts your purchase order in proper form as described
below. Your purchase of Fund shares is subject to annual 12b-1 Plan expenses
and, if you redeem your shares within two years of purchase, the shares may be
subject to a CDSC. The Fund reserves the right to reject your purchase order
and to suspend the offering of shares of the Fund.
MINIMUM INVESTMENTS INITIAL SUBSEQUENT
Regular Accounts $1,000 $100 ($1,000 by wire)
Qualified Tax Sheltered Retirement
Plans or IRAs $250 $100
The Fund reserves the right to vary the initial and subsequent minimum
investment requirements at any time.
PURCHASES BY MAIL
Complete and sign the New Account Application form.
Make check or money order payable to The Olstein Financial Alert Fund Class C
$1,000 minimum. $250 IRA minimum.
Any lesser amount must be approved by the Fund.
If a purchase request is inadvertently sent to the Fund at its corporate
address, it will be forwarded to the Fund's transfer agent and the effective
date of purchase will de delayed until the request is received by the Fund's
transfer agent.
MAIL TO: OVERNIGHT OR EXPRESS MAIL TO:
THE OLSTEIN FINANCIAL THE OLSTEIN FINANCIAL
ALERT FUND (Class C) ALERT FUND Class C)
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
Setting up an IRA account? Please call the Fund at 800) 799-2113 for
details.
All checks and money orders must be in U.S. Dollars only. No cash will be
accepted.
NOTE: FIRSTAR MUTUAL FUND SERVICES, LLC CHARGES A $25 FEE FOR ANY RETURNED
CHECKS DUE TO INSUFFICIENT FUNDS. YOU WILL BE RESPONSIBLE FOR ANY
LOSSES SUFFERED BY THE FUND AS A RESULT.
PURCHASES BY WIRE
Call first to set up a new account by wire to give the Fund your investment
and dollar amount: (800) 799-2113
Immediately send a completed New Account Application form to the Fund at the
above address to have all accurate information recorded to your account. Your
purchase request should be wired through the Federal Reserve Bank as follows:
Firstar Bank N.A. Credit to: Firstar Mutual Fund Services, LLC
777 East Wisconsin Avenue Account Number: 112-952-137
Milwaukee, Wisconsin 53202 Further credit to: The Olstein Financial
ABA Number: 075000022 Alert Fund
Your account name and account number
(For new accounts, include taxpayer identification number)
PURCHASES BY TELEPHONE
The telephone purchase option allows you to move money from your bank account
to your Fund account at your request. Only bank accounts held at domestic
financial institutions that are Automated Clearing House (ACH) members may be
used for telephone transactions.
To have your Fund shares purchased at the NAV determined at the close of
regular trading on a given date, Firstar must receive both your purchase order
and payment by Electronic Funds Transfer through the ACH System before the close
of regular trading on that date. Most transfers are completed within three
business days. YOU MAY NOT USE TELEPHONE TRANSACTIONS FOR INITIAL PURCHASE OF
FUND SHARES.
The minimum amount that can be transferred by telephone is $100. For
information about telephone transactions, please call the Fund at (800) 799-
2113.
AUTOMATIC INVESTMENT PLAN
You may purchase shares of the Fund through an Automatic Investment Plan
which allows monies to be deducted directly from your checking, savings or bank
money market accounts to invest in the Fund. You may make automatic investments
on a weekly, monthly, bi-monthly (every other month) or quarterly basis.
Minimum initial investment: $1,000
Subsequent monthly investment: $ 100
You are eligible for this plan if your account is maintained at a domestic
financial institution which is an ACH member.
The Fund may alter, modify or terminate this Plan at any time. For
information about participating in the Automatic Investment Plan, please call
the Fund at (800) 799-2113.
ADDITIONAL INVESTMENTS
You may add to your account at any time by purchasing shares by mail (minimum
$100) or by wire (minimum $1,000) according to the above wiring instructions.
You must notify the Fund at (800) 799-2113 prior to sending your wire. You must
send a remittance form which is attached to your individual account statement
together with any subsequent investments made through the mail. All purchase
requests must include your account registration number in order to assure that
your funds are credited properly.
HOW TO REDEEM SHARES
REMEMBER:
CHECKS ARE SENT TO YOUR ADDRESS ON RECORD. IF YOU MOVE, TELL US!
You may redeem your shares of the Fund as described below on any business day
that the Fund calculates its NAV. Redemption requests in excess of $50,000 must
be made in writing. Your shares will be sold at the NAV next calculated after
your order is accepted by the transfer agent. Any applicable CDSC will be
deducted.
If your redemption request is in good order, the Fund will normally send you
your redemption proceeds on the next business day and no later than seven
calendar days after receipt of the redemption request. The Fund can send
payments by wire directly to any bank previously designated by you in the New
Account Application. A $12.00 fee is charged for each wire redemption.
If you purchase shares by check and request a redemption soon after the
purchase, the Fund will honor the redemption request, but will not mail the
proceeds until your purchase check has cleared (usually within 12 days). If you
make a purchase with a check that does not clear, the purchase will be canceled
and you will be responsible for any losses or fees incurred in that transaction.
Checks will be made payable to you and will be sent to your address of
record. If the proceeds of the redemption are requested to be sent to an
address other than the address of record or if the address of record has been
changed within 15 days of the redemption request, the request must be in writing
with your signature(s) guaranteed. The Fund is not responsible for interest on
redemption amounts due to lost or misdirected mail.
IF YOUR ACCOUNT FALLS BELOW $1,000, THE FUND MAY ASK YOU TO INCREASE YOUR
BALANCE.
IF YOU DON'T, YOUR SHARES COULD BE AUTOMATICALLY REDEEMED.
SIGNATURE GUARANTEES
Signature guarantees are needed for
o Redemption requests over $50,000
o Redemption requests to be sent to a different address other than the
address of record
o Obtaining or changing telephone redemption privileges
Signature guarantees can be obtained from banks and securities dealers, but
not from a notary public. The transfer agent may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees and guardians. The New Account Application contains appropriate
information and a form on which to make the signature guarantee.
CONTINGENT DEFERRED SALES CHARGES
If you are a client of Olstein & Associates who maintains a private brokerage
account at the time of purchase, your account will not be subject to the CDSC
described in this Prospectus.
If you submit a redemption request for a specific dollar amount, and the
redemption request is subject to a CDSC, the Fund will redeem the number of
shares necessary to deduct the applicable CDSC and tender the requested amount
to you if you have enough shares in the account. Shares which are sold within
the first two years of their purchase will be assessed the applicable CDSC on
the original purchase price of such shares. Purchases by participants in 401(k)
or 403(b) plans for which the Fund is listed as an investment option and Olstein
& Associates is listed as broker of record, will not be subject to any CDSC.
If after redeeming shares, you decide to repurchase the same amount of shares
within 90 days of a redemption which was subject to a CDSC, you will receive an
amount of shares equal to the repurchase plus the number of shares necessary to
reimburse the amount of the CDSC.
CDSC
YEAR AFTER PURCHASE MADE (AS A % OF DOLLAR AMOUNT SUBJECT TO CHARGE)
Up to 1 year: 2.50%
Between 1 & 2 years: 1.25%
After 2 full years: None
REDEMPTIONS IN-KIND
If your redemption request exceeds the lesser of $250,000 or 1% of the NAV
(an amount that would affect Fund operations), the Fund reserves the right to
make a "redemption in-kind." A redemption in-kind is a payment in portfolio
securities rather than cash. The portfolio securities would be valued using the
same method as the Fund uses to calculate its NAV. You may experience
additional expenses such as brokerage commissions in order to sell the
securities received from the Fund. In-kind payments do not have to constitute a
cross section of the Fund's portfolio. The Fund will not recognize gain or loss
for federal tax purposes on the securities used to complete an in-kind
redemption, but you will recognize gain or loss equal to the difference between
the fair market value of the securities received and the shareholder's basis in
the Fund shares redeemed.
REDEMPTION BY MAIL
Send written redemption requests to:
THE OLSTEIN FINANCIAL ALERT FUND CLASS C
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
If a redemption request is inadvertently sent to the Fund at its corporate
address, it will be forwarded to the Fund's transfer agent and the effective
date of redemption will de delayed until the request is received by the
Fund's transfer agent.
The Fund cannot honor any redemption requests with special conditions or
which specify an effective date other than as provided.
A redemption request must be received in good order by the transfer agent
before it will be processed. "Good Order" means the request for redemption
must include a Letter of Instruction specifying or containing:
o the NAME of the Fund
o the NUMBER of shares or the DOLLAR amount of shares to be redeemed
o SIGNATURES of all registered shareholders exactly as the shares are
registered
o the ACCOUNT registration number
o Any additional requirements listed below that apply to your particular
account.
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Redemption requests must be signed by
Sole Proprietorship, Custodial all person(s) required to sign for
(Uniform Gift to Minors Act), the account, exactly as it is
General Partners registered.
Corporations, Associations Redemption request and a corporate
resolution, signed by person(s)
required to sign for the account,
accompanied by signature guarantee(s).
Trusts Redemption request signed by the
trustee(s), with a signature
guarantee. (If the Trustee's name is
not registered on the account, a copy
of the trust document certified within
the past 60 days is also required.)
IRA REDEMPTIONS
If you have an IRA, you must indicate on your redemption request whether or
not to withhold federal income tax. Redemption requests not indicating an
election to have federal tax withheld will be subject to withholding. If you
are uncertain of the redemption requirements, please contact the transfer agent
in advance: (800) 799-2113.
REDEMPTION BY TELEPHONE
If you are set up to perform telephone transactions (either through your New
Account Application or by subsequent arrangements in writing), you may redeem
shares in any amount up to $50,000 by instructing the transfer agent by
telephone at: (800) 799-2133. You must redeem at least a $100 for each
telephone redemption. Redemption requests for amounts exceeding $50,000 must be
made in writing.
If the proceeds are sent by wire, the transfer agent will assess a $12.00
wire fee.
In order to arrange for redemption by wire or telephone after an account has
been opened, or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to the transfer agent at the address
listed above.
A signature guarantee is required of all shareholders in order to qualify for
or to change telephone redemption privileges.
