EMPO Empowered Products Inc (CE)

Investment Advisor

 

Capital Management Associates, Inc.

140 Broadway

New York, New York 10005

 

1-888-626-3863

 

The Securities and Exchange Commission has not approved or disapproved the securities being offered by this prospectus or determined whether this prospectus is accurate and complete.  Any representation to the contrary is a criminal offense.

 

Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution.  Shares are not insured by the FDIC, Federal Reserve Board, or any other agency and are subject to investment risks including possible loss of principal amount invested.  Neither the Fund nor the Fund’s distributor is a bank.  You should read the prospectus carefully before you invest or send money.

The SAI and the Fund’s annual and semi-annual reports are available, without charge, upon request by calling 1-888-626-3863. For shareholder inquiries about the fund please call 1-888-626-3863.

 

 

Table of Contents

Page

 

SUMMARY	2
INVESTMENT OBJECTIVE	2
FEES AND EXPENSES OF THE FUND	2
SHAREHOLDER FEES	2
ANNUAL FUND OPERATING EXPENSES	2
EXPENSE EXAMPLE	2
PORTFOLIO TURNOVER	3
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND	3
PERFORMANCE	4
MANAGEMENT	5
PURCHASE AND SALE OF FUND SHARES	5
TAX INFORMATION	5
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES	5
INVESTMENT OBJECTIVE, STRATEGIES, RISKS AND PORTFOLIO HOLDINGS	5
INVESTMENT OBJECTIVE	5
PRINCIPAL INVESTMENT STRATEGIES	6
PRINCIPAL RISKS OF INVESTING IN THE FUND	6
OTHER INVESTMENT POLICIES	7
DISCLOSURE OF PORTFOLIO HOLDINGS	8
MANAGEMENT OF THE FUND	8
THE INVESTMENT ADVISOR	8
THE ADMINISTRATOR AND TRANSFER AGENT	9
THE DISTRIBUTOR	9
ADDITIONAL INFORMATION ON EXPENSES	9
INVESTING IN THE FUND	10
PURCHASE OPTIONS	10
INSTITUTIONAL SHARES	10
INVESTOR SHARES	10
PURCHASE AND REDEMPTION PRICE	12
PURCHASING SHARES	13
REDEEMING YOUR SHARES	14
PURCHASING OR REDEEMING SHARES THROUGH A FINANCIAL INTERMEDIARY	16
FREQUENT PURCHASES AND REDEMPTIONS	16
OTHER IMPORTANT INFORMATION	17
DIVIDENDS, DISTRIBUTIONS, AND TAXES	18
BENCHMARK DESCRIPTIONS	18
FINANCIAL HIGHLIGHTS	19

 

 

Shareholder Fees ( fees paid directly from your investment)

 

	Institutional Shares	Investor Shares
Maximum Sales Charge (Load) Imposed on Purchases  (as a percentage of offering price)	None	3.00%
Redemption Fee (as a percentage of the amount redeemed, if applicable).	None	None

	Institutional Shares	Investor Shares
Management Fees	1.00%	1.00%
Distribution and Service (12b-1) Fees	0.00%	0.75%
Other Expenses	0.75%	0.75%
Acquired Fund Fees and Expenses	0.02%	0.02%
Total Annual Fund Operating Expenses 1	1.77%	2.52%
Fee Waiver and/or Expense Reimbursement 2	(0.25)%	(0.25)%
Total Annual Fund Operating Expenses after Fee Waiver and/or Expense Reimbursement 1, 2	1.52%	2.27%

Calendar Year Returns

Institutional Shares

 

 

Quarterly Returns During This Time Period
	Highest	15.15% (quarter ended June 30, 2009)
	Lowest	(25.85)% (quarter ended December 31, 2008)
	Year to Date	31.47 % (quarter ended December 31, 2013)

 

Average Annual Total Returns (For the Period Ended December 31, 2013)	Past 1 Year	Past 5 Years	Past 10 Years
Capital Management Mid-Cap Fund – Institutional Shares
Before taxes	31.47%	16.14%	7.41%
After taxes on distributions	29.96%	15.78%	6.69%
After taxes on distributions and sale of shares	19.01%	13.06%	6.06%
Capital Management Mid-Cap Fund – Investor Shares    Before taxes  (includes maximum sales loads)	26.61%	14.58%	6.30%
Russell Mid-Cap Value Index (reflects no deduction for fees, expenses or taxes)	33.46%	21.15%	10.25%
S&P 500 Total Return Index(reflects no deduction for fees, expenses or taxes)	32.39%	17.93%	7.40%

Institutional Shares		Investor Shares
$25,000 minimum initial investment and minimum subsequent investment is $500 ($100 if participating in the automatic investment plan).		$1,000 minimum initial investment and minimum subsequent investment is $500 ($100 if participating in the automatic investment plan).

INVESTMENT OBJECTIVE, STRATEGIES, RISKS AND PORTFOLIO HOLDINGS

INVESTMENT OBJECTIVE

 

The investment objective of the Capital Management Mid-Cap Fund is to seek long-term capital appreciation.  The Fund’s investment objective may be changed without shareholder approval.

 

 

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PRINCIPAL INVESTMENT STRATEGIES

 

The Fund, which is a diversified separate investment portfolio of the Trust, pursues its investment objective by investing primarily in equity securities of medium-capitalization (“mid-cap”) companies.  The Fund considers a mid-cap company to be one that has market capitalization, measured at the time the Fund purchases the security, within the range of $1.5 billion to $12.5 billion.

 

The Fund’s investments in mid-cap companies will be primarily in equity securities of such companies, such as common and preferred stock and securities convertible into common stock.  The Fund intends to invest in a diversified group of mid-cap companies and will not concentrate its investments in any one industry or group.

 

Under normal market conditions, the Fund will invest at least 90% of its total assets in equity securities, of which at least 80% of its total assets will be invested in the equity securities of mid-cap companies, as measured at the time of purchase.  This investment policy may be changed without shareholder approval upon at least 60 days’ prior written notice to the shareholders.

 

While the Fund’s primary focus is investment in equity securities, the Fund may sell a security short (i.e., sell a security borrowed from a broker) if the Advisor expects the market price for the security to drop in the future.  When the Fund makes a short sale of a security, the Fund will have to replace the security in the future, whether or not the price declines.  The Fund may hold up to 20% of its net assets in short positions at any time.

 

In selecting portfolio securities, the Advisor uses various screens and models to produce a potential universe of approximately 1,100 companies.  Then through fundamental research, the Advisor selects from that universe companies whose current share price is relatively undervalued.  This process may include visits and/or meetings with company management and contacts with industry experts and suppliers.  Final investment decisions are made by the Advisor’s Portfolio Manager.

 

The Advisor considers selling or reducing the Fund’s holding in a security if the security no longer meets the Advisor’s investment criteria, the company is no longer considered a mid-cap company or the Advisor believes a more attractive investment alternative is available.

PRINCIPAL RISKS OF INVESTING IN THE FUND

 

An investment in the Fund is subject to investment risks, including the possible loss of some or all of the principal amount invested.  There can be no assurance that the Fund will be successful in meeting its investment objective.  The Fund is intended for aggressive investors seeking above-average gains and are willing to accept the risks involved in investing in the securities of mid-cap companies.

