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P R O S P E C T U S March 1, 2004 Phone: (800) 860-3863 E-mail: Web Site: www.muhlenkamp.com
Investment Objective The investment objective of the Muhlenkamp Fund (the “Fund”) is to maximize total return to its shareholders through capital appreciation, and income from dividends and interest, consistent with reasonable risk.
Principal Strategies To pursue its goal, the Fund principally invests in a diversified list of common stocks. The Fund invests primarily in companies determined by the Fund’s adviser to be highly profitable, yet undervalued. The adviser looks for those companies it believes to have above average profitability, as measured by corporate return on equity (ROE), that sell at below average prices as measured by price to earnings ratios (P/E). Company size, based on market capitalization, is of little importance to the adviser.
Principal Risks Historically common stocks have outperformed other types of investments; however, stock prices will fluctuate in the short-term. Like any investment, an investment in the Fund is subject to risk. The value of your investment can go up or down. This means that you could lose money.
Stock Market Risks Stocks are selected by the adviser based upon what the adviser believes to be their potential for long-term growth; however, there can be no assurance that the objective will be met. The Fund is subject to risks that affect common stocks in general, such as economic conditions and adverse changes (generally increases) in interest rates. Investments in value stocks are subject to the risk that the market may never realize their value, or their prices may go down. Short-term volatility often accompanies a long-term a approach to investing. These and other factors could adversely affect your investment.
Bond Market Risks The Fund’s investment in bonds may be subject to risks that affect the bond markets in general, such as general economic conditions and adverse changes (generally increases) in interest rates.
An investment in this Fund is not a bank deposit. It is not FDIC insured or government endorsed. It should be considered a “long-term” investment, an investment for a period of three or more years.
The bar chart and table below provide an indication of the risk of investing in the Fund. The bar chart shows the Fund’s performance in each calendar year over a ten-year period. The table shows how the Fund’s average annual total returns for one, three, five, and ten calendar years, and since the Fund’s inception compared with those of a broadbased securities market index. All presentations below assume reinvestment of dividends and distributions. Keep in mind that the Fund’s past performance, before and after taxes, does not indicate how it will perform in the future.
Year-to-Year Total Return (as of 12/31 of each year)
During the 10-year period shown in the bar chart, the highest return for a quarter was 27.51% (quarter ending 6/30/03) and the lowest return for a quarter was –21.53% (quarter ending 09/30/02).
* After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRAs. Remember, the Fund’s past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.
As an investor, you pay certain fees and expenses in connection with the Fund, which are described in the table below and example that follows. In the table you will see the fees and expenses you would incur if you bought and held shares of the Fund. Shareholder transaction fees are paid from your account. Annual Fund operating expenses are paid out of the Fund assets, so their effect is included in the Fund’s share price.
* Investors may be charged an annual account maintenance fee if their account falls below the established minimums. Investors may be charged a fee by their broker if they effect transactions through a broker or agent. There are certain annual charges and other fees associated with retirement accounts offered by the Fund.
Example: This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
This 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 those periods. The example also assumes that your investment has a 5% return each year, that you reinvest all dividends and distributions, and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
The investment adviser for the Fund is Muhlenkamp & Co., Inc., 5000 Stonewood Drive, Suite 310, Wexford, Pennsylvania, 15090- 8317, a Pennsylvania corporation principally owned by Ronald H. Muhlenkamp. For the fiscal year ended December 31, 2003, the adviser received management fees of 1% of the Fund’s average daily market value of its net assets. Under terms of the advisory agreement, total annual Fund operating expenses cannot under any circumstances exceed 2% of the Fund’s net assets. Should actual expenses incurred ever exceed the 2% limitation, such excess expenses shall be paid by the adviser.
Pricing Policy You pay no sales charges of any kind to invest in this Fund. Your price for Fund shares is the Fund’s net asset value (NAV) per share, which is generally calculated as of the close of trading on the New York Stock Exchange (usually 4:00 P.M. Eastern Time) every day the New York Stock Exchange is open. Your order will be priced at the next NAV calculated after your order is accepted by the Fund. The Fund’s investments are valued based on market price, or when market quotations are not readily available, upon fair value as determined in good faith in accordance with procedures approved by the Fund’s Board of Trustees.
Purchasing Shares You may open an account with an initial investment of $1,500. If you choose to participate in the Automatic Investment Plan (AIP), the minimum initial investment is $200. The AIP requires a minimum investment of $50 per month automatically deducted from your checking or savings account.
Selling Shares You may sell all or some of your shares, by mail or telephone, on any day that the Fund is open for business. Your shares will be sold at the next calculated NAV after the Fund’s transfer agent accepts your order. You will generally receive the proceeds within a week. You may receive your payment by check, wire transfer, or EFT (if previously enrolled in this program). The Fund reserves the right to delay sending out redemption proceeds for up to seven calendar days. Before selling recently purchased shares, please note that if the Fund’s transfer agent has not yet collected payment for the shares you are selling, there may be a delay sending the proceeds until the payment is collected, which may take up to 12 calendar days from the purchase date.
Signature(s) on the redemption request must be guaranteed by an “eligible guarantor institution.” These include banks, broker-dealers, credit unions and savings institutions. A broker-dealer guaranteeing signatures must be a member of a clearing corporation or maintain net capital of at least $100,000. Credit unions must be authorized to issue signature guarantees. Signature guarantees will be accepted from any eligible guarantor institution that participates in a signature guarantee program. A notary public is not an acceptable guarantor.