NEITHER THE FUND NOR ANY OF ITS SERVICE CONTRACTORS WILL BE LIABLE FOR ANY
LOSS OR EXPENSE IN ACTING UPON ANY TELEPHONE INSTRUCTIONS THAT ARE REASONABLY
BELIEVED TO BE GENUINE. The Fund will use reasonable procedures to attempt to
confirm that all telephone instructions are genuine such as:
o requesting a shareholder to correctly state his or her Fund account
number,
o the name in which his or her account is registered,
o his or her banking institution,
o bank account number and
o the name in which his or her bank account is registered.
THE FUND AND ITS TRANSFER AGENT EACH RESERVE THE RIGHT TO REFUSE A WIRE OR
TELEPHONE REDEMPTION IF IT IS BELIEVED ADVISABLE TO DO SO. PROCEDURES FOR
REDEEMING FUND SHARES BY WIRE OR TELEPHONE MAY BE MODIFIED OR TERMINATED AT ANY
TIME BY THE FUND.
The Fund is not responsible for interest on redemptions due to lost or
misdirected mail.
ACH TRANSFER
Redemption proceeds can be sent to your bank account by ACH transfer. You
can elect this option by completing the appropriate section of the New Account
Application form. If money is moved by ACH transfer, you will not be charged by
the Fund for these services. There is a $100 minimum per ACH transfer.
SYSTEMATIC WITHDRAWAL PLAN
If you own shares with a value of $10,000 or more, you may participate in the
Systematic Withdrawal Plan. The Fund's systematic withdrawal option allows you
to move money automatically from your Fund account to your bank account
according to the schedule you select. The minimum systematic withdrawal amount
is $100.
To select the systematic withdrawal option you must check the appropriate box
on the New Account Application. A systematic withdrawal may be subject to a
CDSC. If you expect to purchase additional Fund shares, it may not be to your
advantage to participate in the Systematic Withdrawal Plan because
contemporaneous purchases and redemptions may result in adverse tax
consequences.
For further details about this service, see the New Account Application or
call the transfer agent at (800) 799-2113.
RETIREMENT PLANS
Shares of the Fund are available for use in all types of tax-deferred
retirement plans such as:
o IRAs,
o employer-sponsored defined contribution plans including 401(k) plans),
and
o tax-sheltered custodial accounts described in Section 403(b)(7) of the
Internal Revenue Code.
Qualified investors benefit from the tax-free compounding of income dividends
and capital gains distributions. Application forms and brochures describing
investments in the Fund for retirement plans can be obtained by calling the Fund
at (800) 799-2113. Below is a brief description of the types of retirement
plans that may invest in the Fund:
ROTH IRAs
Roth IRAs permit tax free distributions of account balances if the assets have
been invested for five years or more and the distributions meet certain
qualifying restrictions. Investors filing as single
taxpayers who have adjusted gross incomes of $95,000 or more, and investors
filing as joint taxpayers with adjusted gross incomes of $150,000 or more may
find their participation in this IRA to be restricted.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
You are eligible to contribute on a deductible basis to an IRA account if you
are not an active participant in an employer maintained retirement plan and,
when a joint return is filed, you do not have a spouse who is an active
participant. The IRA deduction is also available for individual taxpayers and
married couples with adjusted gross incomes not exceeding certain limits. All
individuals who have earned income may make nondeductible IRA contributions to
the extent that they are not eligible for a deductible contribution. Income
earned by an IRA account will continue to be tax deferred. Roth IRAs are also
available.
A special IRA program is available for employers under which the employers
may establish IRA accounts for their employees in lieu of establishing tax
qualified retirement plans. SEP-IRAs (Simplified Employee Pension-IRA) free the
employer of many of the recordkeeping requirements of establishing and
maintaining a tax qualified retirement plan trust.
If you are entitled to receive a distribution from a qualified retirement
plan, you may rollover all or part of that distribution into the Fund's IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
Firstar Bank N.A. makes available its services as an IRA Custodian for each
shareholder account established as an IRA. For these services, Firstar Bank
N.A. receives an annual fee of $12.50 per account with a cap of $25.00 per
social security number, which fee is paid directly to Firstar Bank N.A. by the
IRA shareholder. If the fee is not paid by the date due, shares of the Fund
owned by the shareholder in the IRA account will be redeemed automatically for
purposes of making the payment. IRAs are subject to special rules and
conditions that must be reviewed by the investor when opening a new account.
401(K) PLANS AND OTHER DEFINED CONTRIBUTION PLANS
Both self-employed individuals (including sole proprietorships and
partnerships) and corporations may use shares of the Fund as a funding medium
for a retirement plan qualified under the Internal Revenue Code. Such plans
typically allow investors to make annual deductible contributions, which may be
matched by their employers up to certain percentages based on the investor's
pre-contribution earned income.
403(B)(7) RETIREMENT PLANS
Schools, hospitals, and certain other tax-exempt organizations or
associations may use shares of the Fund as a funding medium for a retirement
plan for their employees. Contributions are made to the 403(b)(7) Plan as a
reduction to the employee's regular compensation. Such contributions are
excludable from the gross income of the employee for Federal Income tax purposes
to the extent they do not exceed applicable limitations (including a generally
applicable limitation of $9,500 per year).
DIVIDENDS, CAPITAL GAINS DISTRIBUTION AND TAXES
The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from investments and will distribute gains, if any, once a year.
Expenses of the Fund, including the investment management fees and 12b-1
fees, are accrued each day. Reinvestments of dividends and distributions in
additional shares of the Fund will be made at the net asset value determined on
the payable date, unless you elect to receive the dividends and/or distributions
in cash. No interest will accrue on amounts represented by uncashed
distribution or redemption checks. You may change your election at any time by
notifying the Fund in writing thirty days prior to the record date. Please call
the Fund at (800) 799-2113 for more information.
In general, distributions from the Fund are taxable to you as either ordinary
income or capital gains. This is true whether you reinvest your distributions in
additional shares of the Fund or receive them in cash. Any capital gains
distributed by the Fund are taxable to you as long-term capital gains no matter
how long you have owned your shares. Every January, you will receive a
statement that shows the tax status of distributions you received for the
previous year. Distributions declared in December but paid in January are
taxable as if they were paid in December. Distributions taxed as capital gains
may be taxable at different rates depending on how long the Fund holds its
assets.
When you sell or exchange your shares of the Fund, you may have a capital
gain or loss. The tax rate on any gain from the sale or exchange of your shares
depends on how long you have held your shares.
Fund distributions and gains from the sale or exchange of your shares will
generally be subject to state and local income tax. Non-U.S. investors may be
subject to U.S. withholding and estate tax. You should consult your tax
professional about federal, state, local or foreign tax consequences.
By law, the Fund must withhold 31% of your distributions and proceeds if you
do not provide your correct taxpayer identification number, or certify that such
number is correct, or if the IRS instructs the Fund to do so.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING THE
FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN THE FUND.
THE
OLSTEIN
FINANCIAL
ALERT
FUND
a series of
THE OLSTEIN FUNDS
4 Manhattanville Road
Purchase, NY 10577
1-800-799-2113
FOR MORE INFORMATION
YOU MAY OBTAIN THE FOLLOWING AND OTHER INFORMATION ON THE FUND FREE OF CHARGE:
o Annual and Semi-annual Report to Shareholders
The annual and semi-annual reports provide the Fund's most recent
financial report and portfolio listings. The annual report contains a
discussion of the market conditions and investment strategies that
affected the Fund's performance during its last fiscal year.
o Statement of Additional Information (SAI) dated December 29, 1999
The SAI provides more details about the Fund's policies and management
and is incorporated by reference into this Prospectus.
INQUIRIES MAY BE MADE TO THE FOLLOWING:
TELEPHONE:
1-800-799-2113
MAIL:
The Olstein Financial Alert Fund
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
SEC:
Text only versions of Fund documents can be viewed online or downloaded from:
http://www.sec.gov
You may review and obtain copies of Fund information at the SEC Public
Reference Room in Washington, D.C. (1-800-SEC-0330). Copies of the
information may be obtained for a fee by writing the Public Reference Section,
Washington, D.C. 20549-6009.
811-9038
THE
OLSTEIN
FUNDS
THE
OLSTEIN
FINANCIAL
ALERT
FUND
ADVISER CLASS SHARES
PROSPECTUS
January 6, 2000
THE OLSTEIN FINANCIAL ALERT FUND
PROSPECTUS JANUARY 6, 2000
ADVISER CLASS SHARES A SERIES OF
THE OLSTEIN FUNDS
4 MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(888) 887-9827
The Fund seeks long-term capital appreciation through a proprietary cash flow
value-oriented approach to investing in common stocks, that cuts across all
investment disciplines. The Fund's inferential screening techniques were
originated in the 1970's by Robert A. Olstein, the president of the Fund's
investment manager, who co-authored the "Quality of Earnings Report" service, a
publication that served as a financial statement alert service for institutional
investors.
TABLE OF CONTENTS
FUND INFORMATION
Summary of the Fund 2
Past Performance 4
Fund Expenses 5
Olstein & Associates Managed Account Performance 6
Objectives, Strategies, and Main Risks 6
Management of the Fund 9
Fund Distribution 10
Financial Highlights 11
SHAREHOLDER INFORMATION
Eligible Investors 12
Pricing of Fund Shares 12
How to Purchase Shares 12
How to Redeem Shares 14
Retirement Plans 18
Dividends, Capital Gains Distributions and Taxes 19
FOR MORE INFORMATION
The back cover tells you how to obtain more information about the
Fund.
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
ACCURATE OR COMPLETE. IT IS A CRIMINAL OFFENSE TO SUGGEST OTHERWISE.
FUND INFORMATION
SUMMARY OF THE FUND
INVESTMENT OBJECTIVES
The Fund's primary investment objective is long-term capital appreciation and
its secondary objective is income. The Fund was created so that the public
could invest according to the financial statement alert philosophy developed and
utilized for over thirty years by Robert A. Olstein, the president of the Fund's
investment manager, Olstein & Associates, L.P. The Fund is designed for
investors with at least a three to five year investment horizon.