 

Since the Fund’s investment strategy utilizes equity securities (concentrating on mid-cap company securities), short-term investment instruments, and short sales, the Fund has some exposure to the risks associated with each of these investments.

 

Market Risk.   Securities markets are volatile and prices of all securities may decline when markets decline generally.  Accordingly, the price of and the income generated by the Fund’s securities may decline in response to, among other things, adverse changes in investor sentiment, general economic and market conditions, regional or global instability, interest rate fluctuations or other factors that may cause the securities markets to decline generally.

 

Risks related to Other Equity Securities .  In addition to common stocks, the equity securities in the Fund’s portfolio may include preferred stock and convertible securities.  Like common stocks, the value of these equity securities may fluctuate in response to many factors, including the activities of the issuer, general market and economic conditions, interest rates, and specific industry changes.  Also, regardless of any one company’s particular prospects, a declining stock market may produce a decline in prices for all equity securities, which could also result in losses for the Fund.  Convertible securities entitle the holder to receive interest payments or a dividend preference until the security matures, is redeemed, or the conversion feature is exercised.  As a result of the conversion feature, the interest rate or dividend preference is generally less than if the securities were non-convertible.

 

 

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Mid-Cap Securities .  Investing in the securities of mid cap companies generally involves substantially greater risk than investing in larger, more established companies.  This greater risk is, in part, attributable to the fact that the securities of mid-cap companies usually have more limited marketability and, therefore, may be more volatile than securities of larger, more established companies or the market averages in general.  Because mid-cap companies normally have fewer shares outstanding than larger companies, it may be more difficult to buy or sell significant amounts of such shares without an unfavorable impact on prevailing prices.  Another risk factor is that mid-cap companies often have limited product lines, markets, or financial resources and may lack management depth.  Additionally, mid-cap companies are typically subject to greater changes in earnings and business prospects than are larger, more established companies.  Mid-cap companies may not be well-known to the investing public, may not be followed by the financial press or industry analysts, and may not have institutional ownership.  These factors affect the Advisor’s access to information about the companies and the stability of the markets for the companies’ securities.  Mid-cap companies may be more vulnerable than larger companies to adverse business or economic developments. Although investing in securities of smaller companies offers potential above average returns if the companies are successful, the risk exists that the companies will not succeed.   If the companies do not succeed, the prices of the companies’ shares could dramatically decline in value.  Therefore, an investment in the Fund may involve a substantially greater degree of risk than an investment in other mutual funds that seek capital growth by investing in more established, larger companies.  The Advisor’s ability to choose suitable investments also has a significant impact on the ability of the Fund to achieve its investment objective.

 

Portfolio Management Risk.   The strategies used and securities selected by the Fund’s Advisor may fail to produce the intended result and the Fund may not achieve its objective.  The securities selected for the Fund may not perform as well as other securities that were consistent with the Fund’s investment strategy, but were not selected for the Fund.  As a result, the Fund may suffer losses or underperform other funds with the same investment objective or strategies, even in a rising market. The performance of the Fund will decline and may be worse than the performance of equity funds that focus on other types of equities or have a broader investment style when the Advisor’s management style (generally, value-oriented mid-cap equity) is out-of-favor in the market.  Since different types of equity securities ( e.g. , large-cap, mid-cap, small-cap) tend to shift into and out of favor with investors depending on market and economic conditions, the performance of the Fund may also be worse than the performance of equity funds that focus on other types of equities or have a broader investment style when the Advisor’s management style is out-of-favor. The performance of the Fund may be better or worse than the performance of equity funds that focus on other types of equities or have a broader investment style.

Short Sales Risk.   As explained above, the Fund may establish a short position in a stock by selling borrowed shares of the stock.  Borrowed shares must be repaid (i.e., short positions must be “covered”) whether or not the stock’s price declines.  When the price of any stock that the Fund has sold short rises above the price at which the Fund borrowed and sold the stock, then the Fund may lose money on the short sale.  Accordingly, the Fund is likely to lose value on its short sales in a rising market.  If the broker from whom the stock was borrowed requires that the stock be repaid, then the Fund could be forced to cover short positions earlier than the Fund otherwise would.  If the Fund does not have the assets to cover a short sale, then the Fund’s potential losses on the short will be unlimited because the security’s price may appreciate indefinitely.

OTHER INVESTMENT POLICIES

 

An investment in the Fund should not be considered a complete investment program.  Whether the Fund is an appropriate investment for an investor will depend largely on his/her financial resources and individual investment goals and objectives.  Investors who engage in short-term trading and/or other speculative strategies and styles will not find the Fund to be an appropriate investment vehicle if they want to invest in the Fund for a short period of time.

 

As a temporary defensive measure in response to adverse market, economic, political, or other conditions, the Advisor may determine from time to time that market conditions warrant investing in investment-grade bonds, U.S. government securities, repurchase agreements, money market instruments, and to the extent permitted by applicable law and the Fund’s investment restrictions, shares of other investment companies.  Under such circumstances, the Advisor may invest up to 100% of the Fund’s assets in these investments.  Since investment companies investing in other investment companies pay management fees and other expenses relating to those investment companies, shareholders of the Fund would indirectly pay both the Fund’s expenses and the expenses relating to those other investment companies with respect to the Fund’s assets invested in such investment companies.  To the extent the Fund is invested in short-term investments, it will not be pursuing and may not achieve its investment objective.  Under normal circumstances, however, the Fund may also hold money market or repurchase agreement instruments for funds awaiting investment, to accumulate cash for anticipated purchases of portfolio securities, to allow for shareholder redemptions, and to provide for Fund operating expenses.

 

 

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DISCLOSURE OF PORTFOLIO HOLDINGS

 

A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund’s SAI.

MANAGEMENT OF THE FUND

THE INVESTMENT ADVISOR

 

The Fund’s investment advisor is Capital Management Associates, Inc., 140 Broadway, New York, New York 10005.  The Advisor serves in that capacity pursuant to an advisory contract with the Trust on behalf of the Fund.  Subject to the authority of the Board of Trustees of the Trust (“Trustees”), the Advisor provides guidance and policy direction in connection with its daily management of the Fund’s assets.  The Advisor manages the investment and reinvestment of the Fund’s assets.  The Advisor is also responsible for the selection of broker-dealers through which the Fund executes portfolio transactions, subject to the brokerage policies established by the Trustees, and it provides certain executive personnel to the Fund.

 

The Advisor is registered as an investment advisor with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended.  The Advisor, organized as a New York corporation in 1982, is controlled by its officers and directors, with the principal shareholders being J.V. Shields, Jr. and David V. Shields.  The Shields brothers have been affiliated with the Advisor since its inception.  Ralph J. Scarpa is responsible for the day-to-day management of the Fund’s portfolio (“Portfolio Manager”).  Mr. Scarpa has been the President of the Advisor since January 1, 2007 and has been affiliated with the Advisor since 1995.  Prior to becoming President of the Advisor, Mr. Scarpa served as a Portfolio Manager of the Advisor.  Mr. Scarpa is also Co-CEO and Managing Member of Wellington Shields & Co., LLC (“WSC”), the distributor for the Fund.  The Advisor has been managing the Fund since its inception and has been providing investment advice to investment companies, individuals, corporations, pension and profit sharing plans, endowments, and other business and private accounts since 1982.  Mr. Scarpa also serves as Co-CEO and President of Wellington Shields Capital Management, an investment advisory firm registered with the SEC and an affiliate of WSC.  The Fund’s SAI provides additional information about the Portfolio Manager’s compensation, other accounts managed by the Portfolio Manager, and the Portfolio Manager’s ownership of securities in the Fund.

