As filed with the Securities and Exchange Commission on June 1 , 2005
File No: 333-124113
1940 Act Registration No:811 - 21720
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/_ X _/ PRE-EFFECTIVE AMENDMENT NO. _ 1 _
/___/ POST-EFFECTIVE AMENDMENT NO. __
NORTHERN LIGHTS FUND TRUST
(Exact Name of Registrant as Specified in Charter)
631-470-2616
(Registrant's Telephone Number, Including Area Code)
150 Motor Parkway, Suite 205
Hauppauge, NY 11788
(Address of Principal Executive Offices)
Emile R. Molineaux, Esq.
Northern Lights Fund Trust
c/o Gemini Fund Services, LLC
150 Motor Parkway, Suite 205
Hauppauge, NY 11788
(Name and Address of Agent for Service)
Copy to:
Thomas R. Westle, Esq.
Blank Rome LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
(212) 885-5239
It is proposed that this filing will become effective on June 6 , 2005 pursuant to Rule 488 under the Securities Act of 1933.
An indefinite number of Registrant's shares of beneficial interest, without par value has been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940. Accordingly, no filing fee is being paid at this time.
ADVISORS SERIES TRUST
615 E. Michigan Street
Milwaukee, Wisconsin 53202
1-877-560-6823
June 1 , 2005
Dear Jacobs & Company Mutual Fund Shareholder:
A Special Meeting of Shareholders of the Jacobs & Company Mutual Fund(the “Fund”), a series of Advisors Series Trust (the “Trust”), has been scheduled for July 15, 2005 (the “Special Meeting”) to vote on whether to approve a proposal to reorganize the Fund into a newly formed series (the “New Fund”) of Northern Lights Fund Trust (“Northern Lights”). (Northern Lights is a new fund group which will be comprised of mutual funds managed by various, unaffiliated investment advisers.) The New Fund’s name will be identical to that of the Fund.
The complexity of the legal and regulatory compliance functions of the Fund has increased significantly in recent years, and may continue to increase in the foreseeable future. Due to the increased compliance needs of the Fund, the Board of Trustees and management of the Trust believe that it is in the best interests of the Fund’s shareholders to align the Fund so that it can be part of a complex that meets the level of compliance oversight needed by the Fund. Northern Lights, is smaller than the Trust, and is more compatible to the legal and regulatory philosophy of the Fund.
Jacobs & Company will continue to act as investment adviser to the New Fund and there will be no changes to any of the New Fund’s investment objectives, policies and strategies.
Assuming shareholder approval of the proposal to reorganize the Fund into the New Fund, each shareholder of the Fund will receive a full and fractional number of shares of the New Fund equal in dollar value to the Fund shares that the shareholder owned at the time of reorganization. The reorganization is intended to qualify as a tax free “reorganization” within the meaning of the Internal Revenue Code. If the reorganization so qualifies, in general, a shareholder will recognize no gain or loss upon the receipt of the shares of the New Fund in connection with the reorganization. The attached Proxy Statement/Prospectus is designed to give you more information about the proposal.
The Board of Trustees of the Trust has unanimously approved the reorganization and encourages you to vote “FOR” the proposal. If you have any questions regarding the reorganization, please do not hesitate to call 1-877-560-6823.
If you are a shareholder of record of the Fund as of the close of business on Friday, April 22, 2005, you are entitled to vote at the Special Meeting and at any adjournment thereof. While you are, of course, welcome to join us at the Special Meeting, most shareholders will cast their votes by proxy.
Whether or not you are planning to attend the Special Meeting, we need your vote. To vote by proxy, you must mail the enclosed proxy card. Please complete, date and sign the enclosed proxy card and mail it in the enclosed, postage-paid envelope.
You retain the right to revoke your proxy at any time before it is actually voted by delivering notice of such revocation to the Secretary of the Trust in open meeting or by filing with the Secretary of the Trust either a notice of revocation or a duly executed proxy bearing a later date.
Thank you for taking the time to consider this important proposal and for your continuing investment in the Fund.
Sincerely,
ADVISORS SERIES TRUST
By:
Eric M. Banhazl
President
ADVISORS SERIES TRUST
615 E. Michigan Street
Milwaukee, Wisconsin 53202
1-877-560-6823
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD FRIDAY , JU LY 15, 2005
Advisors Series Trust, a Delaware statutory trust (the “Trust”), will hold a Special Meeting of Shareholders (the “Special Meeting”) of the Jacobs & Company Mutual Fund (the “Fund”), aseries of the Trust. The Special Meeting will be held on Friday , Ju ly 15 15 , 2005 at 9:00 a.m. Central time at the offices of U.S. Bancorp Fund Services, LLC, 777 E. Wisconsin Avenue, Milwaukee, WI 53202. At the Special Meeting, you and the other shareholders of the Fund will be asked to consider and vote separately upon:
1. A proposed reorganization of the Fund into a newly organized series of Northern Lights Fund Trust, which is discussed in more detail in the accompanying Proxy Statement/Prospectus.
2. To transact such other business as may properly come before the Special Meeting or any adjournments thereof.
Only shareholders of record at the close of business on Friday, April 22, 2005, the record date for this Special Meeting, will be entitled to notice of, and to vote at, the Special Meeting or any postponements or adjournments thereof.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY CARD PROMPTLY. The Board of Trustees recommends that you vote in favor of the proposal.
As a shareholder, you are asked to attend the Special Meeting either in person or by proxy. Even if you plan to attend the Special Meeting, we urge you to authorize proxies to cast your votes, which are commonly referred to as proxy voting. You can do this in one of three ways by completing, signing, dating and promptly returning the enclosed proxy card in the enclosed postage prepaid envelope.
Your prompt voting by proxy will help assure a quorum at the Special Meeting. You retain the right to revoke your proxy at any time before it is actually voted by delivering notice of such revocation to the Secretary of the Trust in open meeting or by filing with the Secretary of the Trust either a notice of revocation or a duly executed proxy bearing a later date.
By Order of the Board of Trustees of
Advisors Series Trust
___________________________________
Rodney A. DeWalt, Secretary
June 1 , 2005
ADVISORS SERIES TRUST
615 E. Michigan Street
Milwaukee, Wisconsin 53202
1-877-560-6823
QUESTIONS AND ANSWERS
YOUR VOTE IS VERY IMPORTANT!
Dated: June 1 , 2005
The following is important information to help you understand the proposal on which you are being asked to vote. Please read the entire combined Proxy Statement/Prospectus provided to you before voting.
Question: What is this document and why did we send it to you?
Answer: The Board of Trustees approved a plan to reorganize (the “Reorganization”) a series (the “Fund”) of Advisors Series Trust, a Delaware statutory trust (the “Trust”), into a newly created series (the “New Fund,”) of Northern Lights Fund Trust, a Delaware statutory trust (“Northern Lights”). Shareholder approval is needed to proceed with the Reorganization and a special shareholder meeting will be held on Friday , Ju ly 15, 2005 (the “Special Meeting”) to consider the issue. We are sending this document to you for your use in deciding whether to approve the Reorganization at the Special Meeting. This document includes, among other things, a letter from the President of the Trust, a Notice of Special Meeting of Shareholders, a combined Proxy Statement/Prospectus and a form of Proxy.
Question: What is the purpose of this Reorganization?
Answer: The complexity of the legal and regulatory compliance functions of the Fund has increased significantly in recent years, and may continue to increase in the foreseeable future. Due to the increased complexity, the Board of Trustees and management of the Trust believe that it is in the best interests of the Fund’s shareholders to align the Fund with a smaller mutual fund complex that has similar legal and regulatory compliance oversight needs. Northern Lights, a multi-adviser, multi-fund complex, is smaller than the Trust, and has similar legal and regulatory compliance issues that are beneficial in helping the Fund to comply with the applicable rules and regulations. There will be no changes to the Fund’s investment adviser, investment objectives, policies or strategies as a result of the Reorganization.