INVESTMENT PHILOSOPHY AND STRATEGY
The Fund seeks to achieve its primary objective by investing in a diversified
portfolio of under-valued equity securities as determined by the investment
manager for the Fund. The manager believes that achieving the Fund's investment
objective is correlated with minimizing investment errors as opposed to
selecting companies with the highest appreciation potential without regard to
downside risk. The stock selection strategy emphasizes a detailed inferential
look behind the numbers of financial statements to assess financial strength and
screen for potential problems in order to assess downside risk - "defense first"
- - before considering a stock's potential for capital appreciation. The first
line of defense against investment errors is to select companies for the
portfolio that generate excess cash flow after capital expenditures and working
capital needs. In addition to purchasing under-valued securities, if the
investment manager determines that a security is over-valued, the Fund may
engage in short sales of the security.
The main thrust of the Fund's philosophy is to identify stocks selling below
the investment manager's proprietary calculation of private market value. The
stock selection process concentrates on the common stocks of companies that the
investment manager believes can deliver investor returns over a five year time
period that are at least fifty percent higher than the yield on three to five
year U.S. treasury notes over the same time period. When evaluating stocks for
the Fund's portfolio, the investment manager emphasizes an inferential analysis
of financial statements, as opposed to more conventional analytical
methodologies such as macro-economic analysis, management contact or market
timing techniques. The objective of the inferential analysis is to alert the
investment manager to positive or negative factors affecting a company's future
free cash flow that may or may not be recognized in the financial markets.
The Fund's investment philosophy is based on the belief that an intensive
inferential analysis of a company's financial statements, supporting documents,
disclosure practices, and financial statement footnotes, is the best way to
analyze the capabilities of management, the economic reality of the information
provided, the conservatism of the accounting and disclosure practices, the
company's financial strength, and finally, the value of the company.
When screening investments for the Fund's portfolio, the investment manager
believes that the quality of a company is associated with the following
characteristics:
o its financial strength
o its ability to provide excess cash flow
o the quality of its earnings
o the predictability of the earnings based on the company's unique business
fundamentals
The Fund will invest in companies without regard to whether they are
conventionally categorized as small, medium, or large capitalization or whether
they are characterized as growth, cyclical, technology, or any other category.
Similarly, the Fund does not focus on characteristics such as number of years in
business, sensitivity to economic cycles, industry categorization, or the
volatility of a company's stock price. The Fund believes that value
opportunities can develop across all categories, and the restriction of
investments according to artificial barriers could inhibit the Fund from
reaching its capital gain objective.
The Fund's investment philosophy and value-oriented approach to the goal of
long-term capital appreciation requires investors who are willing to accept
fluctuations in market psychology and who have the patience to follow a value
investing discipline. Therefore, the Fund is designed for investors with a
longer-term investment outlook of at least three-to-five years. The Fund
believes that value investing requires a disciplined, patient approach because
anticipated stock values often take time to emerge.
The Fund will purchase stocks that meet its value criteria and, if the
manager concludes that suitable undervalued securities are not available, the
Fund may invest all or a portion of its assets in short-term fixed income or
money market securities, until suitable equity securities are available. At
such times, the Fund will pursue its secondary investment objective of income.
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investing in common stocks has inherent risks which could cause you to lose
money. Some of the risks of investing in this Fund are:
o Stock prices may decline over short, or even extended periods.
o The investment manager may be incorrect in its judgment of the value of
particular stocks.
o Stock prices may not climb to anticipated levels for an unexpectedly long
time.
o The Fund engages in short sales of stocks when the investment manager
believes that their price is over-valued and may decline. Short selling is
a technique that may be considered speculative and involves risk beyond the
amount of money used to secure each transaction.
PAST PERFORMANCE
The bar chart and table shown below illustrate the variability of the Fund's
returns. The bar chart indicates the risks of investing in the Fund by showing
the changes in the Fund's performance from year to year (on a calendar year
basis). The table shows how the Fund's average annual returns compare with
those of the S&P 500 Index and the Lipper Mid-Cap Value Funds Index, both of
which represent broad measures of market performance. The Fund's past
performance is not necessarily an indication of how the Fund will perform in the
future.
The Adviser Class does not have a past performance history because it was
only recently created. Therefore, the returns featured in the bar chart and
table shown below represent the past performance of the Class C shares of the
Fund, which is the original class of shares of the Fund that has been sold since
its inception. Both the Class C shares and the Adviser Class Shares of the Fund
would have similar annual returns because the shares of both classes are
invested in the same portfolio of securities. However, the annual returns for
the Adviser Class Shares should be higher than the Class C shares because the
annual expenses of the Adviser Class Shares will be lower than the Class C
shares. The Class C shares are subject to annual Rule 12b-1 fees of 1.00% of the
average annual daily net assets of the class, while the Adviser Class Shares are
only subject to annual Rule 12b-1 fees of 0.25%.
Total Return as of 12/31
1996 24.36%
1997 34.83%
1998 15.01%
1999 34.89%
BEST QUARTER: Q4 1998 27.67%
WORST QUARTER: Q3 1998 -16.07%
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
SINCE INCEPTION
1 YEAR 9/21/95
------ ---------------
Olstein Financial Alert Fund 34.89% 25.77%
S&P 500 Index (w/ dividends reinvested)1<F2> 21.04% 26.07%
Lipper Mid-Cap Value Funds Index 11.94% 12.38%
1<F2> The S&P 500 Index is an unmanaged index created by Standard & Poor's
Corporation that is considered to represent the U.S. stock market
performance in general, and is not an investment product available for
purchase. The Class C returns presented above include operating expenses
(such as management fees, transaction costs, etc.) that reduce returns,
while the return of the S&P 500 Index does not. An individual who
purchases a product that attempts to mimic the performance of the S&P 500
Index will incur expenses such as management fees, transaction costs,
etc. that reduce returns.
2<F3> The Lipper Mid-Cap Value Funds Index consists of the average return of the
30 largest mid-cap value funds tracked by Lipper Analytical Services.
Performance is presented after the deduction of all fees.
FUND EXPENSES
The following tables describe the fees and expenses that you would pay if you
buy and hold shares of the Adviser Class of the Fund.
SHAREHOLDER TRANSACTION FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge on Purchases None
Maximum Contingent Deferred Sales Charge None
Maximum Sales Charge on Reinvested Dividends None
Redemption Fees None*<F4>
*<F4> The transfer agent charges a $12.00 fee for each wire redemption.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.00%
Distribution and Service (12b-1) Fees 0.25%
Other Expenses 0.19%
-----
TOTAL ANNUAL OPERATING COSTS 1.44%
EXAMPLE
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of each period. The Example also
assumes that you earn a 5% return, with no change in Fund expense levels.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 year 3 years
------ -------
$147 $456
OLSTEIN & ASSOCIATES MANAGED ACCOUNT PERFORMANCE
The following table provides information about the performance record
established by the Olstein & Associates portfolio management team while managing
individual client accounts at Smith Barney Inc. from December 31, 1990 through
the quarter immediately preceding the commencement of Fund operations. The
accounts whose performance is shown were managed according to the same
investment objectives, strategies and philosophy, and were subject to
substantially similar investment policies and techniques as those used by the
Fund.
The results presented are not intended to predict or suggest the return to be
experienced by the Fund or the return that an individual investor might achieve
by investing in the Fund. The Fund's results may be different from the
composite of separate accounts shown because of, among other things, differences
in fees and expenses, and because private accounts are not subject to certain
investment limitations, diversification requirements, and other restrictions
imposed by the Investment Company Act of 1940, as amended, and the Internal
Revenue Code, as amended, which, if applicable, may have adversely
affected the performance of such accounts.
The accounts whose performance is shown were managed according to the same
investment objectives and philosophy, and were subject to substantially similar
investment policies and techniques, as those used by the Fund.
NET OLSTEIN S&P 500
PERFORMANCE2<F6> TOTAL RETURN3<F7>
---------------- -----------------
1991 +32.26% +30.48%
1992 +12.29% +7.77%
1993 +11.63% +10.07%
1994 +4.90% +1.32%
1995 (1st six mos.)1<F5> +15.09% +20.25%
1<F5> The Fund commenced operations in the third quarter of 1995, at
which time Olstein & Associates discontinued managing separate
accounts. The Smith Barney clients' investment performance was
calculated on a quarterly basis, and therefore no performance
was calculated for the third quarter of 1995.
2<F6> The results shown above represent a composite of discretionary,
fee paying, separate accounts, reflect the reinvestment of any
dividends or capital gains, and are shown after deduction of
fees of 3.0%, which represents the highest possible account
management fee (including all investment management,
transaction, administrative and custodial fees) charged to such
accounts by Smith Barney Inc. The method used to calculate the
performance shown differs from the standard SEC method which is
used to calculate returns for mutual funds.
3<F7> The S&P 500 Total Return reflects the reinvestment of dividends
and capital gains, but represents a "gross" return, without the
deduction of any fees.
OBJECTIVES, STRATEGIES AND MAIN RISKS
OBJECTIVES
The Fund's primary investment objective is long-term capital appreciation.
The Fund seeks to achieve this objective through investment in a diversified
portfolio of common stocks selected according to the value-oriented investment
philosophy described in the Summary of the Fund section of this prospectus. If
the investment manager determines that securities meeting the Fund's value
criteria are not available, the Fund may invest all or a portion of its assets
in short-term fixed income or money market securities in order to pursue the
Fund's secondary objective of income.
The Fund's investment philosophy and value-oriented approach to the goal of
long-term capital appreciation requires investors who are willing to accept
fluctuations in market psychology and who have the patience to follow a value
investing discipline. Therefore, the Fund is designed for investors with a
longer-term investment outlook of at least three-to-five years. The Fund
believes that value investing requires a disciplined, patient approach because
anticipated stock values often take time to emerge.
STRATEGIES
The Fund seeks to achieve its objective by investing primarily in a
diversified portfolio of common stocks of U.S.-based companies that are
selected because their financial characteristics are consistent with the Fund's
unique value philosophy. When evaluating a potential company for investment,
the investment manager performs an intensive, inferential analysis of the
historical and current information contained in the company's publicly disclosed
financial statements and accompanying footnotes, shareholder reports and other
required disclosure filings. The manager scrutinizes the company's corporate
accounting and reporting techniques in an effort to "look behind the numbers" to
obtain an accurate understanding of the company's business fundamentals and
business characteristics.