 

The Advisor’s Compensation.   As full compensation for the investment advisory services provided to the Fund, the Fund pays the Advisor monthly compensation based on the Fund’s daily average net assets at the annual rate of 1.00% of the first $100 million of the Fund’s net assets, 0.90% of the next $150 million, 0.85% of the next $250 million, and 0.80% of all assets over $500 million.  During the fiscal year ended November 30, 2013, the Advisor waived a portion of its advisory fee in the amount of $41,771.  As a result, the advisory fee paid to the Advisor by the Fund as a percentage of average annual net assets for the last fiscal year was approximately 0.75%.

 

Disclosure Regarding Approval of the Investment Advisory Contract.   A discussion regarding the Trustees’ basis for approving the renewal of the investment advisory contract for the Fund is available in the Fund’s Annual Report to shareholders for the fiscal year ended November 30, 2013 and, when available, the Annual Report for the fiscal year ending November 30, 2014.  You may obtain a copy of these Annual Reports, free of charge, upon request to the Fund.

 

Expense Limitation Agreement.   In the interest of limiting expenses of the Fund, the Advisor has entered into an expense limitation agreement with the Trust, with respect to the Fund (“Expense Limitation Agreement”), pursuant to which the Advisor has agreed to waive or limit its fees and to assume other expenses so that the total annual operating expenses of the Fund (other than interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, and amounts, if any, payable pursuant to a Rule 12b-1 Plan) are limited to 1.50% of the average daily net assets of the Fund through the period ending April 1, 2015.  It is expected that the Expense Limitation Agreement will continue from year-to-year thereafter, provided such continuance is specifically approved by a majority of the Trustees who (i) are not “interested persons” of the Trust or any other party to the Expense Limitation Agreement, as defined in the Investment Company Act of 1940, as amended (“1940 Act”); and (ii) have no direct or indirect financial interest in the operation of this Expense Limitation Agreement.  The Expense Limitation Agreement may also be terminated by the Advisor and the Trust at the end of the then current term upon not less than 90-days’ notice to the other party as set forth in the Expense Limitation Agreement.

 

 

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The Fund may, at a later date, reimburse the Advisor the management fees waived or limited and other expenses assumed and paid by the Advisor pursuant to the Expense Limitation Agreement during any of the previous three fiscal years, provided the Fund has reached a sufficient asset size to permit such reimbursement to be made without causing the total annual expense ratio of the Fund to exceed the percentage limits stated above.  Consequently, no reimbursement by the Fund will be made unless: (i) the Fund’s assets exceed $10 million; (ii) the Fund’s total annual expense ratio is less than the percentage limits stated above; and (iii) the payment of such reimbursement has been approved by the Trustees on a quarterly basis.

 

Brokerage Practices.   In selecting brokers and dealers to execute portfolio transactions, the Advisor may consider research and brokerage services furnished to the Advisor or its affiliates.  The Advisor may not consider sales of shares of the Fund as a factor in the selection of brokers and dealers, but may place portfolio transactions with brokers and dealers that promote or sell the Fund’s shares so long as such transactions are done in accordance with the policies and procedures established by the Trustees that are designed to ensure that the selection is based on the quality of execution and not on sales efforts.  When placing portfolio transactions with a broker or dealer, the Advisor may aggregate securities to be sold or purchased for the Fund with those to be sold or purchased for other advisory accounts managed by the Advisor.  In aggregating such securities, the Advisor will average the transaction as to price and will allocate available investments in a manner which the Advisor believes to be fair and reasonable to the Fund and such other advisory accounts.  An aggregated order will generally be allocated on a pro rata basis among all participating accounts, based on the relative dollar values of the participating accounts, or using any other method deemed to be fair and reasonable to the Fund and the participating accounts, with any exceptions to such methods involving the Trust being reported by the Advisor to the Trustees.  Certain securities trades will be cleared through Wellington Shields & Co., LLC, a registered broker-dealer affiliate of the Advisor and the distributor of the Fund.

 

The 1940 Act generally prohibits the Fund from engaging in principal securities transactions with an affiliate of the Advisor.  Thus, the Fund does not engage in principal transactions with any affiliate of the Advisor.  The Fund has adopted procedures, under Rule 17e-1 under the 1940 Act, that are reasonably designed to provide that any brokerage commission the Fund pays to an affiliate of the Advisor does not exceed the usual and customary broker’s commission.  In addition, the Fund will adhere to Section 11(a) of the Securities Exchange Act of 1934 and any applicable rules thereunder governing floor trading.

 

THE ADMINISTRATOR AND TRANSFER AGENT

 

Matrix 360 Administration, LLC (“Matrix”) serves as the Fund administrator providing the Fund with certain administrative, fund accounting, and compliance services.  In addition, Matrix serves as the transfer agent and dividend disbursing agent of the Fund.  As indicated later in the section of this prospectus entitled “Investing in the Fund,” Matrix will handle your orders to purchase and redeem shares of the Fund and will disburse dividends paid by the Fund.  Matrix also makes available the office space, equipment, personnel, and facilities required to provide the foregoing services to the Fund.

 

THE DISTRIBUTOR

 

Wellington Shields & Co., LLC (“Distributor”) is the principal underwriter and distributor of the Fund’s shares and serves as the Fund’s exclusive agent for the distribution of Fund shares.  The Distributor may sell the Fund’s shares to or through qualified securities dealers and others.

ADDITIONAL INFORMATION ON EXPENSES

 

Other Expenses.   In addition to the management fees and Rule 12b-1 fees for the Investor Shares of the Fund, the Fund pays all expenses not assumed by the Fund’s Advisor, including, without limitation: the fees and expenses of its administrator, custodian, transfer agent, independent registered public accounting firm and legal counsel; the costs of printing and mailing to shareholders annual and semi-annual reports, proxy statements, prospectuses, statements of additional information, and supplements thereto; the costs of printing registration statements; bank transaction charges; any proxy solicitors’ fees and expenses; filing fees; any federal, state, or local income or other taxes; any interest; any membership fees of the Investment Company Institute and similar organizations; fidelity bond and Trustees’ liability insurance premiums; and any extraordinary expenses, such as indemnification payments or damages awarded in litigation or settlements made.  All general Trust expenses are allocated among and charged to the assets of each separate series of the Trust, such as the Fund, on a basis that the Trustees deem fair and equitable, which may be on the basis of relative net assets of each series or the nature of the services performed and relative applicability to each series.

 

 

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Annual Fund Operating Expenses.   In the section entitled “Summary – Fees and Expenses of the Fund” the “Total Annual Fund Operating Expenses” and “Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement” are based upon actual expenses incurred by the Fund for the fiscal year ended November 30, 2013.