Question: How will the Reorganization work?
Answer: The New Fund will be formed as a new series of Northern Lights, which will have no assets and no shareholders. Pursuant to an Agreement and Plan of Reorganization (the “Plan”), the Fund will transfer all of its assets and liabilities to the New Fund in return for shares of the New Fund. Finally, the Fund will distribute the shares it received from the New Fund to its shareholders. Shareholders of the Fund will thus effectively become shareholders of the New Fund, and each shareholder will hold the same number of shares with the same net asset value as the shareholder held prior to the Reorganization. The reorganization is intended to qualify as a tax free “reorganization” within the meaning of the Internal Revenue Code. If the reorganization so qualifies, in general, a shareholder will recognize no gain or loss upon the receipt of the shares of th e New Fund in connection with the reorganization. Please refer to the proxy statement for a detailed explanation of the proposal.
Question: What will the name of the New Fund be?
Answer: The name of the New Fund will be identical to that of the Fund.
Question: How will this affect my account?
Answer: Following the Reorganization, you will be a shareholder of the New Fund, which has the same investment objective, strategies and investment adviser as the Fund you currently own. You will receive shares of the New Fund equal in value to shares of the Fund you currently hold. The Reorganization will not affect the value of your account at the time of Reorganization.
Question: What will happen if the Reorganization is not approved?
Answer: If shareholders of the Fund fails to approve the Reorganization, the Fund will not be reorganized and the Board will consider other alternatives for the Fund.
Question: Why do I need to vote?
Answer: Your vote is needed to ensure that the proposal can be acted upon. Your immediate response by voting by proxy will help prevent the need for any further solicitations for a shareholder vote. We encourage all shareholders to participate.
Question: I am a small investor. Why should I bother to vote?
Answer: Your vote makes a difference. If other shareholders like you fail to vote, the Fund may not receive enough votes to go forward with the Special Meeting.
Question: How does the Board of Trustees suggest that I vote?
Answer: After careful consideration, the Board of Trustees of the Trust recommends that you vote “FOR” the Reorganization.
Question: Who is paying for expenses related to the Special Meeting?
Answer: The Fund’s administrator, U.S. Bancorp Fund Services, LLC, will pay all costs relating to the Reorganization, including the costs relating to the Special Meeting and this Proxy Statement/Prospectus.
Question: How do I cast my vote?
Answer: You may vote by completing, dating and signing a proxy card and mailing it as soon as you can. The shares of shareholders who complete and properly sign a proxy card and return it before the Special Meeting will be voted as directed by such shareholder at the Special Meeting and any adjournments or postponements of the Special Meeting. The shares of a shareholder who properly signs and returns a proxy card, but does not specify how to vote, will be voted for the Reorganization, except that proxy cards returned by a broker to indicate a broker non-vote will not be so voted and will not constitute a vote “for” or “against” the proposal.
Question: How may I revoke my proxy?
Answer: Any shareholder giving a proxy may revoke it at any time before it is exercised by delivering notice of such revocation to the Secretary of the Trust in open meeting or in writing by filing with the Secretary of the Trust either a notice of revocation or a duly executed proxy bearing a later date. Presence at the Special Meeting by a shareholder who has signed a proxy does not itself revoke the proxy.
Question: Will the advisory fees change?
Answer: No, the investment advisory fees and Rule 12b-1 fees charged to the Fund will not change as a result of the Reorganization. The New Fund will have an expense limitation agreement similar to the Fund’s current one which will limit net operating expenses to 2.0%.
Question: What if a shareholder redeems shares of the Fund before the Reorganization takes place?
Answer: A shareholder may choose to redeem or exchange (if applicable) shares of the Fund before the reorganization takes place. If so, the redemption or exchange will be treated as a normal redemption or exchange of shares and generally will be a taxable transaction.
Question: Who do I call if I have questions?
Answer: We will be happy to answer your questions about the proxy solicitation. Please call 1-877-560-6823 during normal business hours between 8 a.m. and 5 p.m. Central time.
_________________________________________
COMBINED PROXY STATEMENT AND PROSPECTUS
JUNE 1 , 2005
FOR THE REORGANIZATION OF
JACOBS & COMPANY MUTUAL FUND
a series of
Advisors Series Trust
615 East Michigan Street
Milwaukee, Wisconsin 53202
1-877-560-6823
INTO
JACOBS & COMPANY MUTUAL FUND
a series of
Northern Lights Fund Trust
150 Motor Parkway, Suite 205 Hauppauge, NY 11788
_________________________________________
This Proxy Statement/Prospectus is being sent to you in connection with the solicitation of proxies by the Board of Trustees of Advisors Series Trust (the “Trust”) for use at a Special Meeting of Shareholders (the “Special Meeting”) of the Jacobs & Company Mutual Fund (the “Fund”), a series of the Trust, to be held at the offices of the Fund’s administrator, US Bancorp Fund Services, LLC, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, on Friday , Ju ly 15, 2005 at 9:00 a.m. Central time. At the Special Meeting, shareholders of the Fund will be asked:
· To approve an Agreement and Plan of Reorganization between the Trust on behalf of the Fund and Northern Lights Fund Trust (“Northern Lights”), on behalf of a newly created series of shares, named the Jacobs & Company Mutual Fund (the “New Fund”), whereby the New Fund would acquire all of the assets and liabilities of the Fund in exchange for the New Fund’s shares which would be distributed pro rata by the New Fund to the holders of its shares in complete liquidation of the Fund (the “Reorganization”). A copy of the Agreement and Plan of Reorganization (the “Plan”) is attached hereto as Exhibit A. As a result of the Reorganization, each shareholder will become a shareholder of the New Fund, which will have identical investment objectives, policies, and strategies as the Fund i t is acquiring.
· To transact such other business as may properly come before the Special Meeting or any adjournments thereof
The Fund is a series of the Trust, an open-end management investment company registered with the Securities and Exchange Commission (the “SEC”) that is organized as a Delaware statutory trust. The New Fund is a separate series of Northern Lights, an open-end management company registered with the SEC that is also organized as a Delaware statutory trust.
The following documents have been filed with the SEC and are incorporated by reference into this Proxy Statement/Prospectus:
From Post-Effective Amendment No. 2 of Northern Lights Fund Trust, filed May 31 , 2005 (SEC File No. 811-21720):
· Prospectus and Statement of Additional Information of the Jacobs & Company Mutual Fund dated June 3, 2005 ..
From Post-Effective Amendment No. 1 87 of Advisors Series Trust, filed May 27 , 200 5 (SEC File No. 811-04010):
· Prospectus of the Jacobs & Company Mutual Fund, dated May 31 , 200 5 ..
Additional information is set forth in the Statement of Additional Information dated May 31 , 2005 relating to this Proxy Statement, which is also incorporated by reference into this Proxy Statement. Copies of these documents are available upon request and without charge by writing to Jacobs & Company, or by calling 1-877-560-6823.
The Annual Report to Shareholders of the Trust for the fiscal year ended January 31, 2005, containing audited financial statements, and the Semi-Annual Report to Shareholders of the Trust for the six months ended July 31, 2004, containing unaudited financial statements, have been previously mailed to shareholders. Copies are available by writing or calling the Trust at the address or telephone number listed above. Because the New Fund, a series of Northern Lights Fund Trust, has not yet commenced operations, no annual report to shareholders of the New Fund is available at this time.
This Proxy Statement/Prospectus sets forth the basic information you should know before voting on the proposal, and sets forth concisely the information about the New Fund that a prospective investor should know before investing. You should read it and keep it for future reference.
The Fund expects that this Proxy Statement will be mailed to shareholders on or about June 6 , 2005.
Date: June 1 , 2005
The SEC has not approved or disapproved these securities nor has it passed on the accuracy or adequacy of this combined proxy statement and prospectus. Any representation to the contrary is a criminal offense.