The manager believes that the true quality and value of a company is
associated with its financial strength, its ability to provide excess cash flow,
the quality and predictability of its earnings based on the company's unique
business and financial fundamentals. The manager believes that, in order to
achieve long-term capital appreciation, downside risk should be considered
before upside potential in the stock selection process. The first line of
defense for protecting against downside risk is to only select companies for the
portfolio that generate positive excess cash flow. Companies that generate
excess cash flow have the potential to:
o Raise their dividend payments
o Re-purchase company shares
o Make strategic acquisitions
o Ride out rough times without adopting short-term strategies not in the
long-term interest of the company in order to alleviate cash shortages
o Be acquired as a result of their strong financial position
OLSTEIN & ASSOCIATES IDENTIFIES AND SELECTS
COMPANIES WHICH, IN THE MANAGER'S OPINION:
o Generate more cash flow than necessary
to sustain business
o Avoid aggressive accounting practices
such as capitalizing regular expenses
o Demonstrate balance sheet fundamentals that
are consistent with the Fund's "defense first" approach
o Are selling at a discount to the private market
value as estimated by Olstein & Associates
The manager considers aggressive accounting practices to include: (i) "front
end" accounting techniques that immediately flow non-recurring revenues such as
up-front franchising fees through the company's income statement; (ii) "purchase
accounting" techniques that use non-recurring cost writeoffs associated with
corporate acquisitions to enable the company to increase reported earnings;
(iii) capitalization of research and development, advertising or promotional
payments, based on unjustified optimism; and (iv) reversing previously
established reserves to achieve earnings growth targets. In addition, the
investment manager usually avoids companies that use accounting techniques to
report higher profits to shareholders than those reported to the IRS for tax
purposes. For example, firms that capitalize excessive marketing costs for
shareholder reporting purposes and expense such costs for tax reporting
purposes can report materially higher earnings figures to shareholders.
If the manager identifies companies that engage in aggressive accounting
practices, carry excessive debt or are over-leveraged, and the manager believes
that their stock price is overvalued, the Fund may sell the stock short. Short
sales allow the Fund to realize profits if the stock price declines below the
level where the Fund sold the stock short.
The investment manager calculates the "private market value" of a company by
considering the amount of excess cash flow expected to be generated by the
company over five years after taking into account all working capital needs and
capital expenditures. The manager next calculates the return that could be
generated by an investment in the company based on the anticipated excess cash
flows. This return is then compared to the available rates of return on three-
to-five year U.S. Treasury notes. The Fund seeks investments that could provide
returns over a five year time period that are at least fifty percent higher than
the yield on such U.S. Treasury notes. This approach differs from the
traditional value investing technique which relies on an analysis of the
price-to-earnings ratios reported by companies.
Once suitable investments are identified as described above, the Fund seeks
to buy the companies' common stock at prices that reflect a discount to the
manager's calculation of the stock's "private market value." The Fund
believes that stock prices often fall below the "private market value" as a
result of analysts and investors who focus on the short-term and overreact to a
company's failure to fully meet quarterly earnings estimates, or to other
negative information. The Fund also believes that negative market psychology
can cause stocks to be temporarily unpopular or improperly valued. The Fund
intends to capitalize on market volatility and valuation extremes, by purchasing
stocks at prices that the manager believes can result in above average capital
appreciation if and when the deviation in stock prices are corrected by market
forces. The investment manager believes that an attempt to capitalize on
valuation extremes requires patience, sometimes as long as three to five years,
because anticipated stock values often take time to emerge.
In addition to common stocks, the Fund may invest in other equity securities
or securities that have an equity component, such as warrants, rights or
securities that are convertible into common stock. The Fund may also purchase
and sell American Depository Receipts ("ADRs"), which are receipts typically
issued by a U.S. bank or trust company which evidence ownership of underlying
foreign securities, although the Fund does not expect to invest more than 5% of
its assets in ADRs. The Fund may also enter into equity swap agreements for the
purpose of attempting to obtain a desired return or exposure to certain equity
securities or equity indices in an expedited manner or at a lower cost to the
Fund than if the Fund had invested directly in such securities and, indirectly,
to better manage the Fund's ability to experience taxable gains or losses in an
effort to maximize the after-tax returns for shareholders.
If the investment manager determines that suitable undervalued equity
securities are not available, the Fund may seek income by investing all or a
portion of its assets in other types of securities, including preferred stock,
debt securities issued or guaranteed as to principal by the United States
government, its agencies or instrumentalities, and/or other high-quality,
investment grade debt securities (commercial paper, repurchase agreements,
bankers' acceptances, certificates of deposit and other fixed income securities,
including non-convertible and convertible bonds, debentures and notes issued by
U.S. corporations and certain bank obligations and loan participations). The
Fund may also invest in money market mutual funds within the limitations imposed
by the 1940 Act.
MAIN RISKS
MANAGER AND STOCK MARKET RISK
Olstein & Associates makes all decisions regarding the Fund's investments.
Therefore the Fund's investment success depends on the skill of Olstein &
Associates in evaluating, selecting and monitoring the Fund's assets. Like all
mutual funds, an investment in the Fund is subject to the risk that prices of
securities may decline over short, or even extended periods, or that the
investments chosen by the investment manager may not perform as anticipated. In
addition, because the Fund uses a value-oriented approach, there is a risk that
the market will not recognize a stock's intrinsic value for an unexpectedly long
time, or that the investment manager's calculation of the underlying value will
not be reflected in the market price.
THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE
LONG-TERM CAPITAL APPRECIATION.
SHORT SELLING
If the Fund anticipates that the price of a company's stock is overvalued and
will decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund may realize a profit
or loss depending upon whether the market price of a security decreases or
increases between the date of the short sale and the date on which the Fund
replaces the borrowed security. Short selling is a technique that may be
considered speculative and involves risk beyond the initial capital necessary to
secure each transaction. Whenever the Fund sells short, it is required to
deposit collateral in segregated accounts to cover its obligation, and to
maintain the collateral in an amount at least equal to the market value of the
short position. As a hedging technique, the Fund may purchase call options to
buy securities sold short by the Fund. Such options would lock in a future
purchase price and protect the Fund in case of an unanticipated increase in the
price of a security sold short by the Fund.
PORTFOLIO TURNOVER
The Fund intends to follow a strict "buy and sell" discipline, under which it
will purchase or sell stocks whenever the Fund's value criteria are met. This
practice may result in a portfolio turnover rate higher than that reached by
many capital appreciation funds. High portfolio turnover involves additional
transaction costs (such as brokerage commissions), which are borne by the Fund,
and might involve adverse tax effects.
YEAR 2000 ISSUES
Like all mutual funds, the Fund and its service providers utilize systems
that must accurately process date related information on or after January 1,
2000. If the systems used by the Fund or its service providers (investment
manager and distributor, transfer agent, custodian, administrator and others)
are negatively affected by Year 2000 issues, the Fund may not be able to handle
securities trades, payments of interest and dividends, or pricing and account
services. Although, at this time, there can be no assurance that there will be
no adverse impact on the Fund, the Fund's service providers have advised the
Fund that they have been actively working on necessary changes to their computer
systems to prepare for the year 2000 and expect that their systems, and those of
other parties they deal with, will be adapted in time for that event. The Year
2000 issue could also adversely affect the companies in which the Fund invests,
and therefore, could affect their stock prices. The manager attempts to
determine the effect the Year 2000 issue may have on a company when choosing
securities for investment.
MANAGEMENT OF THE FUND
The Fund's investments and business operations are managed by Olstein &
Associates, L.P., subject to supervision by a Board of Trustees. The members of
the Board of Trustees are fiduciaries for the Fund's shareholders and establish
policy for the operation of the Fund.
As investment manager, Olstein & Associates selects investments for the Fund,
supervises the Fund's portfolio transactions to buy and sell securities, all
according to the Fund's stated investment objectives and policies. The
investment manager is also responsible for selecting brokers and dealers to
execute the Fund's portfolio transactions. The investment manager may place
transactions through itself or Fund affiliates, subject to SEC rules designed to
ensure fairness of commissions. The firm also manages the day-to-day operation
of the business of the Fund. The investment manager will provide on a
reimbursable basis, administrative and clerical services, office space and other
facilities for the Fund, and keep certain books and records for the Fund. To
date, the investment manager has chosen not to accrue or seek reimbursement for
such expenses from the Fund. For its services the investment manager receives
an annual fee equal to 1.00% of the Fund's average daily net assets.
Robert A. Olstein is the president of Olstein & Associates and is principally
responsible for the management of the Fund's portfolio of securities.
Mr. Olstein has been engaged in various aspects of securities research and
portfolio management for both institutional and retail clients since 1968. In
1971, he co-founded the Quality of Earnings Report service, which pioneered the
idea of utilizing inferential screening of financial statements to identify
early warning alerts of potential changes in a company's future earnings power
and thus the value of its stock. Prior to forming Olstein & Associates, Mr.
Olstein managed portfolios for individuals, corporations and employee benefit
plans at Smith Barney Inc. and its predecessor companies between 1981 and 1995.
Mr. Olstein was a Senior Vice President/Senior Portfolio Manager at Smith Barney
where he managed approximately $158 million of individual and employee benefit
accounts, $73 million of which were managed under the Smith Barney Equity
Portfolio Management Program. Mr. Olstein is a senior member of the New York
Society of Securities Analysts and a fellow of the Financial Analysts
Federation. He is a past recipient of the Graham & Dodd and Gerald M. Loeb
Research Awards, has testified before the Senate Banking Committee on bank
accounting, and has been quoted in and is the author of numerous articles on
corporate reporting and disclosure practices in publications such as the Wall
Street Journal, Business Week, the New York Times, Baron's, etc. Mr. Olstein
periodically serves as co-host on CNBC's "Squawk Box" show.
MR. OLSTEIN HAS BEEN IN THE MANAGEMENT BUSINESS SINCE 1968
FUND DISTRIBUTION
Shares of the Fund are offered to investors through financial advisers such
as brokers, dealers, investment advisers and financial planners. These
financial advisers are eligible to offer shares of the Adviser Class of the
Fund, provided they separately charge investment advisory or management fees to
their clients. Olstein & Associates serves as the Fund's principal underwriter
and national distributor. In addition to its status as a registered investment
adviser, Olstein & Associates is registered as a broker-dealer and is a member
of the National Association of Securities Dealers, Inc.