INVESTING IN THE FUND

 

PURCHASE OPTIONS

 

The Fund offers two different classes of shares through this prospectus.  Fund shares may be purchased by any account managed by the Advisor and any other institutional investor or broker-dealer authorized to sell shares of the Fund.  The share classes available to an investor may vary depending on how the investor wishes to purchase shares of the Fund.  The following is a summary of each share class.

 

Institutional Shares

 

•

No front-end sales charge.

•

No contingent deferred sales charge.

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No distribution and service plan (Rule 12b-1) fees.

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$25,000 minimum initial investment.

•

$500 minimum additional investment ($100 if participating in the automatic investment plan).

•

No conversion feature.

 

Investor Shares

 

•

A maximum front-end sales charge of 3.00%, as described below.

•

No contingent deferred sales charge.

•

Distribution and service plan (Rule 12b-1) fees of 0.75%.

•

$1000 minimum initial investment.

•

$500 minimum additional investment ($100 if participating in the automatic investment plan).

•

No conversion feature.

 

When you purchase shares of the Fund, you must choose a share class.  If none is chosen, your investment will be made in the Investor Shares.

 

INSTITUTIONAL SHARES

 

Institutional Shares are sold and redeemed at net asset value.  Shares may be purchased by any account managed by the Advisor and any other institutional investor or any broker-dealer authorized to sell shares in the Fund.  The minimum initial investment is $25,000 and the minimum additional investment is $500 ($100 for those participating in the automatic investment plan).  The Fund may, in the Advisor’s sole discretion, accept certain accounts with less than the minimum investment.

 

INVESTOR SHARES

 

Investor Shares are sold subject to a maximum front-end sales charge (load) of 3.00%, so that the term “offering price” includes the front-end sales charge (load).  Shares are redeemed at net asset value.  Shares may be purchased by any account managed by the Advisor and any broker-dealer authorized to sell Fund shares.

 

The minimum initial investment is $1,000.  The minimum additional investment is $500 ($100 for those participating in the automatic investment plan).  The Fund may, in the Advisor’s sole discretion, waive such minimum investment amounts.

 

 

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Sales Charges

 

The public offering price of Investor Shares of the Fund equals net asset value plus a sales charge.  The Distributor receives this sales charge and may reallow it in the form of dealer discounts and brokerage commissions as follows:

 

Amount of Transaction At Public Offering Price	Sales Charge As % of Net Amount Invested	Sales Charge As % of Public Offering Price	Dealer Discounts and Brokerage Commissions as % of Public Offering Price
Less than $250,000	3.09%	3.00%	2.80%
$250,000 but less than $500,000	2.56%	2.50%	2.30%
$500,000 or more	2.04%	2.00%	1.80%

 

From time to time, dealers who receive dealer discounts and brokerage commissions from the Distributor may reallow all or a portion of such dealer discounts and brokerage commissions to other dealers or brokers.  Pursuant to the terms of the Distribution Agreement, the sales charge payable to the Distributor and the dealer discounts may be suspended, terminated, or amended.  The Distributor, at its expense, may, from time to time, provide additional promotional incentives to dealers who sell Fund shares.

 

Reduced Sales Charges

 

Concurrent Purchases.   For purposes of qualifying for a lower sales charge for Investor Shares, investors have the privilege of combining concurrent purchases of the Fund and any other series of the Trust affiliated with the Advisor and sold with a sales charge.  This privilege may be modified or eliminated at any time or from time to time by the Trust without notice thereof.

 

Rights of Accumulation .  The sales charge applicable to a purchase of Investor Shares is determined by adding the purchase price of shares to be purchased, including any concurrent purchases as described above, to the aggregate value (at the current offering price) of shares of the Fund previously purchased and then owned, provided the Distributor is notified by such person or his or her broker-dealer each time a purchase is made which would so qualify.  For example, a person who is purchasing Investor Shares with an aggregate value of $50,000 and who currently owns shares of the Fund with a value of $200,000 would pay a sales charge of 2.50% of the offering price on the new investment and 3.00% on the amount previously invested.

 

Letter of Intent.   Sales charges may also be reduced through an agreement to purchase a specified quantity of shares over a designated thirteen-month period by completing the “Letter of Intent” section of the Fund Shares Application.  Information about the “Letter of Intent” procedure, including its terms, is contained in the SAI.

 

Group Plans.   Shares of the Fund may be sold at a reduced or eliminated sales charge to certain Group Plans under which a sponsoring organization makes recommendations to, permits group solicitation of, or otherwise facilitates purchases by, its employees, members, or participants.  Information about such arrangements is available from the Distributor.

 

In order to obtain a reduced sales charge, it may be necessary at the time of purchase for a shareholder to inform the Fund, the Distributor, or his/her broker-dealer of the existence of other accounts or purchases which are eligible to be aggregated to obtain a reduced sales charge.  A shareholder may be required to provide to the Fund, the Distributor, or his/her broker-dealer certain information to verify his/her eligibility for a reduced sales charge.  This information may include, to the extent applicable, the following: (i) information or records regarding shares of the Fund or other funds eligible to be aggregated that are in accounts (e.g., retirement accounts) held by the shareholder at the Fund; (ii) information or records regarding shares of the Fund or other funds eligible to be aggregated that are in accounts held by the shareholder at broker-dealers; and (iii) information or records regarding shares of the Fund or other funds eligible to be aggregated that are in accounts held by related parties of the shareholder, such as members of the same family or certain qualified groups, at the Fund or at any broker-dealers.

 

See the SAI for additional information on reduced sales charges.  Complete information regarding the Fund's sales charges, as well as information regarding reduced sales charges (such as concurrent purchases, rights of accumulation, letters of intent, and group plans) and the terms and conditions for the purchase, pricing, and redemption of Fund shares is not available on the internet since the Fund does not have an internet website; however, further information is available by calling the Fund at 1-888-626-3863.

 

 

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Distribution of the Fund’s Shares

 

For the Investor Shares of the Fund, the Fund has adopted a Distribution Plan in accordance with Rule 12b-1 (“Distribution Plan”) under the 1940 Act.  Pursuant to the Distribution Plan, the Fund compensates the Distributor for services rendered and expenses borne in connection with activities primarily intended to result in the sale and distribution of the Fund’s Investor Shares (this compensation is commonly referred to as “12b-1 fees”).  Because the 12b-1 fees are paid out of the Fund’s assets on an on-going basis, these fees, over time, will increase the cost of your investment and may cost you more than paying other types of fees such as sales loads.

 

The Distribution Plan provides that the Fund may pay annually up to 0.75% of the average daily net assets of the Fund’s Investor Shares for activities primarily intended to result in the sale of those shares, including reimbursing entities for providing distribution and shareholder servicing with respect to the Fund’s Investor Shares.  Such expenditures, paid as service fees to any person who sells Investor Shares, may not exceed 0.25% of the Investor Shares’ average annual net asset value.