The shares offered by this Prospectus/Proxy Statement are not deposits or obligations of any bank, and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
The Board of Trustees of the Trust (the “Board”) called the Special Meeting to ask shareholders to consider and vote on the Reorganization of the Fund into the New Fund, which is a newly formed series of Northern Lights. The Board (including a majority of the independent trustees, meaning those trustees who are not “interested persons” of the Trust as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) believes that the Reorganization is in the best interests of the Fund and its shareholders, and approved the Reorganization at a Board meeting held on March 11, 2005, subject to the approval of the Fund’s shareholders.
The Board believes that the Reorganization is in the best interests of the Fund and its shareholders, that the terms of the Reorganization are fair and reasonable and that the interests of existing shareholders of the Fund will not be diluted as a result of the Reorganization. The factors considered by the Board in approving the Reorganization included, among other things, (1) the legal and regulatory compliance compatibility of the Fund and Northern Lights; (2) the investment objectives, policies and restrictions of the Fund are identical to those of the New Fund, (3) Jacobs & Company will continue to manage the New Fund; (4) after the Reorganization, investment management, administrative services and other functions will be performed under contracts having substantially similar terms as the existing contracts; (5) the fees and expenses for the New Fund are expected to be virtually the same as fees a nd expenses for the Fund; (6) the Reorganization will result in no dilution of shareholders’ interests; and (7) the shareholders would likely not experience any adverse tax consequences.
The Board recommends that the shareholders of the Fund vote FOR the Plan.
Jacobs & Company (the “Adviser”) currently serves as the investment adviser of the Fund and will also serve as the investment adviser to the New Fund.
The New Fund will have identical investment objectives, strategies and policies to those of the Fund. The Fund and the New Fund each seek to achieve their investment objectives by using the following strategies:
Current Fund/New Fund
Investment Strategy
Jacobs & Company Mutual Fund (Trust)/ Jacobs & Company Mutual Fund (Northern Lights)
The Fund invests in a combination of equity and fixed-income securities. Although the percentage of assets allocated between equity and fixed-income securities is flexible, under normal market conditions, the Adviser expects that at least 40% of the Fund’s assets will be invested in fixed-income securities. The equity securities held by the Fund will include common stocks of large-capitalization domestic companies. Covered call options will be written on equity securities to enhance total return. Under normal market conditions, the Fund will seek to generate current earnings from option premiums by writing (selling) covered call options on a substantial portion of its portfolio securities. The Fund seeks to produce a high level of current income and current gains generated from option writing premiums and, to a lesser extent, from dividends. Net gains from the Fund’ s option strategy generally will be short-term capital gains which, for federal income tax purposes, will constitute investment company taxable income that, to the extent distributed, will be taxable to shareholders at rates applicable to ordinary income, rather than at lower rates that are applicable to long-term capital gains and certain qualifying dividends. The fixed-income securities held by the Fund consist, in normal circumstances, primarily of mortgage-backed securities issued by the Government National Mortgage Association, but may also include other U.S. Government and corporate bonds, notes and bills, preferred stocks, and money market instruments. The mixture of fixed-income securities may be adjusted depending on market conditions.
In selecting equity securities for the Fund, the Adviser seeks growth stocks it believes to be of high-quality, based on its analysis of factors such as potential earnings growth, price to earnings ratios, strength of management, product development and dividend history. In selecting fixed-income securities, the Adviser seeks safety of principal, monthly or other periodic cash flows and above-average yield, with a sensitivity to risk.
Investment in the New Fund will be subject to identical risks as investment in the Fund. In addition, the purchase, distribution, redemption and other service arrangements of the New Fund will be similar to the current arrangements of the Fund. The main difference will be that the New Fund will use Gemini Fund Services, LLC as its transfer agent and fund administrator rather than U.S. Bancorp Fund Services, LLC and will use Aquarius Fund Distributors, LLC as its distributor rather than Quasar Distributors, LLC.
The Reorganization should constitute a tax-free reorganization for federal income tax purposes and will not affect the federal tax status of Fund shares held before the Reorganization. Therefore, shareholders should not recognize any gain or loss on their Fund shares for federal income tax purposes as a result of the Reorganization. Furthermore, the administrator, U.S. Bancorp Fund Services, LLC will pay the costs of the Reorganization and the Special Meeting. The administrator, U.S. Bancorp Fund Services, LLC will also incur the costs associated with the solicitation of proxies, including the cost of copying, printing and mailing proxy materials. In addition to solicitations by mail, the administrator, Adviser and the Board also may solicit proxies, without special compensation, by telephone, facsimile or otherwise.
As with most funds, the New Fund, like the Fund, may expose shareholders to certain market risks that could cause shareholders to lose money, particularly a sudden decline in a holding’s share price or an overall decline in the stock or bond market or circumstances affecting small to medium-sized companies. The New Fund, like the Fund, will be subject to the following risks:
Current Fund /
New Fund
Investment Risks
Jacobs & Company Mutual Fund/ Jacobs & Company Mutual Fund
Market Risk. The risk that the market value of a security may move up and down, sometimes rapidly and unpredictably. These fluctuations may cause a security to be worth less than the price originally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector of the economy or the market as a whole.
Fixed-Income Securities Risk. The market value of fixed-income securities is sensitive to prevailing interest rates. In general, when interest rates rise, a fixed-income security’s value declines and when interest rates decline, its market value rises. Normally, the longer the remaining maturity of a security, the greater the effects of interest rate changes on the market value of the security. In addition, changes in the ability of an issuer to make payments of interest and principal and in the market’s perception of an issuer’s creditworthiness affect the market value of fixed-income securities of that issuer.
The Fund’s investments in mortgage-backed securities will be subject to prepayment risk, which is the risk that the borrowers of the underlying mortgages will prepay principal more rapidly than is anticipated. When interest rates decline, homeowners tend to refinance their mortgages, which generally increases rates of prepayment among borrowers. As a result, the Fund may lose the benefit of the higher yielding underlying mortgages that are being prepaid and may have to seek opportunities in other, less attractive securities. This could cause a decrease in the Fund’s income and share price.
Options Risk. Covered call options, such as those written by the Fund, enhance Fund income by the generation of premiums upon the sale of the options, but may result in the Fund’s losing the benefit of a portion of the appreciation in the underlying equity security to the extent the value increases to an amount in excess of the option exercise price . Because the Fund does not have control over the exercise of the call options it writes, it may be required to sell the underlying stocks and to realize capital gains or losses at inopportune times. Call option premiums received by the Fund will be recognized upon exercise, lapse or other disposition of the option and generally will be treated by the Fund as short-term capital gain (or loss) and, as such, will increase the portion of dividends taxed to shareholders of the Fund at ordinary income tax rates. For a more detailed discussion of the effect of the use of options on the taxation of your investment in the Fund, please see the “Tax Consequences” section of the Fund’s Prospectus.
Portfolio Turnover Risk. A high portfolio turnover rate (100% or more) has the potential to result in the realization and distribution to shareholders of higher capital gains. This may mean that you would be likely to have a higher tax liability. A high portfolio turnover rate may also lead to higher transactions costs, which could negatively affect the Fund’s performance.
B. COMPARISON FEE TABLE AND EXAMPLE
The following Summary of Fund Expenses shows the fees for the Fund (based on the Fund’s current fees for the fiscal year ending January 31, 2005) and the New Fund (based on estimates of the New Fund’s fees for the fiscal year ending January 31, 2006).
Fund
New Fund
(Proforma)
Shareholder Fees
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
None
None
Maximum deferred sales charge (load)
None
None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fee
1.00%
1.00%
Distribution and Service (12b-1) Fee
0.25%
0.25%
Other Expenses
2.02%
1.96%
Total Annual Fund Operating Expenses
3.27%
3.21%
Fee Reduction and/or Expense Reimbursement
-1.27%
-1.21%
Net Annual Fund Operating Expenses(2)
2.00%
2.00%
(1) Other Expenses for the New Fund are based on estimated amounts for the current fiscal year.