As distributor, Olstein & Associates selects financial advisers to enter into
agreements to sell the Fund's shares. Olstein & Associates also provides
marketing and shareholder servicing support for the Fund, and coordinates the
distribution activities of the Fund, its service providers and financial
advisers who sell the Funds' shares.
RULE 12B-1 PLAN
The Fund has adopted a Shareholder Servicing and Distribution Plan for the
Adviser Class pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended. Under the Plan, the assets of the Adviser Class are subject to
annual fees totaling 0.25% of the average daily net assets of the Class. These
fees are used to pay for the sale of shares of the Class and for shareholder and
distribution services provided to Class shareholders. Because these fees are
paid out of the Class's assets on an on-going basis, over time these fees may
cost you more than paying other types of sales charges.
FINANCIAL HIGHLIGHTS
The following table includes selected per share data and other performance
information for the Fund throughout each period and is derived from the audited
financial statements of the Fund. It should be read together with the Fund's
financial statements, notes and the unqualified report of independent auditors,
Ernst & Young, LLP along with management's discussion and analysis of the Fund's
performance, appearing in the Fund's Annual Report to Shareholders for the year
ended August 31, 1999. The Fund's Annual Report may be obtained without charge
by writing or calling the Fund at the address or number listed on the prospectus
cover.
THIS FINANCIAL HIGHLIGHTS TABLE REFLECTS THE PERFORMANCE OF THE SHARES OF THE
CLASS C SHARES OF THE FUND, RATHER THAN THE ADVISER CLASS OF THE FUND, WHICH IS
A NEW CLASS AND DOES NOT HAVE A HISTORICAL PERFORMANCE RECORD. BECAUSE BOTH
CLASSES INVEST IN THE SAME PORTFOLIO OF INVESTMENTS, THEY WILL HAVE SIMILAR BUT
NOT IDENTICAL FINANCIAL PERFORMANCE.
<TABLE>
FOR THE PERIOD
FOR THE FOR THE FOR THE SEPTEMBER 21, 1995+<F8>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED THROUGH
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996
----------------- ---------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.88 $ 14.79 $ 11.21 $ 10.00
------- ------- ------- -------
INVESTMENT OPERATIONS:
Net investment loss (0.10)1<F11> (0.06)1<F11> (0.05) (0.07)
Net realized and unrealized gain (loss)
on investments 7.31 (0.95) 4.66 1.29
------- ------- ------- -------
Total from investment operations 7.20 (1.01) 4.61 1.22
------- ------- ------- -------
DISTRIBUTIONS:
From net realized gain on investments (0.65) (2.90) (1.03) (0.01)
------- ------- ------- -------
NET ASSET VALUE - END OF PERIOD $ 17.43 $ 10.88 $ 14.79 $ 11.21
------- ------- ------- -------
TOTAL RETURN++<F9> 67.99% (9.33)% 43.61% 12.22%
------- ------- ------- -------
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses2<F12> 2.19% 2.25% 2.38% 2.43%*<F10>
Net investment loss (0.74)%*<F10> (0.39)% (0.45)% (0.68)%*<F10>
Interest and dividends on short positions 0.10%*<F10> -- -- --
Portfolio turnover rate 179.33% 187.44% 164.92% 139.77%*<F10>
Net assets at end of period ($000 omitted) $349,157 $204,323 $175,602 $109,005
+<F8> Commencement of operations.
++<F9> Total returns do not reflect any deferred sales charge. The total return for the period September 21, 1995 through August
31, 1996, has not been annualized.
*<F10> Annualized.
1<F11> Net investment loss per share represents net investment loss divided by average shares outstanding throughout the period.
2<F12> The expense ratio excludes interest expenses on equity swap contracts and dividends on short positions. The ratio
including such interest and dividends for the period ended February 28, 1999 was 2.38%.
</TABLE>
SHAREHOLDER INFORMATION
ELIGIBLE INVESTORS
ABOUT THE ADVISER CLASS. The Adviser Class is sold through broker/dealers,
investment advisers, financial planners, financial institutions, and other
financial professionals (hereafter, "Financial Advisers"). The Rule 12b-1
distribution or shareholder servicing fees are lower for this class of shares
than the Fund's Class C shares because the Financial Advisers selling this class
charge investors an additional fee for advisory services (usually asset-based)
and perform distribution, administration and/or shareholder services that
benefit the Fund.
The Fund currently offers the no-load Adviser Class shares described in this
Prospectus as well as Class C shares which are described in a separate
prospectus. (For information or a copy of the Class C prospectus, call
(888) 887-9827). Shares of each class represent interests in the Fund's
portfolio of investments and share equally in the Fund's gains or losses, except
that each class is subject to differing distribution and shareholder servicing
expenses.
WHO MAY PURCHASE THE ADVISER CLASS. The following investors may qualify to
purchase Adviser Class shares of the Fund:
o Clients of Financial Advisers who charge their clients asset-based fees
for advisory services.
o A bank, trust company or similar financial institution investing for the
account of one of its customers for whom it exercises investment
discretion over a trust account.
o A tax-exempt employee benefit plan of Olstein & Associates or any
officer or trustee of The Olstein Funds, or a full-time employee of
Olstein & Associates.
PRICING OF FUND SHARES
The price for Adviser Class shares is the net asset value per share ("NAV"),
which is determined by the Fund as of the close of regular trading (generally
4:00 p.m. eastern time) on each day that the New York Stock Exchange is open for
unrestricted trading. Purchase and redemption requests are priced at the next
NAV calculated after receipt and acceptance of a completed purchase or
redemption request. The NAV is determined by dividing the value of the Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets - liabilities/# of shares = NAV). The NAV
takes into account the expenses and fees of the Fund, including management,
distribution and shareholder servicing fees, which are accrued daily. Each
class of shares of the Fund will have its own NAV which reflects any variations
in distribution and shareholder servicing fees among the classes.
The Fund's portfolio securities are valued each day at their market value,
which usually means the last quoted sale price on the security's principal
exchange that day. If market quotations are not readily available, securities
will be valued at their fair market value as determined in good faith, or under
procedures approved by, the Board of Trustees. The Fund may use independent
pricing services to assist in calculating NAV.
The SAI contains additional information regarding the pricing of the Fund
shares.
HOW TO PURCHASE SHARES
All initial purchases of Adviser Class shares must be made through a
Financial Adviser that is authorized to sell Adviser Class shares of the Fund.
The Fund's manager and distributor, Olstein & Associates, requires that all
accounts opened by such Financial Advisers are for investors who meet the
eligibility requirements described above.
Shares are normally purchased at the first NAV calculated after the Fund's
transfer agent receives and accepts a purchase order in proper form as
described below. The Fund has entered into one or more agreements with
Financial Advisers under which the Financial Advisers may directly, or through
intermediaries that the Financial Advisers are authorized to designate, accept
purchase and redemption orders that are in "proper form" on behalf of the Fund.
The Fund will be deemed to have received a purchase order when the Financial
Adviser or intermediary accepts the purchase order and such order will be priced
at the NAV next computed for the Adviser Class after such order is accepted by
the Financial Adviser or intermediary.
Shares of the Funds may be purchased through Financial Adviser that may
charge the investor a transaction fee or other fee for their service at the time
of purchase. Such fees would not otherwise be charged by the Fund.
The Fund reserves the right to reject your purchase order and to suspend the
offering of shares of the Fund. The Fund reserves the right to vary the
following initial and subsequent minimum investment requirements at any time.
MINIMUM INVESTMENTS INITIAL SUBSEQUENT
------------------- ------- ----------
Regular Accounts $1,000 $100 ($1,000 by wire)
Qualified Tax Sheltered Retirement
Plans or IRAs $250 $100
PURCHASES THROUGH YOUR FINANCIAL ADVISER
Contact your Financial Adviser to open or add to your account.
PURCHASES BY MAIL
Financial Advisers should have the investor complete and sign the
New Account Application form.
Make check or money order payable to The Olstein Financial Alert Fund - Adviser
Class
If a purchase request is inadvertently sent to the Fund at its corporate
address, it will be forwarded to the Fund's transfer agent and the effective
date will be delayed until the request is received by the Fund's transfer agent.
MAIL TO: OVERNIGHT OR EXPRESS MAIL TO:
THE OLSTEIN FINANCIAL THE OLSTEIN FINANCIAL
ALERT FUND (Adviser Class) ALERT FUND (Adviser Class)
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
Setting up an IRA account? Please call the Fund at (888) 887-9827 for details.
All checks and money orders must be in U.S. Dollars only. No cash will be
accepted.
NOTE: FIRSTAR MUTUAL FUND SERVICES, LLC CHARGES A $25 FEE FOR ANY RETURNED
CHECKS DUE TO INSUFFICIENT FUNDS. YOU WILL BE RESPONSIBLE FOR ANY LOSSES
SUFFERED BY THE FUND AS A RESULT.
PURCHASES BY WIRE
Call first to set up a new account by wire to give the Fund the investment and
dollar amount: (888) 887-9827
Immediately send a completed New Account Application form to the Fund at the
above address to have all accurate information recorded to your account. Your
purchase request should be wired through the Federal Reserve Bank as follows:
Firstar Bank N.A. Credit to: Firstar Mutual Fund Services, LLC
777 East Wisconsin Avenue Account Number: 112-952-137
Milwaukee, Wisconsin 53202 Further credit to: The Olstein Financial
Alert Fund
ABA Number: 075000022 Your account name and account number
(For new accounts, include taxpayer identification number)
PURCHASES BY TELEPHONE
The telephone purchase option allows you to move money from your bank account
to your Fund account at your request. Only bank accounts held at domestic
financial institutions that are Automated Clearing House (ACH) members may be
used for telephone transactions.
To have your Fund shares purchased at the NAV determined at the close of
regular trading on a given date, Firstar must receive both your purchase order
and payment by Electronic Funds Transfer through the ACH System before the close
of regular trading on that date. Most transfers are completed within three
business days. YOU MAY NOT USE TELEPHONE TRANSACTIONS FOR INITIAL PURCHASES OF
FUND SHARES.