 

The Distribution Plan is known as a “compensation” plan because payments are made for services rendered to the Fund with respect to Investor Shares regardless of the level of expenditures made by the Distributor.  The Trustees will, however, take into account such expenditures for purposes of reviewing operations under the Distribution Plan and concerning their annual consideration of the Distribution Plan’s renewal.  The Distributor has indicated that it expects its expenditures to include, without limitation: (i) the printing and mailing to prospective investors of Fund prospectuses, statements of additional information, any supplements thereto and shareholder reports with respect to the Investor Shares of the Fund; (ii) the development, preparation, printing, and mailing of advertisements, sales literature, and other promotional materials describing and/or relating to the Investor Shares of the Fund; (iii) holding seminars and sales meetings designed to promote the distribution of the Fund’s Investor Shares; (iv) obtaining information and providing explanations to wholesale and retail distributors of the Fund’s investment objectives and policies and other information about the Fund; (v) training sales personnel regarding the Investor Shares of the Fund; and (vi) financing any other activity that the Distributor determines is primarily intended to result in the sale of Investor Shares.  The Distributor may also use a portion of the 12b-1 fees received to provide compensation to financial intermediaries and third-party broker-dealers for their services in connection with the sale of Investor Shares.

PURCHASE AND REDEMPTION PRICE

 

Determining the Fund’s Net Asset Value.   The price at which you purchase or redeem shares is based on the next calculation of net asset value after an order is received, subject to the order being accepted by the Fund in good form.  An order is considered to be in good form if it includes a complete and accurate application and payment in full of the purchase amount.  The Fund’s net asset value per share is calculated by dividing the value of the Fund’s total assets, less liabilities (including Fund expenses, which are accrued daily), by the total number of outstanding shares of the Fund.  The net asset value per share of the Fund is normally determined at the time regular trading closes on the New York Stock Exchange (“NYSE”), currently 4:00 p.m. Eastern time, Monday through Friday, except when the NYSE closes earlier.  The Fund does not calculate net asset value on holidays when the NYSE is closed.

 

The pricing and valuation of portfolio securities is determined in good faith in accordance with procedures established by, and under the direction of, the Trustees.  In determining the value of the Fund’s total assets, portfolio securities are generally calculated at market value by quotations from the primary market in which they are traded.  Instruments with maturities of 60 days or less are valued at amortized cost, which approximates market value.  The Fund normally uses third party pricing services to obtain market quotations.  Securities and assets for which representative market quotations are not readily available or which cannot be accurately valued using the Fund’s normal pricing procedures are valued at fair value as determined in good faith under policies approved by the Trustees.  Fair value pricing may be used, for example, in situations where (i) a portfolio security, such as a mid-cap stock, is so thinly traded that there have been no transactions for that stock over an extended period of time; (ii) the exchange on which the portfolio security is principally traded closes early; (iii) trading of the particular portfolio security is halted during the day and does not resume prior to the Fund’s net asset value calculation; or (iv) the validity of a market quotation received is questionable.  Pursuant to policies adopted by the Trustees, the Advisor consults with Matrix on a regular basis regarding the need for fair value pricing.  The Advisor is responsible for notifying the Trustees (or the Trust’s Fair Value Committee) when it believes that fair value pricing is required for a particular security.  The Fund’s policies regarding fair value pricing are intended to result in a calculation of the Fund’s net asset value that fairly reflects portfolio security values as of the time of pricing.  A portfolio security’s “fair value” price may differ from the price next available for the portfolio security using the Fund’s normal pricing procedures, and may differ substantially from the price at which the security may ultimately be traded or sold.  If the fair value price differs from the price that would have been determined using the Fund’s normal pricing procedures, a shareholder may receive more or less proceeds or shares from redemptions or purchases of Fund shares, respectively, than a shareholder would have otherwise received if the portfolio security were priced using the Fund’s normal pricing procedures.  The performance of the Fund may also be affected if a portfolio security’s fair value price were to differ from the security’s price using the Fund’s normal pricing procedures.  To the extent the Fund invests in other open-end investment companies that are registered under the 1940 Act, the Fund’s net asset value calculations are based upon the net asset value reported by such registered open-end investment companies, and the prospectuses for those companies explain the circumstances under which they will use fair value pricing and the effects of using such fair value pricing.  The Trustees monitor and evaluate the Fund’s use of fair value pricing, and periodically review the results of any fair valuation under the Fund’s policies.

 

 

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Additional information on the Fund’s valuation policies is available in the SAI.

 

Other Matters.   Purchases and redemptions of shares of the same class by the same shareholder on the same day will be netted for the Fund.

 

PURCHASING SHARES

 

You may make purchases directly from the Fund by mail or bank wire.  The Fund has also authorized one or more brokers to accept purchase and redemption orders on its behalf and such brokers are authorized to designate intermediaries to accept orders on behalf of the Fund.  Orders will be deemed to have been received by the Fund when an authorized broker, or broker-authorized designee, receives the order, subject to the order being accepted by the Fund in good form.  The orders will be priced at the Fund’s net asset value next computed after the orders are received by the authorized broker or broker-authorized designee.  Investors may also be charged a fee by a broker or agent if shares are purchased through a broker or agent.

  

The Fund reserves the right to (i) refuse to accept any request to purchase shares of the Fund for any reason or (ii) suspend its offering of shares at any time.

 

Regular Mail Orders.   Payment for shares must be made by check from a U.S. financial institution and payable in U.S. dollars.  Cash, money orders, and traveler’s checks will not be accepted by the Fund.  If checks are returned due to insufficient funds or other reasons, your purchase will be canceled.  You will also be responsible for any losses or expenses incurred by the Fund and Matrix.  The Fund will charge a $35 fee and may redeem shares of the Fund already owned by the purchaser or shares of another identically registered account in another series of the Trust to recover any such loss.  For regular mail orders, please complete a Fund Shares Application and mail it, along with your check made payable to the “ Capital Management Mid-Cap Fund ,” to:

 

Capital Management Mid-Cap Fund

Institutional Shares or Investor Shares (please specify)

c/o Matrix 360 Administration, LLC

4520 Main Street

Suite 1425

Kansas City, MO  64111

The application must contain your Social Security Number (“SSN”) or Taxpayer Identification Number (“TIN”).  If you have applied for a SSN or TIN at the time of completing your account application but you have not received your number, please indicate this on the application and include a copy of the form applying for the SSN or TIN.  Taxes are not withheld from distributions to U.S. investors if certain IRS requirements regarding the SSN or TIN are met and we have not been notified by the IRS that the particular U.S. investor is subject to back-up withholding.

 

By sending your check to the Fund, please be aware that you are authorizing the Fund to make a one-time electronic debit from your account at the financial institution indicated on your check.  Your bank account will be debited as early as the same day the Fund receives your payment in the amount of your check.  Your original check will be destroyed once processed, and you will not receive your canceled check back.  If the Fund cannot post the transaction electronically, you authorize the Fund to present an image copy of your check for payment.

 

 

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Bank Wire Orders.   Purchases may also be made through bank wire orders.  To establish a new account or to add to an existing account by wire, please call the Fund at 1-888-626-3863 for instructions.

 

Subsequent Investments.   You may also add to your account by mail or wire at any time by purchasing shares at the then current public offering price.  The minimum subsequent investment is $500.  Before adding funds by bank wire, please call the Fund at 1-888-626-3863 for wire instructions and to advise the Fund of the investment, dollar amount, and the account identification number.  Mail orders should include, if possible, the “Invest by Mail” stub that is attached to your Fund confirmation statement.  Otherwise, please identify your account in a letter accompanying your purchase payment.