(2) The Advisor has contractually agreed to reduce its fees and/or absorb expenses of the Fund and the New Fund, until such contractual arrangement is terminated by the respective Board of Trustees or each fund’s Investment Advisory Agreement is terminated, to ensure that Net Annual Fund Operating Expenses will not exceed 2.00%. The Advisor reserves the right to be reimbursed for any waiver of its fees or expenses paid on behalf of each fund, up to three years from the date of such waiver or expense payment, provided that the respective fund’s expenses are less than the limit agreed to by the Fund and New Fund. The Board of Trustees may terminate this expense reimbursement arrangement at any time. Without the expense reimbursement, the Total Annual Fund Operating Expenses would be 3.27% for the Fund and 3.21% for the New Fund.
Examples
The examples set forth below are intended to help you compare the cost of investing in the Fund with the cost of investing in the New Fund. The examples assume that you invest $10,000 in the specified Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year, that all dividends and other distributions are reinvested and that total operating expenses for each fund are those shown in the table above. 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
Fund
$ 203
$ 627
$1,078
$2,327
New Fund
$ 203
$ 627
$1,078
$2,327
C. THE PROPOSAL
The following is a summary of key information concerning the Reorganization. Keep in mind that more detailed information appears in the Plan, a copy of which is attached to this Proxy Statement/Prospectus as Exhibit A, and in the prospectuses and statements of additional information incorporated by reference into this Proxy Statement/Prospectus.
1. Summary of the Proposed Reorganization
At the Special Meeting, the shareholders of the Fund will be asked to approve the Plan. Upon approval by the shareholders of the Fund, the Reorganization will involve the transfer of all of the assets and liabilities of the Fund to the New Fund in exchange for the New Fund’s shares. Upon the transfer of all of the assets to and assumption of all of the liabilities of the Fund by the New Fund, the New Fund will distribute to the Fund that number of full and fractional New Fund shares having an aggregate net asset value equal to the aggregate net asset value of the Fund as of the close of business on the business day preceding the closing (the “Closing”) of the Reorganization (the “Valuation Date”). Portfolio securities of the Fund will be valued in accordance with the valuation practices of the Fund. Valuation procedures of the New Fund are the same as the valuati on procedures of the Fund.
Immediately after the transfer of the Fund’s assets to the New Fund, the Fund will distribute the New Fund shares to its shareholders by establishing accounts on the New Fund’s share records in the names of those shareholders representing the respective pro rata number of New Fund Shares deliverable to them, in complete liquidation of the Fund. The distribution will be accomplished by the establishment of accounts on the share records of the New Fund in the name of each shareholder of the Fund, each representing the respective pro rata number of full and fractional shares of the New Fund due each of those shareholders. Certificates evidencing the New Fund Shares will not be issued to the Fund’s shareholders.
Upon completion of the Reorganization, each shareholder of the Fund will own that number of full and fractional shares of the New Fund having an aggregate net asset value equal to the aggregate net asset value of such shareholder’s shares held in the Fund as of the close of business on the Valuation Date.
Until the Closing, shareholders of the Fund will continue to be able to redeem their shares at the net asset value next determined after receipt by the Fund’s transfer agent of a redemption request in proper form. Redemption and purchase requests received by the transfer agent after the Closing will be treated as requests received for the redemption or purchase of shares of the New Fund received by the shareholder in connection with the Reorganization. After the Reorganization, all of the issued and outstanding shares of the Fund will be canceled on the books of the Fund and the transfer books of the Fund will be permanently closed.
The Reorganization is subject to a number of conditions, including, without limitation, the approval of the Plan and the transactions contemplated thereby described in this Proxy Statement/Prospectus by the shareholders of the Fund, the receipt of a legal opinion from counsel to Northern Lights with respect to certain tax issues, the parties’ performance in all material respects of their respective agreements and undertakings in the Plan and effective registration of the New Fund. Assuming satisfaction of the conditions in the Plan, the Reorganization is expected to be effective on June 15, 2005, or such other date as is agreed to by the parties.
The Plan may be amended by the mutual consent of the parties thereto, notwithstanding approval thereof by Fund shareholders, provided that no such amendment will have a material adverse effect on the interests of such shareholders without their further approval. In addition, the Plan may be terminated with respect to the Fund at any time prior to the Closing by either party thereto upon notice to the other.
2. Description of the New Fund’s Shares
The New Fund shares issued to Fund shareholders pursuant to the Reorganization will be duly authorized, validly issued, fully paid and non-assessable when issued, and will be transferable without restriction and will have no preemptive or conversion rights. The New Fund’s shares will be sold and redeemed based upon the net asset value of the New Fund next determined after receipt of the purchase or redemption request, as described in the New Fund’s Prospectus.
3. Reasons for the Reorganization
The complexity of the legal and regulatory compliance functions of the Fund has increased significantly in recent years, and may continue to increase in the foreseeable future. Due to the increased complexity, the Board of Trustees and management of the Trust believe that it is in the best interests of the Fund’s shareholders to have the Fund be aligned with a smaller mutual fund complex that requires similar legal and regulatory compliance oversight.
The Board based its decision to approve the Plan by determining the following factors, among others:
· that the prospective funds of Northern Lights require similar legal and regulatory compliance oversight ;
· that the investment objectives, policies and restrictions of the Fund are identical to those of the New Fund;
· that Jacobs & Company will continue to manage the New Fund;
· that after the Reorganization, investment management, administrative services and other function will be performed under contracts having substantially similar terms as the existing contracts;
· that the fees and expenses for the New Fund are expected to be virtually the same as fees and expenses for the Fund;
· that the Reorganization will result in no dilution of shareholders’ interests; and
· that the shareholders would likely not experience any adverse tax consequences.
If the Plan is not approved by the Fund’s shareholders, then the Fund will continue to operate as a separate open-end management company and a series of the Trust, or the Board may take any further action as it deems to be in the best interests of the Fund and its shareholders, including liquidation, subject to approval by the Fund’s shareholders if required by applicable law.
4. Federal Income Tax Consequences
As a condition of the Reorganization, the Fund and the New Fund will receive an opinion of counsel to the effect that the Reorganization will qualify as a tax-free reorganization for federal income tax purposes under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and will not affect the federal tax status of Fund shares held before the Reorganization. Therefore, neither the Fund, the New Fund, nor their shareholders should recognize any gain or loss for federal income tax purposes as a result of the Reorganization. In addition, the tax basis of, and the holding period for, the New Fund shares received by each shareholder of the Fund in the Reorganization will be the same as the tax basis of, and the holding period for, the Fund shares given up by such shareholder in the Reorganization (provided that, with respect to the holding period for the New Fund shares received, the Fund shares given up must have been held as capital assets by the shareholder).
The Reorganization is not expected to result in the recognition of gain or loss, for federal income tax purposes, by the Fund or its shareholders. Since its inception, the Fund believes it has qualified as a regulated investment company under the Code. Accordingly, the Fund believes it has been, and expects to continue to be, relieved of any federal income tax liability on its taxable income and gains distributed to shareholders.
Provided that the Reorganization so qualifies, and the Fund is so treated, for U.S. federal income tax purposes, generally:
· The Fund will not recognize any gain or loss as a result of the Reorganization;
· The Fund shareholder will not recognize any gain or loss as a result of the receipt of New Fund shares in exchange for such shareholder’s Fund shares pursuant to the Reorganization; and
· A Fund shareholder’s aggregate tax basis in the New Fund shares received pursuant to the Reorganization will equal such shareholder’s aggregate tax basis in the Fund shares held immediately before the Reorganization.
Subject to limited exceptions, most states use federal taxable income as a taxable base in determining state tax treatment. Consequently, the Trust believes that the state income tax treatment of the Reorganization for most shareholders is likely to be the same as the federal tax consequences. Although the Trust is not aware of any adverse state income tax consequences, the Trust has not made any investigation as to those consequences for the shareholders. Because each shareholder may have unique tax issues, shareholders should consult their own tax advisers.