The minimum amount that can be transferred by telephone is $100. For
information about telephone transactions, please call the Fund at (888) 887-
9827.
AUTOMATIC INVESTMENT PLAN
You may purchase shares of the Fund through an Automatic Investment Plan
which allows monies to be deducted directly from your checking, savings or bank
money market accounts to invest in the Fund. You may make automatic investments
on a weekly, monthly, bi-monthly (every other month) or quarterly basis.
Minimum initial investment: $1,000
Subsequent monthly investment: $ 100
You are eligible for this plan if your account is maintained at a domestic
financial institution which is an ACH member.
The Fund may alter, modify or terminate this Plan at any time. For
information about participating in the Automatic Investment Plan, call the Fund
at (888) 887-9827.
ADDITIONAL INVESTMENTS
You may add to your account at any time by purchasing shares by mail (minimum
$100) or by wire (minimum $1,000) according to the above wiring instructions.
You must notify the Fund at (888) 887-9827 prior to sending your wire. You must
send a remittance form which is attached to your individual account statement
together with any subsequent investments made through the mail. All purchase
requests must include your account registration number in order to assure that
your funds are credited properly.
HOW TO REDEEM SHARES
You may redeem your shares of the Fund as described below on any business day
that the Fund calculates its NAV. Generally, redemption requests should be made
through your Financial Adviser. Redemption requests in excess of $50,000 must
be made in writing. Your shares will be sold at the NAV next calculated after
your redemption request is accepted by the transfer agent.
If your redemption request is in good order, the Fund will normally send you
your redemption proceeds on the next business day and no later than seven
calendar days after receipt of the redemption request. The Fund can send
payments by wire directly to any bank previously designated by you in the New
Account Application. A $12.00 fee is charged for each wire redemption.
REMEMBER:
CHECKS ARE SENT TO YOUR ADDRESS ON RECORD. IF YOU MOVE, TELL US!
If you purchase shares by check and request a redemption soon after the
purchase, the Fund will honor the redemption request, but will not mail the
proceeds until your purchase check has cleared (usually within 12 days). If you
make a purchase with a check that does not clear, the purchase will be canceled
and you will be responsible for any losses or fees incurred in that transaction.
Checks will be made payable to you and will be sent to your address of
record. If the proceeds of the redemption are requested to be sent to an
address other than the address of record or if the address of record has been
changed within 15 days of the redemption request, the request must be in writing
with your signature(s) guaranteed. The Fund is not responsible for interest on
redemption amounts due to lost or misdirected mail.
Shares of the Fund may be redeemed through Financial Advisers that may charge
the investor a transaction fee or other fee for their services at the time of
redemption. Such fees would not otherwise be charged by the Fund.
IF YOUR ACCOUNT FALLS BELOW $1,000, THE FUND
MAY ASK YOU TO INCREASE YOUR BALANCE.
IF YOU DON'T, YOUR SHARES COULD BE
AUTOMATICALLY REDEEMED.
Certain authorized Financial Advisers and their designated intermediaries are
authorized to accept redemption orders on behalf of the Fund. The Fund will be
deemed to have received a redemption order when the Financial Advisers or
intermediary accepts the redemption order and such order will be priced at the
NAV next computed for the Adviser Class after such order is accepted by the
Financial Adviser or intermediary.
SIGNATURE GUARANTEES
Signature guarantees are needed for
o Redemption requests over $50,000
o Redemption requests to be sent to a different address other than the
address of record
o Obtaining or changing telephone redemption privileges
Signature guarantees can be obtained from banks and securities dealers, but
not from a notary public. The transfer agent may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees and guardians. The New Account Application contains appropriate
information and a form on which to make the signature guarantee.
REDEMPTIONS IN-KIND
If your redemption request exceeds the lesser of $250,000 or 1% of the NAV
(an amount that would affect Fund operations), the Fund reserves the right to
make a "redemption in-kind." A redemption in-kind is a payment in portfolio
securities rather than cash. The portfolio securities would be valued using the
same method as the Fund uses to calculate its NAV. You may experience
additional expenses such as brokerage commissions in order to sell the
securities received from the Fund. In-kind payments do not have to constitute
a cross section of the Fund's portfolio. The Fund will not recognize gain or
loss for federal tax purposes on the securities used to complete an in-kind
redemption, but you will recognize gain or loss equal to the difference between
the fair market value of the securities received and the shareholder's basis in
the Fund shares redeemed.
REDEMPTION THROUGH YOUR FINANCIAL ADVISER
Contact your Financial Adviser.
REDEMPTION BY MAIL
Send written redemption requests to:
THE OLSTEIN FINANCIAL ALERT FUND (Adviser Class)
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
If a redemption request is inadvertently sent to the Fund at its corporate
address, it will be forwarded to the Fund's transfer agent and the effective
date of redemption will be delayed until the request is received by the Fund's
transfer agent.
The Fund cannot honor any redemption requests with special conditions or
which specify an effective date other than as provided.
A redemption request must be received in good order by the transfer agent
before it will be processed. "Good Order" means the request for redemption must
include a Letter of Instruction specifying or containing:
o the NAME of the Fund
o the NUMBER of shares or the DOLLAR amount of shares to be redeemed
o SIGNATURES of all registered shareholders exactly as the shares are
registered
o the ACCOUNT registration number
o Any additional requirements listed below that apply to your particular
account
TYPE OF REGISTRATION REQUIREMENTS
-------------------- ------------
Individual, Joint Tenants, Redemption requests must be signed by
Sole Proprietorship, Custodial all person(s) required to
(Uniform Gift to Minors Act), sign for the account, exactly as the
General Partners account is registered.
Corporations, Associations Redemption request and a corporate
resolution, signed by person(s)
required to sign for the account,
accompanied by signature guarantee(s).
Trusts Redemption request signed by the
trustee(s), with a signature
guarantee. (If the Trustee's name is
not registered on the account, a copy
of the trust document certified within
the past 60 days is also required.)
IRA REDEMPTIONS
If you have an IRA, you must indicate on your redemption request whether or
not to withhold federal income tax. Redemption requests not indicating an
election to have federal tax withheld will be subject to withholding. If you
are uncertain of the redemption requirements, please contact the transfer
agent in advance: (888) 887-9827.
REDEMPTION BY TELEPHONE
If you are set up to perform telephone transactions (either through your New
Account Application or by subsequent arrangements in writing), you may redeem
shares in any amount up to $50,000 by instructing the transfer agent by
telephone at: (888) 887-9827. Redemption requests for amounts exceeding $50,000
must be made in writing.
If the proceeds are sent by wire, the transfer agent will assess a $12.00
wire fee.
In order to arrange for redemption by wire or telephone after an account has
been opened, or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to the transfer agent at the address
listed above.
A signature guarantee is required of all shareholders in order to qualify for
or to change telephone redemption privileges.
NEITHER THE FUND NOR ANY OF ITS SERVICE CONTRACTORS WILL BE LIABLE FOR ANY
LOSS OR EXPENSE IN ACTING UPON ANY TELEPHONE INSTRUCTIONS THAT ARE REASONABLY
BELIEVED TO BE GENUINE. The Fund will use reasonable procedures to attempt to
confirm that all telephone instructions are genuine such as:
o requesting a shareholder to correctly state his or her Fund account number,
o the name in which his or her account is registered,
o his or her banking institution,
o bank account number and
o the name in which his or her bank account is registered.
THE FUND AND ITS TRANSFER AGENT EACH RESERVE THE RIGHT TO REFUSE A WIRE OR
TELEPHONE REDEMPTION IF IT IS BELIEVED ADVISABLE TO DO SO. PROCEDURES FOR
REDEEMING FUND SHARES BY WIRE OR TELEPHONE MAY BE MODIFIED OR TERMINATED AT
ANY TIME BY THE FUND.
The Fund is not responsible for interest on redemptions due to lost or
misdirected mail.
ACH TRANSFER
Redemption proceeds can be sent to your bank account by ACH transfer. You
can elect this option by completing the appropriate section of the New Account
Application form. If money is moved by ACH transfer, you will not be charged by
the Fund for these services. There is a $100 minimum per ACH transfer.
SYSTEMATIC WITHDRAWAL PLAN
If you own shares with a value of $10,000 or more, you may participate in the
Systematic Withdrawal Plan. The Fund's systematic withdrawal option allows you
to move money automatically from your Fund account to your bank account
according to the schedule you select. The minimum systematic withdrawal amount
is $100.
To select the systematic withdrawal option you must check the appropriate box
on the New Account Application. If you expect to purchase additional Fund
shares, it may not be to your advantage to participate in the Systematic
Withdrawal Plan because contemporaneous purchases and redemptions may result in
adverse tax consequences.
For further details about this service, see the New Account Application or
call the transfer agent at (888) 887-9827.
RETIREMENT PLANS
Shares of the Fund are available for use in all types of tax-deferred
retirement plans such as:
o IRAs,
o employer-sponsored defined contribution plans (including 401(k) plans), and
o tax-sheltered custodial accounts described in Section 403(b)(7) of the
Internal Revenue Code.
Qualified investors benefit from the tax-free compounding of income dividends
and capital gains distributions. Application forms and brochures describing
investments in the Fund for retirement plans can be obtained by calling the Fund
at (888) 887-9827. Below is a brief description of the types of retirement
plans that may invest in the Fund:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
You are eligible to contribute on a deductible basis to an IRA account if you
are not an active participant in an employer maintained retirement plan and,
when a joint return is filed, you do not have a spouse who is an active
participant. The IRA deduction is also available for individual taxpayers and
married couples with adjusted gross incomes not exceeding certain limits. All
individuals who have earned income may make nondeductible IRA contributions to
the extent that they are not eligible for a deductible contribution. Income
earned by an IRA account will continue to be tax deferred. Roth IRAs are also
available.
A special IRA program is available for employers under which the employers
may establish IRA accounts for their employees in lieu of establishing tax
qualified retirement plans. SEP-IRAs (Simplified Employee Pension-IRA) free the
employer of many of the recordkeeping requirements of establishing and
maintaining a tax qualified retirement plan trust.