  

Automatic Investment Plan.   The automatic investment plan enables shareholders to make regular monthly or quarterly investments in shares through automatic charges to their checking account.  With shareholder authorization and bank approval, the Fund will automatically charge the checking account for the amount specified ($100 minimum), which will be automatically invested in shares at the public offering price on or about the 21st day of the month.  The shareholder may change the amount of the investment or discontinue the plan at any time by writing to the Fund.

 

Exchange Feature.   You may exchange shares of the Fund for shares of any other series of the Trust offered for sale in the state in which you reside.  Shares may be exchanged for shares of any other series of the Trust at the net asset value plus the percentage difference between the sales charge applicable to those shares and any sales charge previously paid in connection with the shares being exchanged.  Prior to making an investment decision or giving us your instructions to exchange shares, please read the prospectus for the series in which you wish to invest.  The Trustees reserve the right to suspend, terminate, or amend the terms of the exchange privilege upon prior written notice to the shareholders.

 

Stock Certificates.   The Fund normally does not issue stock certificates.  Evidence of ownership of shares is provided through entry in the Fund’s share registry.  Investors will receive periodic account statements (and, where applicable, purchase confirmations) that will show the number of shares owned.

 

Important Information about Procedures for Opening a New Account.   Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act of 2001), the Fund is required to obtain, verify, and record information to enable the Fund to form a reasonable belief as to the identity of each customer who opens an account.  Consequently, when an investor opens an account, the Fund will ask for the investor’s name, street address, date of birth (for an individual), social security or other tax identification number (or proof that the investor has filed for such a number), and other information that will allow the Fund to identify the investor.  The Fund may also ask to see the investor’s driver’s license or other identifying documents.  An investor’s account application will not be considered “complete” and, therefore, an account will not be opened and the investor’s money will not be invested until the Fund receives this required information.  If after opening the investor’s account the Fund is unable to verify the investor’s identity after reasonable efforts, as determined by the Fund in its sole discretion, the Fund may (i) restrict redemptions and further investments until the investor’s identity is verified; and (ii) close the investor’s account without notice and return the investor’s redemption proceeds to the investor.  If the Fund closes an investor’s account because the Fund was unable to verify the investor’s identity, the Fund will value the account in accordance with the Fund’s next net asset value calculated after the investor’s account is closed.  In that case, the investor’s redemption proceeds may be worth more or less than the investor’s original investment.  The Fund will not be responsible for any losses incurred due to the Fund’s inability to verify the identity of any investor opening an account.

 

REDEEMING YOUR SHARES

 

Regular Mail Redemptions.   Regular mail redemption requests should be addressed to:

 

Capital Management Mid-Cap Fund

Institutional Shares or Investor Shares (please specify)

c/o Matrix 360 Administration, LLC

4520 Main Street

Suite 1425

Kansas City, MO  64111

 

 

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Regular mail redemption requests should include the following:

  

(1)

Your letter of instruction specifying the account number and number of shares, or the dollar amount, to be redeemed.  This request must be signed by all registered shareholders in the exact names in which they are registered;

(2)

Any required signature guarantees (see “Signature Guarantees” below); and

(3)

Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianships, corporations, partnerships, pension or profit sharing plans, and other organizations.

 

Your redemption proceeds normally will be sent to you within 7 days after receipt of your redemption request.  The Fund may delay forwarding a redemption check for recently purchased shares while it determines whether the purchase payment will be honored.  Such delay (which may take up to 15 days from the date of purchase) may be reduced or avoided if the purchase is made by certified check or wire transfer.  In all cases, the net asset value next determined after receipt of the request for redemption will be used in processing the redemption request.

 

Telephone and Bank Wire Redemptions.   Unless you decline the telephone transaction privileges on your account application, you may redeem shares of the Fund by telephone.  You may also redeem shares by bank wire under certain limited conditions.  The Fund will redeem shares in this manner when so requested by the shareholder only if the shareholder confirms redemption instructions in writing, using the instructions above.

 

The Fund may rely upon confirmation of redemption requests transmitted via facsimile (FAX# 215-830-8995).  The confirmation instructions must include the following:

 

(1)

The name of the Fund and the designation of class (Institutional or Investor);

(2)

Shareholder(s) name and account number;

(3)

Number of shares or dollar amount to be redeemed;

(4)

Instructions for transmittal of redemption proceeds to the shareholder; and

(5)

Shareholder(s) signature(s) as it/they appear(s) on the application then on file with the Fund.

 

Redemption proceeds will not be distributed until written confirmation of the redemption request is received, per the instructions above.  You can choose to have redemption proceeds mailed to you at your address of record, your financial institution, or to any other authorized person, or you can have the proceeds sent by wire transfer to your financial institution ($5,000 minimum).  Redemption proceeds cannot be wired on days in which your financial institution is not open for business.  You can change your redemption instructions anytime you wish by filing a letter including your new redemption instructions with the Fund.  See “Signature Guarantees” below.

 

The Fund in its discretion may choose to pass through to redeeming shareholders any charges imposed by the Fund’s custodian for wire redemptions.  If this cost is passed through to redeeming shareholders by the Fund, the charge will be deducted automatically from your account by redemption of shares in your account.  Your bank or brokerage firm may also impose a charge for processing the wire.  If wire transfer of funds is impossible or impractical, the redemption proceeds will be sent by mail to the designated account.

 

You may redeem shares, subject to the procedures outlined above, by calling the Fund at 1-888-626-3863.  Redemption proceeds will only be sent to the financial institution account or person named in your account application currently on file with the Fund.  Telephone redemption privileges authorize the Fund to act on telephone instructions from any person representing himself or herself to be the investor and reasonably believed by the Fund or its agents to be genuine.  The Fund or its agents will employ reasonable procedures, such as requiring a form of personal identification, to confirm that instructions are genuine.  The Fund, however, will not be liable for any losses due to unauthorized or fraudulent instructions.  The Fund will also not be liable for following telephone instructions reasonably believed to be genuine.

  

Systematic Withdrawal Plan.   A shareholder who owns shares of the Fund valued at $250,000 or more at the current offering price may establish a systematic withdrawal plan to receive a monthly or quarterly check in a stated amount not less than $100.  Each month or quarter, as specified, the Fund will automatically redeem sufficient shares from your account to meet the specified withdrawal amount.  The shareholder may establish this service whether dividends and distributions are reinvested in shares of the Fund or paid in cash.  Call or write the Fund for an application form.

 

 

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Small Accounts.   The Trustees reserve the right to redeem involuntarily any account having a balance of less than $250,000 for the Institutional Shares or $1,000 for the Investor Shares (due to redemptions, exchanges, or transfers, and not due to market action) upon 30-days’ prior written notice.  If the shareholder brings his account balance up to the applicable minimum for the share class during the notice period, the account will not be redeemed.  Redemptions from retirement plans may be subject to federal income tax withholding.

 

Signature Guarantees.   To protect your account and the Fund from fraud, signature guarantees may be required to be sure that you are the person who has authorized a change in registration or standing instructions for your account.  Signature guarantees are generally required for (i) change of registration requests; (ii) requests to establish or to change exchange privileges or telephone and bank wire redemption service other than through your initial account application; (iii) transactions where proceeds from redemptions, dividends, or distributions are sent to an address or financial institution differing from the address or financial institution of record; and (iv) redemption requests in excess of $50,000.  Signature guarantees are acceptable from a member bank of the Federal Reserve System, a savings and loan institution, credit union (if authorized under state law), registered broker-dealer, securities exchange, or association clearing agency and must appear on the written request for change of registration, establishment or change in exchange privileges, or redemption request.