5. Comparison of Shareholder Rights
Set forth below is a discussion of the material differences in the rights of shareholders of the Fund and the rights of shareholders of the New Fund.
Governing Law. The Fund is a separate series of the Trust, which is organized as a Delaware statutory trust. The New Fund is a separate series of Northern Lights, which is also organized as a Delaware statutory trust. The Fund andthe New Fund are each authorized to issue an unlimited number of shares of beneficial interest. The Fund’s shares have a par value of $0.01 per share and the New Fund’s shares arewithout par value. The Trust’s operations are governed by its Agreement and Declaration of Trust, By-Laws, and applicable trust laws of the State of Delaware. Northern Lights’ operations are also governed by a similar Declaration of Trust and By-Laws, and applicable trust laws of the State of Delaware.
Shareholder Liability. Under Delaware law, trustees and shareholders of a statutory trust are generally afforded by statute the same limited liability as their corporate counterparts and are permitted liberal indemnification rights. The risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance exists and the New Fund is unable to meet its obligations. Under the Trust and Northern Lights’ respective Declaration of Trust and By-laws, the Fund and New Fund are required to indemnify shareholders and former shareholders against loss and expenses incurred in connection with proceedings relating to his or her being or having been a shareholder of the Fund and New Fund, and not because of his or her acts or omissions.
Board of Trustees. Both the Trust and Northern Lights have a Board of Trustees. The composition of the Board of the Trust is different from that of Northern Lights both in terms of membership and size. The Board of Trustees of the Trust is comprised of six trustees, one of whom is an interested person as that term is defined under the 1940 Act. The Board of Trustees for the Northern Lights has four trustees, one of whom is an interested person as that term is defined under the 1940 Act. For more information, refer to the May 31 , 200 5 Statement of Additional Information for the Fund and the June 3 , 2005 Statement of Additional Information for the New Fund, which are incorporated by reference into this Proxy Statement/Prospectus.
Classes. The Fund is a separate series of the Trust with no separate classes of shares. The New Fund is a separate series of Northern Lights and the New Fund may include more than one class of shares. Currently, the Fund does not have more than one class of shares. Northern Lights has reserved the right to create and issue additional classes. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class. Shares of each series or class generally vote together, except when required under federal securities laws to vote separately on matters that only affect a particular class, such as the approval of a distribution plan for a particular class.
6. Capitalization
The capitalization of the Fund as of April 22, 2005 and the New Fund’s pro forma capitalization as if the Reorganization occurred on that date are as follows:
(unaudited)
FUND
NEW FUND
Aggregate Net Assets
$5,957,378.24
$5,957,378.24
Shares Outstanding
697,493.282
697,493.282
Net Asset Value Per Share
$8.54
$8.54
I. COMPARISON INFORMATION ABOUT THE NEW FUND AND THE FUND
A. INVESTMENT OBJECTIVES, STRATEGIES, AND RESTRICTIONS
The New Funds’ investment objectives, policies, strategies and risks are identical to those of the Fund. The following discussion is qualified in its entirety by the more extensive discussion set forth in the Prospectuses of the New Fund dated June 3 , 2005 which is incorporated by reference into this Proxy Statement/Prospectus.
1. Investment Objectives
The Fund and the New Fund have the same investment objectives. The Fund seeks a combination of current income and growth of capital, consistent with preservation of capital.
The Fund’s and the New Fund’s investment objective (as well as their investment strategies set forth above) may not be changed without shareholder approval.
2. Investment Strategies
In selecting investments for the New Fund, the Adviser will employ the identical strategy it used for the Fund.
3. Fundamental Investment Restrictions and Investment Limitations
The New Fund will have identical investment restrictions and limitations to those of the Fund. The Fund and the New Fund each seek to achieve their investment objectives by using the following restrictions and limitations.
The New Fund has adopted the following investment restrictions that may not be changed without approval by a “majority of the outstanding shares” of the New Fund which, as used in this SAI, means the vote of the lesser of (a) 67% or more of the shares of the New Fund represented at a meeting, if the holders of more than 50% of the outstanding shares of the New Fund are present or represented by proxy, or (b) more than 50% of the outstanding shares of the New Fund.
The New Fund may not:
1. Make loans to others, except (i) through the purchase of debt securities in accordance with its investment objectives and policies, (ii) to the extent the entry into a repurchase agreement is deemed to be a loan.
2. Issue senior securities, borrow money or pledge its assets, except that (i) the New Fund may borrow from banks in amounts not exceeding one-third of its total assets (including the amount borrowed); and (ii) this restriction shall not prohibit the New Fund from engaging in options transactions.
3. Purchase securities on margin, participate on a joint or joint and several basis in any securities trading account, or underwrite securities. (Does not preclude the New Fund from obtaining such short-term credit as may be necessary for the clearance of purchases and sales of its portfolio securities).
4. Purchase or sell real estate, commodities or commodity contracts (the New Fund reserves the right, upon notice to shareholders to engage in futures contracts in furtherance of its investment objective);
5. Invest 25% or more of the market value of its assets in the securities of companies engaged in any one industry. (Does not apply to investment in the securities of the U.S. Government, its agencies or instrumentalities.)
6. Purchase the securities of any issuer, if as a result more than 5% of the total assets of the New Fund would be invested in the securities of that issuer, other than obligations of the U.S. Government, its agencies or instrumentalities, provided that up to 25% of the value of the New Fund's assets may be invested without regard to this limitation.
The New Fund observes the following policies, which are not deemed fundamental and which may be changed without shareholder vote.
The New Fund may not:
7. Purchase any security if as a result the New Fund would then hold more than 10% of any class of securities of an issuer (taking all common stock issues of an issuer as a single class, all preferred stock issues as a single class, and all debt issues as a single class) or more than 10% of the outstanding voting securities of an issuer.
8. Invest in any issuer for purposes of exercising control or management.
9. Invest in securities of other investment companies except as permitted under the 1940 Act.
10. Invest, in the aggregate, more than5% of its net assets in securities with legal or contractual restrictions on resale, securities which are not readily marketable and repurchase agreements with more than seven days to maturity.
11. Invest, in the aggregate, more than 10% of its net assets in (a) foreign securities, (b) the purchase of put options, and (c) securities described in restriction 10 immediately above (with each such investment category not to exceed 5% of its net assets).
12. With respect to fundamental investment restriction 2 above, purchase portfolio securities while outstanding borrowings exceed 5% of its assets.
Except with respect to borrowing, if a percentage restriction set forth in the New Fund’s Prospectus or Statement of Additional Informationis adhered to at the time of investment, a subsequent increase or decrease in a percentage resulting from a change in the values of assets will not constitute a violation of that restriction.
B. DISTRIBUTION AND SHAREHOLDER SERVICES
1. Distribution
Quasar Distributors, LLC (“Quasar”), 615 East Michigan Street, Milwaukee, Wisconsin, 53202, an affiliate of the Fund’s administrator, acts as the distributor for the Fund.
The New Fund is distributed by Aquarius Fund Distributors, LLC (“Aquarius”), a registered broker-dealer and member of the National Association of Securities Dealers, Inc. (“NASD”). As such, Aquarius is responsible for all purchases, sales, redemptions, and other transfers of shares. As distributor, Aquarius also provides certain administrative services. Shares of the Fund and the New Fund are offered for sale on a continuous basis at net asset value per share.
To obtain information about NASD member firms and their associated persons, you may contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure Hotline at 800-289-9999. An investor brochure containing information describing the Public Disclosure Program is available from NASD Regulation, Inc. Aquarius is located at 1005 South 107th Avenue, Omaha, Nebraska 68114.