ROTH IRAs
Roth IRAs permit tax free distributions of account balances if the assets have
been invested for five years or more and the distributions meet certain
qualifying restrictions. Investors filing as single taxpayers who have adjusted
gross incomes of $95,000 or more, and investors filing as joint taxpayers with
adjusted gross incomes of $150,000 or more may find their participation in this
IRA to be restricted.
If you are entitled to receive a distribution from a qualified retirement
plan, you may rollover all or part of that distribution into the Fund's IRA.
Your rollover contribution is not subject to the limits on annual IRA
contributions. You can continue to defer Federal income taxes on your
contribution and on any income that is earned on that contribution.
Firstar Bank N.A. makes available its services as an IRA Custodian for each
shareholder account established as an IRA. For these services, Firstar Bank
N.A. receives an annual fee of $12.50 per account with a cap of $25.00 per
social security number, which fee is paid directly to Firstar Bank N.A. by the
IRA shareholder. If the fee is not paid by the date due, shares of the Fund
owned by the shareholder in the IRA account will be redeemed automatically for
purposes of making the payment. IRAs are subject to special rules and
conditions that must be reviewed by the investor when opening a new account.
401(K) PLANS AND OTHER DEFINED CONTRIBUTION PLANS
Both self-employed individuals (including sole proprietorships and
partnerships) and corporations may use shares of the Fund as a funding medium
for a retirement plan qualified under the Internal Revenue Code. Such plans
typically allow investors to make annual deductible contributions, which may be
matched by their employers up to certain percentages based on the investor's
pre-contribution earned income.
403(B)(7) RETIREMENT PLANS
Schools, hospitals, and certain other tax-exempt organizations or
associations may use shares of the Fund as a funding medium for a retirement
plan for their employees. Contributions are made to the 403(b)(7) Plan as a
reduction to the employee's regular compensation. Such contributions are
excludable from the gross income of the employee for Federal Income tax purposes
to the extent they do not exceed applicable limitations (including a generally
applicable limitation of $9,500 per year).
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Fund will declare and pay annual dividends to its shareholders of
substantially all of its net investment income, if any, earned during the year
from investments and will distribute gains, if any, once a year.
Expenses of the Fund, including the investment management fees and 12b-1
fees, are accrued each day. Reinvestments of dividends and distributions in
additional shares of the Fund will be made at the net asset value determined on
the payable date, unless you elect to receive the dividends and/or distributions
in cash. No interest will accrue on amounts represented by uncashed
distribution or redemption checks. You may change your election at any time by
notifying the Fund in writing thirty days prior to the record date. Please call
the Fund at (888) 887-9827 for more information.
In general, distributions from the Fund are taxable to you as either ordinary
income or capital gains. This is true whether you reinvest your distributions in
additional shares of the Fund or receive them in cash. Any capital gains
distributed by the Fund are taxable to you as long-term capital gains no matter
how long you have owned your shares. Every January, you will receive a
statement that shows the tax status of distributions you received for the
previous year. Distributions declared in December but paid in January are
taxable as if they were paid in December. Distributions taxed as capital gains
may be taxable at different rates depending on how long the Fund holds its
assets.
When you sell or exchange your shares of the Fund, you may have a capital
gain or loss. The tax rate on any gain from the sale or exchange of your shares
depends on how long you have held your shares.
Fund distributions and gains from the sale or exchange of your shares will
generally be subject to state and local income tax. Non-U.S. investors may be
subject to U.S. withholding and estate tax. You should consult your tax
professional about federal, state, local or foreign tax consequences.
By law, the Fund must withhold 31% of your distributions and proceeds if you
do not provide your correct taxpayer identification number, or certify that such
number is correct, or if the IRS instructs the Fund to do so.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING THE
FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN THE FUND.
THE a series of
OLSTEIN THE OLSTEIN FUNDS
FINANCIAL 4 Manhattanville Road
ALERT Purchase, NY 10577
FUND (888) 887-9827
FOR MORE INFORMATION
YOU MAY OBTAIN THE FOLLOWING AND OTHER INFORMATION ON THE FUND FREE OF CHARGE:
o Annual and Semi-annual Report to Shareholders
The annual and semi-annual reports provide the Fund's most recent financial
report and portfolio listings. The annual report contains a discussion of
the market conditions and investment strategies that affected the Fund's
performance during its last fiscal year.
o Statement of Additional Information (SAI) dated December 29, 1999
The SAI provides more details about the Fund's policies and management and
is incorporated by reference into this Prospectus.
INQUIRIES MAY BE MADE TO THE FOLLOWING:
TELEPHONE:
(888) 887-9827
MAIL:
The Olstein Financial Alert Fund
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
SEC:
Text only versions of Fund documents can be viewed online or downloaded from:
http://www.sec.gov
You may review and obtain copies of Fund information at the SEC Public
Reference Room in Washington, D.C. (1-800-SEC-0330). Copies of the
information may be obtained for a fee by writing the Public Reference
Section, Washington, D.C. 20549-6009.
Investment Company Act File # 811-9038
THE OLSTEIN FUNDS
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS:
(a) Governing Documents
(1) Registrant's Agreement and Declaration of Trust effective
March 31, 1999.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 29, 1996
(2) Registrant's Certificate of Trust dated March 31, 1995 as
filed in Delaware April 3, 1995
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to
RegistrantIs Registration Statement on Form
N-1A.
Filing Date: March 29, 1996
(b) Registrant's By-laws.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to RegistrantIs
Registration Statement on Form N-1A.
Filing Date: March 29, 1996
(c) Instruments Defining Rights of Security Holders:
See Items 23 a) and 23 b).
(d) Investment Management Agreement between Registrant and OlsteinU&
Associates, L.P. dated August 18, 1995.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to RegistrantIs
Registration Statement on Form N-1A.
Filing Date: March 29, 1996
(e) (1) Form of Amended and Restated Distribution Agreement between
the Registrant and Olstein & Associates, L.P. dated August
1, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 6/7 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: November 2, 1998
(2) Mutual Fund Dealer Agreement between Olstein & Associates,
L.P. and Smith Barney Inc. dated September 21, 1995.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 29, 1996
(3) Form of Selling Dealer Agreement between Olstein &
Associates, L.P. and Selected Dealers.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 29, 1996
(4) Selling Dealer Agreement between Olstein & Associates, L.P.
and Bear, Stearns Securities Corp. dated November 30, 1995.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 29, 1996
Filing Date: March 29, 1996
(f) Bonus, Profit Sharing and Pension Contracts:
Not Applicable.
(g) Custody Agreements:
(1) (A) Custody Agreement between the Registrant and Firstar
Bank Milwaukee, N.A.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 5/6 to
Registrant's Registration Statement on
Form N-1A.
Filing Date: March 3, 1998
(B) Form of Addendum to Custody Agreement between the
Registrant and Firstar Bank Milwaukee, N.A.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 6/7 to
Registrant's Registration Statement on
Form N-1A.
Filing Date: March 3, 1998
(2) Special Custody Account Agreement between the Registrant,
Firstar Bank Milwaukee, N.A. and Bear, Stearns Securities
Corp. dated February 2, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 5/6 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 3, 1998
(A) Form of Addendum to Custody Agreement between the
Registrant, Firstar Bank Milwaukee, N.A. and Bear,
Stearns Securities Corp.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 6/7 to
Registrant's Registration Statement on
Form N-1A.
Filing Date: November 2, 1998
(h) Other Material Contracts:
(1) Administration Agreement between the Registrant and Firstar
Mutual Fund Services, LLC dated February 27, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 5/6 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 3, 1998
(A) Addendum to Firstar Servicing Agreements between the
Registrant and Firstar Mutual Fund Services, LLC dated
October 14, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 6/7 to
Registrant's Registration Statement on
Form N-1A.
Filing Date: November 2, 1998
(2) Accounting Services Agreement between the Registrant and
Firstar Mutual Fund Services, LLC dated February 27, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 5/6 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 3, 1998
(A) Addendum to Firstar Servicing Agreements between the
Registrant and Firstar Mutual Fund Services, LLC dated
October 14, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 6/7 to
Registrant's Registration Statement on
Form N-1A.
Filing Date: November 2, 1998
(3) Transfer Agency Agreement between the Registrant and Firstar
Mutual Fund Services, LLC dated February 27, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 5/6 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 3, 1998
(A) Addendum to Firstar Servicing Agreements between the
Registrant and Firstar Mutual Fund Services, LLC dated
October 14, 1998.
Incorporated herein by reference to:
------------------------------------
Filing: Post Effective Amendment No. 6/7 to
Registrant's Registration Statement on
Form N-1A.
Filing Date: November 2, 1998
(i) Opinion and Consent of Counsel as to the Legality of the
Securities to be Issued.
Incorporated herein by reference to:
------------------------------------
Filing: Post Effective Amendment No. 5/6 to Registrant's
Registration Statement on Form N-1A.
Filing Date: March 3, 1998
(j) Consent of Independent Auditors is electronically filed herewith
as Exhibit 99.23(j).
(k) All Financial Statements Omitted from Item 22.
Not Applicable.
(l) Letter of Understanding Relating to Initial Capital.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to Registrant's
Registration Statement on Form N-1A.
Filing Date: March 29, 1996
(m) Rule 12b-1 Plan
(1) Plan of Distribution Pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for The Olstein Financial
Alert Fund Class C effective as of August 18, 1995.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: March 29, 1996
(2) Form of Distribution Pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for The Olstein Financial
Alert Fund Adviser Class.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 7/8 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: June 22, 1999
(n) Plan Pursuant to Rule 18f-3.
(1) Form of Multiple Class Plan for the Registrant.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 7/8 to
Registrant's Registration Statement on Form
N-1A.
Filing Date: June 22, 1999
(p) Trustees Power of Attorney.
Incorporated herein by reference to:
------------------------------------
Filing: Post-Effective Amendment No. 1/2 to Registrant's
Registration Statement on Form N-1A
Filing Date: March 29, 1996
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT:
None.
ITEM 25. INDEMNIFICATION:
Under the terms of the Delaware Business Trust Act and the
Registrant's Agreement and Declaration of Trust and By-Laws, no officer or
trustee of the Fund shall have any liability to the Fund or its shareholders for
damages, except to the extent such limitation of liability is precluded by
Delaware law, the Agreement and Declaration of Trust, or the By-Laws.