 

Redemptions in Kind.   The Fund does not intend, under normal circumstances, to redeem its securities by payment in kind.  It is possible, however, that conditions may arise in the future which would, in the opinion of the Trustees, make it undesirable for the Fund to pay for all redemptions in cash.  In such cases, the Trustees may authorize payment to be made in readily marketable portfolio securities of the Fund.  Securities delivered in payment of redemptions would be valued at the same value assigned to them in computing the Fund’s net asset value per share.  Shareholders receiving them would incur brokerage costs when these securities are sold.  An irrevocable election has been filed under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay redemptions in cash, rather than in kind, to any shareholder of record of the Fund who redeems during any 90-day period, the lesser of (i) $250,000 or (ii) one percent (1%) of the Fund’s net asset value at the beginning of such period.

 

Miscellaneous.   All redemptions requests will be processed and payment with respect thereto will normally be made within seven (7) days after tender.  The Fund reserves the right to suspend any redemption request involving recently purchased shares until the check for the recently purchased shares has cleared.  The Fund may suspend redemptions, if permitted by the 1940 Act, for any period during which the NYSE is closed or during which trading is restricted by the SEC or if the SEC declares that an emergency exists.  Redemptions may also be suspended during other periods permitted by the SEC for the protection of the Fund’s shareholders.  During drastic economic and market changes, telephone redemption privileges may be difficult to implement.

 

PURCHASING OR REDEEMING SHARES THROUGH A FINANCIAL INTERMEDIARY

 

You may purchase or redeem shares of the Fund through an authorized financial intermediary (such as a financial planner or advisor).  To purchase or redeem shares based upon the net asset value of any given day, your financial intermediary must receive your order before the close of regular trading on the NYSE that day.  Your financial intermediary is responsible for transmitting all purchase and redemption requests, investment information, documentation, and money to the Fund on time.  Your financial intermediary may charge additional transaction fees for its services.

 

Certain financial intermediaries may have agreements with the Fund that allow them to enter confirmed purchase and redemption orders on behalf of clients and customers.  Under this arrangement, the financial intermediary must send your payment to the Fund by the time the Fund prices its shares on the following business day.

 

The Fund is not responsible for ensuring that a financial intermediary carries out its obligations.  You should look to the financial intermediary through whom you wish to invest for specific instructions on how to purchase or redeem shares of the Fund.

FREQUENT PURCHASES AND REDEMPTIONS

 

Frequent purchases and redemptions (“Frequent Trading”) of shares of the Fund may present a number of risks to other shareholders of the Fund.  These risks may include, among other things, dilution in the value of shares of the Fund held by long-term shareholders, interference with the efficient management by the Advisor of the Fund’s portfolio holdings, and increased brokerage and administration costs.  Due to the potential of a thin market for the Fund’s mid-cap portfolio securities, as well as overall adverse market, economic, political, or other conditions affecting the sale price of portfolio securities, the Fund could face untimely losses as a result of having to sell portfolio securities prematurely to meet redemptions.  Current shareholders of the Fund may face unfavorable impacts as mid-cap securities may be more volatile than securities for larger, more established companies and it may be more difficult to sell a significant amount of shares to meet redemptions in a limited market.  Frequent Trading may also increase portfolio turnover which may result in increased capital gains taxes for shareholders of the Fund.  These capital gains could include short-term capital gains taxed at ordinary income tax rates.

 

 

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The Trustees have adopted a policy that is intended to discourage and to identify such activity by shareholders of the Fund.  Under the Fund’s adopted policy, the Advisor has the discretion to refuse to accept further purchase and/or exchange orders from an investor if the Advisor believes the investor has a pattern of Frequent Trading that the Advisor considers not to be in the best interests of the other shareholders.  To assist the Advisor in identifying possible Frequent Trading patterns, Matrix provides a daily record of shareholder trades to the Advisor.  Matrix also assists the Advisor in monitoring and testing shareholder purchase and redemption orders for possible incidents of Frequent Trading.  Under the Fund’s policy regarding Frequent Trading, the Fund intends to limit investments from investor accounts that purchase and redeem shares over a period of less than ten days in which (i) the redemption amount is within ten percent of the previous purchase amount(s); (ii) the redemption amount is greater than $10,000; and (iii) two or more such redemptions occur during a 60 calendar day period.  In the event such a purchase and redemption pattern occurs, an investor account and any other account with the same taxpayer identification number will be precluded from investing in the Fund (including investments that are part of an exchange transaction) for at least 30 calendar days after the redemption transaction.

 

This policy is intended to apply uniformly, except that the Fund may not be able to identify or determine that a specific purchase and/or redemption is part of a pattern of Frequent Trading or that a specific investor is engaged in Frequent Trading, particularly with respect to transactions made through accounts such as omnibus accounts or accounts opened through third-party financial intermediaries such as broker-dealers and banks (“Intermediary Accounts”).  Therefore, this policy is not applied to omnibus accounts or Intermediary Accounts.  Omnibus account arrangements permit multiple investors to aggregate their respective share ownership positions and to purchase, redeem, and exchange Fund shares without the identity of the particular shareholders being known to the Fund.  Like omnibus accounts, Intermediary Accounts normally permit investors to purchase, redeem, and exchange Fund shares without the identity of the underlying shareholder being known to the Fund.  Accordingly, the ability of the Fund to monitor and detect Frequent Trading through omnibus accounts and Intermediary Accounts would be very limited, and there would be no guarantee that the Fund could identify shareholders who might be engaging in Frequent Trading through such accounts or curtail such trading.  The policy will not apply if the Advisor determines that a purchase and redemption pattern is not a Frequent Trading pattern intended to respond to short-term fluctuations in the securities markets, such as inadvertent errors that result in frequent purchases and redemptions.  Inadvertent errors shall include purchases and/or redemptions made unintentionally or by mistake (e.g., where an investor unintentionally or mistakenly invests in the Fund and redeems immediately after recognizing the error).  The investor shall have the burden of proving to the sole satisfaction of the Advisor that a frequent purchase and redemption pattern was the result of an inadvertent error.  In such a case, the Advisor may choose to accept further purchase and/or exchange orders for such investor account.

  

Intermediaries may apply frequent trading policies that differ from those described in this prospectus.  If you invest with the Fund through an intermediary, please read that firm’s program materials carefully to learn of any rules or fees that may apply.

 

Although the Fund has taken steps to discourage Frequent Trading of the Fund’s shares, there is no guarantee that such trading will not occur.

 

OTHER IMPORTANT INFORMATION

 

Commodity Exchange Act Matters. To the extent the Fund makes investments regulated by the Commodities Futures Trading Commission, it intends to so in accordance with Rule 4.5 under the Commodity Exchange Act (“CEA”). The Trust, on behalf of the Fund, has filed a notice of eligibility for exclusion from the definition of the term “commodity pool operator” in accordance with Rule 4.5 and therefore, the Fund is not subject to registration or regulation as a commodity pool operator under the CEA.