Individual Retirement Accounts (IRAs) The Fund offers IRAs to any employed individual and his or her spouse. These include Traditional IRAs, Roth IRAs, SEP-IRAs, SIMPLE-IRAs, and Spousal IRAs. Existing IRAs may be transferred or rolled over to a Muhlenkamp Fund IRA. Assets held in a previous employer’s qualified retirement plan may also be rolled over into a Muhlenkamp Fund IRA. The forms and disclosures needed before investing IRA money in Fund shares may be obtained by calling the Fund at (800) 860-3863.
Systematic Withdrawals Shareholders with accounts that have an account value of at least $5,000* may direct that the Fund make a systematic periodic withdrawal of any amount to any designated payee. To take advantage of this service, you must make your request in writing, and provide the signature(s) of the account owner(s) exactly as the account is registered. Requested withdrawals require that shares be redeemed each period to raise money to make the payments. These redemptions may be a taxable event for you. You may receive your periodic withdrawal by check or EFT, if enrolled in this program.
* The $5,000 minimum requirement is waived for IRA accounts.
Telephone Requests The Fund will automatically establish a telephone redemption option on your account, unless you instruct otherwise on your application, or in writing. The Fund will not be responsible for any account losses due to telephone fraud, as long as the Fund has taken reasonable steps to verify the redemption order. The Fund may require, for example, that you provide your account number, name and address exactly as registered on the account, and the primary Social Security or Employer Identification Number as registered on the account.
A Note on Unusual Circumstances: The Fund reserves the right to revise or terminate the telephone redemption privilege at any time, without notice. In addition, the Fund can stop selling shares or postpone payment at times when the New York Stock Exchange is closed or under any emergency circumstances as determined by the U.S. Securities and Exchange Commission (“SEC”). If you experience difficulty making a telephone redemption during periods of drastic economic or market change, you can send us your request by regular or express mail. Follow the instructions on selling or exchanging shares by mail in this section.
Minimum Account Balance By November 30th of each year, all accounts must have net investments (purchases less redemptions) totaling $1,500 or more; an account value greater than $1,500, or be enrolled in the Automatic Investment Plan. Accounts that do no not meet one of these three criterions will be charged a $15 fee. Such fees will be used to lower Fund expenses. The Fund will check accounts and charge this fee annually.
Opening an Account Decide
how you will open your account: by mail/overnight delivery or telephone/wire.
Initial investment must be at least $1,500. The minimum is $200 for those
accounts participating in the Automatic Investment Plan (AIP).
Additional Investments All
additional purchases are subject to a $50 minimum.
Selling Shares How
would you like to redeem your shares?
Customer Service (800) 860-3863 Call this number to perform certain account transactions (change your address, purchase/sell shares, etc.), obtain account information and request Fund literature. Representatives are available during business hours to receive orders and answer questions regarding your account and the Muhlenkamp Fund in general.
Automated Telephone Service (800) 860-3863 The Fund’s automated telephone system offers 24-hour access to account information, including balances and last transactions. The daily NAV per share of the Fund is also posted on the system each business day by 6 p.m. Eastern Time. To obtain specific account information, the system will prompt you to establish a Personal Identification Number (PIN) during your initial call. You will be prompted to enter your PIN number for subsequent calls.
Statements Each time there is activity in your account, i.e., a purchase or sale, the Fund will mail you a confirmation reflecting the transaction and your new share balance. All shareholders receive quarterly statements reflecting the market value of their account(s) at the end of the period and any dividend distributions during the period.
Financial Reports Shareholders receive Semi-Annual and Annual Reports detailing the Fund’s portfolio holdings and financial statements, as of June 30, and December 31, respectively, of each year. In an effort to keep Fund expenses to a minimum, the Fund will mail only one report in the event there are multiple accounts with the same social security number or tax identification number at the same address.
Quarterly Newsletter Shareholders receive a copy of the Muhlenkamp Memorandum each quarter. This newsletter provides commentary on the previous quarter and explains the adviser’s outlook for the future. Other issues relating to the adviser’s investment philosophy are also discussed.
Website www.muhlenkamp.com The Fund’s prospectus, applications, financial reports, current market commentary, Muhlenkamp Methods and back-issues of the Muhlenkamp Memorandum are available.
The Fund pays dividends annually to shareholders, generally in December, from net investment income and any net capital gains that it has realized during the year. For your convenience, dividends and capital gains are automatically reinvested in the Fund, unless you instruct the Fund otherwise. Please refer to the Financial Highlights section of this Prospectus for a history of dividend distributions. Please note that the Fund has paid only five capital gain distributions in its history, totaling $3.51 per share, making it very tax efficient.
The financial highlights table is intended to help you understand the Fund’s financial performance for the past 5 fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund’s financial statements, is included in the Fund’s most recent annual report which is available upon request.
Selected
Per Share Data And Ratios For The Years Ended December 31, 1999-2003
(1) Net investment income per share is calculated
using ending balances prior to consideration of adjustments for
permanent book and tax differences. How to Read
Financial Highlights As of December 31, 2003 the Fund had approximately $1.15 billion in net assets. For the year, its net expense ratio was 1.18% ($11.80 per $1,000.00 in net assets). Net investment loss amounted to 0.04% of the Fund’s average net assets. The Fund sold and replaced securities valued at 9.15% of its average long-term portfolio value.
We do not disclose any nonpublic personal information about our current or former shareholders to nonaffiliated third parties, except as permitted by law. For example, we are permitted by law to disclose all of the information we collect, as described above, to our transfer agent to process your transactions. Furthermore, we restrict access to your nonpublic personal information to those persons who require such information to provide our products or services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information. In the event that you hold shares of the Muhlenkamp Fund through a financial intermediary, including, but not limited to, a broker-dealer, bank, or trust company, the privacy policy of your financial intermediary would govern how your nonpublic personal information would be shared with nonaffiliated third parties.
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