Subject to the standards and restrictions set forth in the Fund's
Agreement and Declaration of Trust, the Delaware Business Trust Act, Section
3817, permits a business trust to indemnify any trustee, beneficial owner, or
other person from and against any claims and demands whatsoever. Section 3803
protects a Trustee, when acting in such capacity, from liability to any person
other than the business trust or beneficial owner for any act, omission, or
obligation of the business trust or any trustee thereof, except as otherwise
provided in the Agreement and Declaration of Trust.
The Agreement and Declaration of Trust provides that the Trustees
shall not be liable for any neglect or wrong-doing of any officer, agent,
employee, manager or underwriter of the Fund, nor shall any Trustee be
responsible for the act or omission of any other Trustee. Subject to the
provisions of the By-Laws, the Fund may indemnify to the fullest extent each
Trustee and officer of the Fund acting in such capacity, except that no
provision in the Agreement and Declaration of Trust shall be effective to
protect or purport to protect and indemnify any Trustee or officer of the Fund
from or against any liability to the Fund or any shareholder 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.
The By-Laws provide indemnification for each Trustee and officer who
is a party or is threatened to be made a party to any proceeding, by reason of
service in such capacity, to the fullest extent, if it is determined that the
Trustee or officer acted in good faith and reasonably believed: (a) in the case
of conduct in his official capacity as an agent of the Fund, that his conduct
was in the Fund's best interests and (b) in all other cases, that his conduct
was at least not opposed to the Fund's best interests and (c) in the case of a
criminal proceeding, that he had no reasonable cause to believe the conduct of
that person was unlawful. However, there shall be no indemnification for any
liability arising by reason of willful misfeasance, bad faith, gross negligence,
or the reckless disregard of the duties involved in the conduct of the Trustee's
or officer's office. Further, no indemnification shall be made:
(a) In respect of any proceeding as to which any Trustee or officer
of the Fund shall have been adjudged to be liable on the basis
that personal benefit was improperly received by him, whether or
not the benefit resulted from an action taken in the person's
official capacity; or
(b) In respect of any proceeding as to which any Trustee or officer
of the Fund shall have been adjudged to be liable in the
performance of that person's duty to the Fund, unless and only to
the extent that the court in which that action was brought shall
determine upon application that in view of all the relevant
circumstances of the case, that person is fairly and reasonably
entitled to indemnity for the expenses which the court shall
determine; however, in such case, indemnification with respect to
any proceeding by or in the right of the Fund or in which
liability shall have been adjudged by reason of the disabling
conduct set forth in the preceding paragraph shall be limited to
expenses; or
(c) Of amounts paid in settling or otherwise disposing of a
proceeding, with or without court approval, or of expenses
incurred in defending a proceeding which is settled or otherwise
disposed of without court approval, unless the required court
approval set forth in the By-Laws is obtained.
In any event, the Fund shall indemnify each officer and Trustee
against reasonable expenses incurred in connection with the successful defense
of any proceeding to which each such officer or Trustee is a party by reason of
service in such capacity, provided that the Board of Trustees, including a
majority who are disinterested, non-party trustees, also determines that such
officer or Trustee was not liable by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of his or her duties of office. The
Fund shall advance to each officer and Trustee who is made a party to a
proceeding by reason of service in such capacity the expenses incurred by such
person in connection therewith, if (a) the officer or Trustee affirms in writing
that his good faith belief that he has met the standard of conduct necessary for
indemnification, and gives a written undertaking to repay the amount of advance
if it is ultimately determined that he has not met those requirements, and (b) a
determination that the facts then known to those making the determination would
not preclude indemnification.
The Trustees and officers of the Fund are entitled and empowered under
the Declaration of Trust and By-Laws, to the fullest extent permitted by law, to
purchase errors and omissions liability insurance with assets of the Fund,
whether or not the Fund would have the power to indemnify him against such
liability under the Declaration of Trust or By-Laws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers, the underwriter
or control persons of the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in that
Act and is, therefore, unenforceable.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT MANAGER:
In addition to acting as the investment manager and principal
underwriter for the Fund, Olstein & Associates, L.P. provides brokerage services
and related investment advice to institutional and individual investors.
ITEM 27. PRINCIPAL UNDERWRITER:
(a) Olstein & Associates, L.P. ("Olstein"), the principal
underwriter for the Registrant's securities, does not act as
principal underwriter for any other investment companies, but
acts as the investment adviser for the Fund.
(b) The tables below set forth certain information as to the
Distributor's Directors, Officers, Partners and Control Persons:
Olstein, Inc. is the General Partner of Olstein. The following
is a list of the individuals who hold positions either with
Olstein, Inc. or are limited partners of Olstein.
<TABLE>
Name and Business Address Positions and Offices with Positions and Offices with
- ------------------------- -------------------------- --------------------------
Underwriter the Registrant
----------- --------------
<S> <C> <C>
Robert A. Olstein President of Olstein, Inc., Chairman and President
4 Manhattanville Road Limited Partner of Olstein
Purchase, New York 10577
Erik K. Olstein Olstein Vice President - Sales Trustee, Secretary and
4 Manhattanville Road Assistant Treasurer
Purchase, New York 10577
Michael Luper Olstein, Vice President - Chief Accounting Officer and
4 Manhattanville Road Finance Treasurer
Purchase, New York 10577
Olstein, Inc. General Partner None
4 Manhattanville Road
Purchase, New York 10577
Cash Asmussen Limited Partner None
P.O. Box 1861
Laredo, TX 78044-1861
Nick Awad Limited Partner None
144 East 44th Street
New York, NY 10017
Dr. Lewis Bobroff Limited Partner None
4 Catherine Court
Suffern, NY 10901-3104
Harry & Roberta Boltin Limited Partner None
6 Laveta Place
Nyack, NY 10960-1604
James Calabrese Limited Partner None
13 Hendrie Lane
Riverside, CT 06878-1810
Catherine Corless Limited Partner None
44 Halley Drive
Pomona, NY 10970-2003
Patrick Donaghy Limited Partner None
15 East 26th Street
New York, NY 10010-1501
Anita Fleishman Limited Partner None
11 West 69th Street
New York, NY 10023
Albert Fried & Co. Limited Partner None
40 Exchange Place
New York, NY 10005-2701
Neil Klarfeld Limited Partner Trustee
29 Tamarack Lane
Pomona, NY 10970-2006
Dr. David Langerman Limited Partner None
2 Perth Court
West Nyack, NY 10994-1307
Douglas & Diane LeGrande Limited Partner None
97 Birch Hill Road
Weston, CT 06883-1735
Rochelle Nechin Limited Partner None
128 Prospect Avenue
Douglaston, NY 11363-1338
Joan Olstein Limited Partner None
115-7 Hilltop Road
Kinnelon, NJ 07405
Judith Pomerantz Limited Partner None
2 White Pine Drive
Sterlington, NY 10974
Marilyn Portnoy Limited Partner None
7 White Birch Drive
Pomona, NY 10970-3403
Dr. Gary Roebuck Limited Partner None
43 Halley Drive
Pomona, NY 10970-2001
Marie Romano Limited Partner None
447 Windham Court North
Wyckoff, NJ 07481-3472
John Vazzana Limited Partner None
40 Exchange Place
New York, NY 10005-2701
Edwin & Harilyn Zimmerman Limited Partner None
13652 Rivoli Drive
Palm Beach Gardens, FL 33410
</TABLE>
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Each account, book or other document required to be maintained by
Section 31(a) of the Investment Company Act of 1940 (the "1940 Act") and Rules
(17 CFR 270-31a-1 to 31a-3) promulgated thereunder, is maintained by the
Registrant at 4 Manhattanville Road, Purchase, NY 10577, except for those
maintained by the Registrant's custodian Firstar Bank Milwaukee, N.A., 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202 and the Registrant's Administrator,
Transfer, Redemption, Dividend Disbursing and Accounting Agent, Firstar Mutual
Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
ITEM 29. MANAGEMENT SERVICES:
There are no management related service contracts not discussed
in Part A or Part B.
ITEM 30. UNDERTAKINGS
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and the Investment Company Act of 1940
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, duly authorized, in the City of Purchase, and State of New
York, on the 4th day of January, 2000.
THE OLSTEIN FUNDS
By: /s/ Robert A. Olstein
---------------------
Robert A. Olstein,
Chairman and President
Pursuant to the requirement of the Securities Act of 1933, this Registration
Statement has been signed below on by the following persons in the capacities
and on the date indicated:
Signature Title Date
- --------- ----- ----
/s/ Robert A. Olstein Chairman and January 4, 2000
- -------------------------- President
Robert A. Olstein
/s/ Erik K. Olstein Trustee and January 4, 2000
- -------------------------- Secretary
Erik K. Olstein
/s/ Michael Luper Chief Accounting January 4, 2000
- -------------------------- Officer and Treasurer
Michael Luper
/s/ Neil C. Klarfeld Trustee January 4, 2000
- --------------------------
Neil C. Klarfeld*<F37>
/s/ Fred W. Lange Trustee January 4, 2000
- --------------------------
Fred W. Lange*<F37>
/s/ John Lohr Trustee January 4, 2000
- --------------------------
John R. Lohr*<F37>
/s/ D. Michael Murray Trustee January 4, 2000
- --------------------------
D. Michael Murray*<F37>
/s/ Lawrence K. Wein Trustee January 4, 2000
- --------------------------
Lawrence K. Wein*<F37>
*<F37> By: /s/ Robert A. Olstein
----------------------------------------
Robert A. Olstein, Attorney-in-Fact
(Pursuant to Power of Attorney)
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.B23(j) Consent of Independent Auditors Attached
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information and to the incorporation
by reference of our report on The Olstein Financial Alert Fund dated October 8,
1999 in the Registration Statement (Form N-1A) of The Olstein Funds filed with
the Securities and Exchange Commission in this Post-Effective Amendment No. 9
to the Registration Statement under the Securities Act of 1933 (File No.
33-91770) and in this Amendment No. 10 to the Registration Statement under the
Investment Company Act of 1940 (File No. 811-9038 ).
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
January 5, 2000