2. Distribution Plan
Under a distribution plan adopted in accordance with Rule 12b-1 under the 1940 Act, the Fund is authorized to make payments whereby the Fund pays the Adviser, as the distribution coordinator, for services primarily intended to result in the sale of the Fund or the servicing of shareholders at the annual rate of up to 0.25% of the Fund’s average daily net assets of its shares covered. The Fund’s Rule 12b-1 plan is a compensation plan, which means that the fees paid by the Fund under the plan are intended to compensate (rather than reimburse) for services rendered.
Under a distribution plan adopted in accordance with Rule 12b-1 under the 1940 Act, the New Fund is authorized to pay the Adviser, or other financial institutions , up to 0.25% of the New Fund’s average daily net assets of its shares covered for to pay sales, distribution and other fees for the sale of its shares and for services provided to investors. Like the Fund’s Rule 12b-1 plan, the New Fund’s Rule 12b-1 plan is a compensation plan because payments under the plan are made for services rendered regardless of the level of expenditures made by the Adviser.
C. PURCHASE AND REDEMPTION PROCEDURES
For the sake of simplicity, the discussion below references only the New Fund, but also describes the purchase and redemption procedures of the Fund as the Fund and the New Fund have similar purchase and redemption procedures.
1. Purchasing Information
Shares of the New Fund are offered at the next offering price, which is the net asset value per share of the New Fund, computed after the purchase order and funds are received by the New Fund’s transfer agent.
Minimum Investments
To invest start or add to an account with the New Fund, a shareholder must invest at least the minimum amount, as indicated below:
Investment Minimums
New Fund
THE MINIMUM INITIAL INVESTMENTS ARE:
Regular (New Investor)
$2,000
Retirement Accounts
$1,000
Automatic Investment Plans
$100
ADDITIONAL INVESTMENT
Retirement Plans
$100
Automatic Investment Plans
$100
The New Fund may reduce or waive the minimum investment requirements for: certain retirement and other employee benefit plans; for the Adviser’s employees, clients and their affiliates; for investment advisers or financial institutions offering investors a program of services; or any other person or organization deemed appropriate by the New Fund. The New Fund also offers an automatic investment plan, whereby an existing shareholder may purchase addition shares of the New Fund through an Automated Clearing House arrangement. In addition, the New Fund, at the direction of the Board of Trustees of the Northern Lights, may cease taking purchase orders at any time when it believes that it is in the best interest of current shareholders.
2. Redemption Information
Shares of the New Fund are sold at the next offering price, which is the net asset value per share of the New Fund, computed after the request is received by the New Fund’s transfer agent on any day the New Fund and the New York Stock Exchange, Inc. are open for business. The New Fund offers a Systematic Withdrawal Program that allows shareholders to have regular monthly payments redeemed from their account. The New Fund may redeem an account if the total value of the account falls below $1,000 due to redemptions after giving shareholders at least 30 days’ prior written notice of this redemption. The New Fund has also reserved the right to redeem shares “in kind.”
1. Frequent Purchases and Redemptions
Frequent trading into and out of the New Fund can harm all fund shareholders by disrupting the New Fund’s investment strategies, increasing Fund expenses, decreasing tax efficiency and diluting the value of shares held by long-term shareholders. The New Fund is designed for long-term investors and is not intended for market timing or other disruptive trading activities. Accordingly, the New Fund’s Board has approved policies that seek to curb these disruptive activities while recognizing that shareholders may have a legitimate need to adjust their Fund investments as their financial needs or circumstances change.
The New Fund reserves the right to reject or restrict purchase or exchange requests for any reason, particularly when the shareholder's trading activity suggests that the shareholder may be engaged in market timing or other disruptive trading activities. Neither the New Fund nor the Adviser will be liable for any losses resulting from rejected purchase or exchange orders. The Adviser may also bar an investor who has violated these policies (and the investor's financial adviser) from opening new accounts with the New Fund.
Although the New Fund attempts to uniformly limit disruptive trading activities, some investors use a variety of strategies to hide their identities and their trading practices. There can be no guarantee that the New Fund will be able to identify or limit these activities. Omnibus account arrangements are common forms of holding shares of the New Fund. While the New Fund will encourage financial intermediaries to apply the New Fund’s Market Timing Trading Policy to their customers who invest indirectly in the New Fund, the New Fund is limited in its ability to monitor the trading activity or enforce the New Fund’s Market Timing Trading Policy with respect to customers of financial intermediaries. For example, should it occur, the New Fund may not be able to detect market timing that may be facilitated by financial intermediaries or made difficult to identify in the omnibus accounts used by those intermediaries fo r aggregated purchases, exchanges and redemptions on behalf of all their customers. More specifically, unless the financial intermediaries have the ability to apply the New Fund’s Market Timing Trading Policy to their customers through such methods as implementing short-term trading limitations or restrictions and monitoring trading activity for what might be market timing, the New Fund may not be able to determine whether trading by customers of financial intermediaries is contrary to the New Fund’s Market Timing Trading Policy. If the New Fund or its Transfer Agent or shareholder servicing agent suspects there is market timing activity in the account, the New Fund will seek full cooperation from the service provider maintaining the account to identify the underlying participant. Upon instructions from the Adviser, the service providers will take immediate action to stop any further short-term trading by such participants.
D. INVESTMENT ADVISOR AND OTHER SERVICE PROVIDERS
1. Investment Advisor
The Fund and New Fund’s investment adviser is Jacobs and Company, 300 Summer Street, Suite 970, Charleston, West Virginia 25301. In this capacity, Jacobs and Company supervises all aspects of both funds’ operations and makes and implements all investment decisions for the Funds. The Fund currently pays the Adviser a monthly management fee computed at the annual rate of 1.00% of its daily net assets. The New Fund has also agreed to pay the Adviser a management of 1.00% of its daily net assets
A discussion regarding the basis for the Fund’s and New Fund’s Board of Trustees approving their respective investment advisory contracts is available in the Fund’s Statement of Additional information dated May 31, 200 5 and New Fund’s Statement of Additional information dated June 3 , 2005.
2. Other Service Providers
U.S. Bancorp Fund Services, LLC (“USBFS”), 615 East Michigan Street, Milwaukee, Wisconsin, 53202, serves as the Fund’s administrator. Quasar Distributors, LLC, an affiliate of the administrator, serves as the Fund’s distributor. The Fund’s transfer and dividend disbursing agent is USBFS. U.S. Bank, National Association, 425 Walnut Street, Cincinnati, Ohio, 45202, serves as the custodian for the portfolio securities, cash and other assets of the Fund. Tait, Weller & Baker, 1818 Market Street, Suite 2400, Philadelphia, Pennsylvania, 19103, serves as the Fund’s Registered Independent Public Accounting Firm and audits the financial statements and the financial highlights of the Fund.
The New Fund will have the same independent public accountants as the Fund. Gemini Fund Services, LLC, (“GFS”), which has its principal office at the Hauppauge Corporate Center, 150 Motor Parkway, Suite 205, Hauppauge, New York 11788, serves as the New Fund’s administrator. Upon completion of the Reorganization, GFS will serve as the New Fund’s transfer and dividend disbursing agent. The Bank of New York, One Wall Street, New York, New York 10286, serves as the custodian of the New Fund's assets. The contracts with these service providers, including GFS, will have substantially similar terms as the existing contracts.
I. VOTING INFORMATION
For action to be taken by the Fund, the holders of forty percent (40%) of the outstanding shares of the Fund entitled to vote in person or by proxy as of the record date for the Special Meeting will constitute a quorum. Approval of the proposal by the Fund will require the affirmative vote of a majority (i.e., more than 50%) of the outstanding shares of the Fund.
All shares represented by each properly signed proxy received before the meeting will be voted at the Special Meeting. Proxies may be voted by any one of the following methods:
· By completing, dating and signing the enclosed proxy card and mailing it in the enclosed, postage-paid envelope.
· By calling the toll-free number listed on the proxy card and following the recorded instructions.
· By going to the website listed on the proxy card and following the instructions on the website.
If a shareholder specifies how the proxy is to be voted on any business properly to come before the Special Meeting, it will be voted in accordance with instruction given. If no choice is indicated on the proxy, it will be voted “FOR” approval of the Reorganization. If any other matters come before the Special Meeting, proxies will be voted by the persons named as proxies in accordance with their best judgment.
If a quorum of shareholders of the Fund is not present at the Meeting, or if a quorum is present but sufficient votes to approve the proposal described in this Proxy Statement/Prospectus with respect to the Fund are not received, the persons named as proxies may, but are under no obligation to, propose one or more adjournments of the Special Meeting of the Fund to permit further solicitation of proxies. Any business that might have been transacted at the Special Meeting with respect to the Fund may be transacted at any such adjourned session(s) at which a quorum is present. The Special Meeting with respect to the Fund may be adjourned from time to time by a majority of the votes of the Fund properly cast upon the question of adjourning the Special Meeting of the Fund to another date and time, whether or not a quorum is present, and the Special Meeting of the Fund may be held as adjourned without fur ther notice. The persons named in the proxy will vote in favor of such adjournment those shares that they are entitled to vote if such adjournment is necessary to obtain a quorum or to obtain a favorable vote on the proposal.
All proxies voted, including abstentions and broker non-votes (where the underlying holder has not voted and the broker does not have discretionary authority to vote the shares), will be counted toward establishing a quorum. Approval of the Plan will occur only if a sufficient number of votes are cast “FOR” that proposal. If shareholders of the Fund do not approve the Plan, the Fund will continue to operate as a series of the Trust, an open-end management company, or the Board may take any further action as it deems to be in the best interest of the Fund and its shareholders, including liquidation, subject to approval by the shareholders of the Fund if required by applicable law. Abstentions and broker non-votes do not constitute a vote “FOR” and effectively result in a vote “AGAINST.”
A. METHOD AND COST OF SOLICITATION
This Proxy Statement/Prospectus is being sent to you in connection with the solicitation of proxies by the Board for use at the Special Meeting. The Fund expects that the solicitation of proxies will be primarily by mail and telephone. The solicitation may also include facsimile, Internet, telegraph, or oral communications by certain employees of the Adviser or USBFS, who will not be paid for these services. The administrator, U.S. Bancorp Fund Services, LLC will bear the costs of the Special Meeting, including legal costs and the cost of the solicitation of proxies.
B. RIGHT OF REVOCATION
Any shareholder giving a proxy may revoke it at any time before it is actually voted by delivering notice of such revocation to the Secretary of the Trust in open meeting or by filing with the Secretary of the Trust either a notice of revocation or a duly executed proxy bearing a later date. If not so revoked, the votes will be cast at the Special Meeting, and any postponements or adjournments thereof. Attendance by a shareholder at the Special Meeting does not, by itself, revoke a proxy.
C. VOTING SECURITIES AND PRINCIPAL HOLDERS
Shareholders of the Fund at the close of business on April 22, 2005 (the “Record Date”) will be entitled to be present and vote at the Special Meeting. As of that date , 697,493.282 shares were outstanding for the Fund:
As of the Record Date, the Fund’s shareholders of record and/or beneficial owners (to the Trust’s knowledge) who owned five percent or more of the Fund’s shares are set forth below.
Name and Address
No. of Shares Owned
% of Shares
Type of Ownership
John J. & Carol E. Harper
300 Summers Street, Suite 970
Charleston, WV 25301
60,731.743
8.71%
Beneficial
First Clearing, LLC
FBO Keystone Industries, LLC
300 Summers Street, Suite 970
Charleston, WV 25301
41,286.237
5.92%
Record
The Officers and Trustees of the Trust, as a group, owned of record and beneficially less than one percent of the outstanding voting securities of the Fund.
II. FURTHER INFORMATION ABOUT THE FUND AND THE NEW FUND
Further information about the Fund is contained in the following documents:
· Prospectus for the Fund dated May 31 , 200 5 ..
· Statement of Additional Information for the Fund also dated May 31 , 200 5 ..
The New Fund is not currently an operating mutual fund, although they do have a prospectus that has been declared effective by the SEC. A copy of the Prospectus is provided with this Proxy/Prospectus. Shareholders may obtain copies of the Statement of Additional Information and annual and semi-annual reports relating to the Fund and the New Fund free of charge, by writing to Jacobs & Company, 300 Summer Street, Suite 970, Charleston, West Virginia 25301, or by calling 1-877-560-6823.
The Fund and the New Fund are subject to the requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act, and in accordance therewith, file reports, proxy material, and other information relating to the Fund and the New Fund, respectively, with the SEC. These documents can be inspected and copied at the public reference facilities maintained by the SEC in Washington, DC, at 450 Fifth Street, N.W., Washington, DC 20549 and at the SEC’s regional offices in New York at 233 Broadway, New York, New York, 10279 and in Chicago at Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois, 60661. Copies of such materials can also be obtained by mail from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, DC 20549 at prescribed rates. The SEC also maintains a web site at http://www.sec .gov that contains the Prospectus and Statement of Additional Information for the Fund, as well as the Prospectuses and Statements of Additional Information for the New Fund, materials that are incorporated by reference into their respective Prospectuses and Statements of Additional Information, and other information.
I. MISCELLANEOUS ISSUES
A. OTHER BUSINESS
The Board knows of no other business to be brought before the Special Meeting. If any other matters come before the Meeting, the Board intends that proxies that do not contain specific restrictions to the contrary will be voted on those matters in accordance with the judgment of the persons named in the enclosed form of proxy.
B. NEXT MEETING OF SHAREHOLDERS
The Fund is not required and does not intend to hold annual or other periodic meetings of shareholders except as required by the 1940 Act. By observing this policy, the Fund seeks to avoid the expenses customarily incurred in the preparation of proxy material and the holding of shareholder meetings, as well as the related expenditure of staff time. If the Reorganization is not completed, the next meeting of the shareholders of the Fund will be held at such time as the Board may determine or at such time as may be legally required. Any shareholder proposal intended to be presented at such meeting must be received by the Trust at its office at a reasonable time before the Trust begins to print and mail its proxy, as determined by the Board, to be included in the Fund’s proxy statement and form of proxy relating to that meeting, and must satisfy all other legal requirements.
C. LEGAL MATTERS
Certain legal matters in connection with the issuance of the New Fund Shares and the tax consequences of the reorganization will be passed upon by Blank Rome LLP, The Chrysler Building, 405 Lexington Avenue, New York, New York 10174.
D. EXPERTS
The financial statements of the Fund for the year ended January 31, 2005, contained in the Fund’s 2004 Annual Report to Shareholders, have been audited by Tait, Weller & Baker, Registered Independent Public Accounting Firm, as stated in their report dated March 18, 2005, which are incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given their authority as experts in accounting and auditing.
This Statement of Additional Information is not a prospectus and should be read in conjunction with the Proxy Statement/Prospectus dated June 1 , 2005 relating to the Special Meeting of Shareholders (the “Special Meeting”) of the of Jacobs & Company Mutual Fund (the “Fund”), a series of the Advisors Series Trust (the “Trust”) to be held on Ju ly 15, 2005 The Special Meeting is being held to consider a proposal to approve an Agreement and Plan of Reorganization (the “Plan”) whereby substantially all of the assets of the Fund will be transferred into a newly formed series (the “New Fund”) of Northern Lights Fund Trust (“Northern Lights”), in exchange for shares of the New Fund and the New Fund’s assumption of the Fund’s liabilities (the “Reorganization”). Copies of the Proxy Statement/Prospectus, which has been filed with the Securities and Exchange Commission, may be obtained, without charge, by writing to Jacobs & Company, or by calling 1-877-560-6823.
The following documents, each of which accompanies this Statement of Additional Information, are incorporated by reference herein:
(1) The Statement of Additional Information of the Fund, dated May 31 , 200 5 ; and
(2) The Annual Report to Shareholders of the Fund for the fiscal year ended January 31, 2005.
(3) The Semi-Annual Report to Shareholders of the Fund for the six months ended July 31, 2004, containing unaudited financial statements.
This Statement of Additional Information consists of this cover page and the documents described above.
Because the New Fund has not yet commenced operations, Annual or Semi-Annual Reports to Shareholders are not available. Similarly, because the Fund is being acquired by the New Fund, pro forma financial statements are not provided in this Statement of Additional Information in connection with the proposed reorganization.
_________________________________________
PART C
NORTHERN LIGHTS FUND TRUST
OTHER INFORMATION
_________________________________________
ITEM 15. INDEMNIFICATION
Article VI of Registrant's By-Laws states as follows:
6.01 AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this Article, “agent” means any person who is or was a trustee, officer, employee or other agent of this Trust or is or was serving at the request of this Trust as a trustee, director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise or was a trustee, director, officer, employee or agent of a foreign or domestic corporation which was a predecessor of another enterprise at the request of such predecessor entity; “proceeding” means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and “expenses” includes without limitation attorney’s fees and any expenses of establishing a right to indemnification under this Article .
6.02 ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of this Trust) by reason of the fact that such person is or was an agent of this Trust, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if that person acted in good faith and in a manner that person reasonably believed to be in the best interests of this Trust and in the case of a criminal proceeding, had no reasonable cause to believe the conduct of that person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contenders or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of this Trust or that the person had reasonable cause to believe that the person’s conduct was unlawful.
6.03 ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of this Trust to procure a judgment in its favor by reason of the fact that the person is or was an agent of this Trust, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of that action if that person acted in good faith, in a manner that person believed to be in the best interests of this Trust and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.
6.04 EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to the contrary contained herein, there shall be no right to 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 agent’s office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue or matter as to which that person shall have been adjudged to be liable in the performance of that person’s duty to this Trust, 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 circumstances of the case, that person was not liable by reason of the disabling conduct set forth in the preceding paragraph and is fairly and reasonably entitled to indemnity for the expenses which the court shall determine; or
(b) In respect of any claim, issue, or matter as to which that person 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
(c) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval, or of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval, unless the required approval set forth in Section 6 of this Article is obtained.
6.05 SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this Trust has been successful on the merits in defense of any proceeding referred to in Sections 2 or 3 of this Article or in defense of any claim, issue or matter therein, before the court or other body before whom the proceeding was brought, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith, provided that the Board of Trustees, including a majority who are disinterested, non-party Trustees, also determines that based upon a review of the facts, the agent was not liable by reason of the disabling conduct referred to in Section 4 of this Article.
6.06 REQUIRED APPROVAL. Except as provided in Section 5 of this Article, any indemnification under this Article shall be made by this Trust only if authorized in the specific case on a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in Sections 2 or 3 of this Article and is not prohibited from indemnification because of the disabling conduct set forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of trustees who are not parties to the proceeding and are not interested persons of the Trust (as defined in the Investment Company Act of 1940); or
(b) A written opinion by an independent legal counsel.
6.07 ADVANCE OF EXPENSES. Expenses incurred in defending any proceeding may be advanced by this Trust before the final disposition of the proceeding on receipt of an undertaking by or on behalf of the agent to repay the amount of the advance unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this Article, provided the agent provides a security for his undertaking, or a majority of a quorum of the disinterested, non-party trustees, or an independent legal counsel in a written opinion, determine that based on a review of readily available facts, there is reason to believe that said agent ultimately will be found entitled to indemnification.
6.08 OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article shall affect any right to indemnification to which persons other than trustees and officers of this Trust or any subsidiary hereof may be entitled by contract or otherwise.
6.09 LIMITATIONS. No indemnification or advance shall be made under this Article, except as provided in Sections 5 or 6 in any circumstances where it appears:
(a) That it would be inconsistent with a provision of the Agreement and Declaration of Trust, a resolution of the shareholders, or an agreement in effect at the time of accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.
6.10 INSURANCE. Upon and in the event of a determination by the Board of Trustees of this Trust to purchase such insurance, this Trust shall purchase and maintain insurance on behalf of any agent of this Trust against any liability asserted against or incurred by the agent in such capacity or arising out of the agent’s status as such, but only to the extent that this Trust would have the power to indemnify the agent against that liability under the provisions of this Article.
6.11 FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in that person’ s capacity as such, even though that person may also be an agent of this Trust as defined in Section 1 of this Article. Nothing contained in this Article shall limit any right to indemnification to which such a trustee, investment manager, or other fiduciary may be entitled by contract or otherwise which shall be enforceable to the extent permitted by applicable law other than this Article.
ITEM 16. EXHIBITS.
1.
Agreement and Declaration of Trust(1)
2.
By-Laws(1)
3.
Not Applicable.
4.
Form of Agreement and Plan of Reorganization. (4)
5.
Not Applicable.
6.
(a) Form of Investment Advisory Agreement (1)
(b)Form of Operating Expenses Limitation Agreement (3)
7.
(a)Form of Distribution Agreement (3)
8.
Not Applicable.
9.
Form of Custodian Agreement(1)
10.
Rule 12b-1 Plan (1)
11.
Opinion of Counsel regarding legality of issuance of shares and other matters. (2)
12.
Form of Opinion of Counsel on tax matters (2)
13.
(a) Form of Administration Service Agreement(1)
(b) Form of Fund Accounting Service Agreement(1)
(c) Form of Transfer Agency Service Agreement(1)
14.
Independent Auditor's Consent (2)
15.
Not Applicable.
16.
Power of Attorney(3)
17.
(a)Form of Proxy Ballot(2)
(b) Prospectus for Jacobs & Company Mutual Fund, a series of Northern Lights Fund Trust, filed May 31 , 2005 (5)
(c) Statement of Additional Information for Jacobs & Company Mutual Fund, a series of Northern Lights Fund Trust, filed May 31 , 2005 (5)
(1)
Previously filed with the Registration Statement on Form N-1A (File No. 333-122917) on February 18, 2005, and is incorporated herein by this reference.
(2)
Filed herewith.
(3)
Previously filed with the Pre-Effective Amendment Number 1 to the Trust’s Registration Statement on Form N-1A on April 15, 2005, and is incorporated herein by this reference.
(4)
Previously filed with the Registration Statement on Form N-14 (File No. 333-124113) on April 18, 2005 and is incorporated herein by reference.
(5)
Previously filed with the Post-Effective Amendment Number 2 to the Trust’s Registration Statement on Form N-1A on May 31, 2005, and is incorporated herein by this reference.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that it will file an Amendment that will include a copy of the final tax opinion of counsel.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been signed on behalf of the Registrant, in the City of Hauppauge and State of New York, on June 1 , 2005.
NORTHERN LIGHTS FUND TRUST
/s/ Michael J. Wagner
Michael J. Wagner
President and Principal Executive Officer
As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on June 1 , 2005:
Signature
Title
/s/ Michael Miola*
Michael Miola
Trustee
/s/ L. Merill Bryan*
L. Merill Bryan
Trustee
/s/ Anthony J. Hertl*
Anthony J. Hertl
Trustee
/s/Gary Lanzen*
Gary Lanzen
Trustee
/s/ Michael J. Wagner
Michael J. Wagner
President and Principal Executive Officer
/s/ Emile R. Molineaux
Emile R. Molineaux
Secretary
/s/Andrew Rogers
Andrew Rogers
Treasurer and Principal Financial Officer
*/s/
Emile R. Molineaux
Emile R. Molineaux
Attorney-in-Fact pursuant
to Power of Attorney.
EXHIBIT INDEX
Exhibit
Exhibit No.
Opinion and Consent of Counsel Regarding the Issuance of Shares and Other Matters
EX.99.11
Form of Opinion of Counsel on Tax Matters
EX.99.12
Consent of Independent Registered Public Accounting Firm
EX.99.14.
Proxy Card
EX.99.14
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