 

 

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DIVIDENDS, DISTRIBUTIONS AND TAXES

 

The following information is meant as a general summary for U.S. taxpayers.  Additional tax information appears in the SAI.  Shareholders should rely on their own tax advisors for advice about the particular federal, state, and local tax consequences to them of investing in the Fund.

 

The Fund will distribute most of its income and gains to its shareholders every year.  Dividends paid by the Fund derived from net investment income, if any, will generally be paid annually and capital gains distributions, if any, will be made at least annually.  Shareholders may elect to take dividends from net investment income or capital gains distributions, if any, in cash or reinvest them in additional Fund shares.  Although the Fund will not be taxed on amounts it distributes, shareholders will generally be taxed on distributions, regardless of whether distributions are paid by the Fund in cash or are reinvested in additional Fund shares.

 

A particular dividend distribution generally will be taxable as qualified dividend income, long-term capital gains, or ordinary income.  Qualified dividend income generally includes dividends paid by U.S. corporations and certain qualifying foreign corporations, provided the foreign corporation is not a passive foreign investment company.  Any distribution resulting from such qualified dividend income received by the Fund will be designated as qualified dividend income.  If the Fund designates a dividend distribution as qualified dividend income, it generally will be taxable to individual shareholders at the long-term capital gains tax rate provided certain holding period requirements are met.  If the Fund designates a dividend distribution as a capital gains distribution, it generally will be taxable to shareholders as long-term capital gains, regardless of how long the shareholders have held their Fund shares.  To the extent the Fund engages in increased portfolio turnover, short-term capital gains may be realized and any distribution resulting from such gains will be considered ordinary income for federal tax purposes.  All taxable dividends paid by the Fund other than those designated as qualified dividend income or capital gains distributions will be taxable as ordinary income to shareholders.

 

Taxable distributions paid by the Fund to corporate shareholders will be taxed at corporate tax rates.  Corporate shareholders may be entitled to a dividends received deduction (“DRD”) for a portion of the dividends paid and designated by the Fund as qualifying for the DRD.

 

If the Fund declares a dividend in October, November, or December but pays it in January, it will be taxable to shareholders as if the dividend had been received in the year it was declared.  Every year, each shareholder will receive a statement detailing the tax status of any Fund distributions for that year.  Distributions may be subject to state and local taxes, as well as federal taxes.

 

In general, a shareholder who sells or redeems shares will realize a capital gain or loss, which will be long-term or short-term depending upon the shareholder’s holding period for the Fund shares.  An exchange of shares may be treated as a sale and may be subject to tax.

 

As with all mutual funds, the Fund may be required to withhold U.S. federal income tax at the fourth lowest rate for taxpayers filing as unmarried individuals (presently 28%) for all taxable distributions payable to shareholders who fail to provide the Fund with their correct taxpayer identification numbers or to make required certifications, or who have been notified by the IRS that they are subject to backup withholding.  Backup withholding is not an additional tax; rather, it is a way in which the IRS ensures it will collect taxes otherwise due.  Any amounts withheld may be credited against a shareholder’s U.S. federal income tax liability.

 

Shareholders should consult with their own tax advisors to ensure that distributions and sales of Fund shares are treated appropriately on their income tax returns.

 

BENCHMARK DESCRIPTIONS

 

The Russell Mid-Cap Value Index is a widely recognized unmanaged index designed to measure the performance of the mid-cap segment of the U.S. equity universe.  It includes those Russell Mid-Cap Index companies with lower price-to-book ratios and lower forecasted growth values.  This index does not have an investment advisor and does not pay any commissions, expenses, or taxes.  If this index did pay commissions, expenses, or taxes, its returns would be lower.

 

 

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FINANCIAL HIGHLIGHTS

 

The financial highlights tables on the following page are intended to help you understand the Fund’s financial performance for the previous five (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).  The financial data in the table below have been derived from audited financial statements of the Fund and have been audited by BBD, LLP, an independent registered public accounting firm, whose report covering such years is incorporated by reference into the SAI.  This information should be read in conjunction with the Fund’s latest audited annual financial statements and notes thereto, which are also incorporated by reference into the SAI, a copy of which may be obtained at no charge by calling the Fund at 1-888-626-3863.  Further information about the performance of the Fund is contained in the Annual Report of the Fund, a copy of which may also be obtained at no charge by calling the Fund.

 

Capital Management Mid-Cap Fund

FINANCIAL HIGHLIGHTS

For a share outstanding during each fiscal year ended

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		Mid-Cap Fund
		Institutional Shares
		November 30,
		2013					2012				2011				2010				2009
Net Asset Value, Beginning of Year		$	18.07				$	16.56			$	16.48			$	14.58			$	11.37
Investment Operations:
Net investment income (loss)			-		(a)			(0.06	)			(0.04	)			(0.04	)			0.04
Net realized and unrealized gain on investments			5.36					1.57				0.43				1.94				3.21
Total from investment operations			5.36					1.51				0.39				1.90				3.25
Less Distributions:
From net investment income			-					-				-				-				(0.04	)
From net realized capital gains			(1.09	)				-				(0.31	)			-				-
Total distributions			(1.09	)				-				(0.31	)			-				(0.04	)
Net Asset Value, End of Year		$	22.34				$	18.07			$	16.56			$	16.48			$	14.58
Total Return (b)			29.66	%				9.12	%			2.38	%			13.03	%			28.56	%
Ratios/Supplemental Data
Net Assets, End of Year (in 000's)		$	17,629				$	14,048			$	12,964			$	12,950			$	11,627
Ratio of Gross Expenses to Average Net Assets (c)			1.75	%				1.80	%			1.79	%			1.84	%			1.95	%
Ratio of Net Expenses to Average Net Assets (c)			1.50	%				1.50	%			1.50	%			1.50	%			1.50	%
Ratio of Net Investment Income (Loss) to Average Net Assets			0.01	%				(0.33	)%			(0.25	)%			(0.24	%)			0.32	%
Portfolio Turnover Rate			24.43	%				33.43	%			39.62	%			27.56	%			18.26	%

 

(a)	Net investment income resulted in less than $0.01 per share.

(b)	Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends.

(c)	The expense ratios listed above reflect total expenses prior to any waivers and reimbursements (gross expense ratio) and after any waivers and reimbursements (net expense ratio).

 

See Notes to Financial Statements

 

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For a share outstanding during each fiscal year ended
		Mid-Cap Fund
		Investor shares
		November 30,
		2013				2012				2011				2010				2009
Net Asset Value, Beginning of Year		$	15.66			$	14.46			$	14.54			$	12.96			$	10.16
Investment Operations:
Net investment loss			(0.11	)			(0.16	)			(0.15	)			(0.15	)			(0.05	)
Net realized and unrealized gain on investments			4.60				1.36				0.38				1.73				2.85
Total from investment operations			4.49				1.20				0.23				1.58				2.80
Less Distributions:
From net realized capital gains			(1.09	)			-				(0.31	)			-				-
Total distributions			(1.09	)			-				(0.31	)			-				-
Net Asset Value, End of Year		$	19.06			$	15.66			$	14.46			$	14.54			$	12.96
Total Return (a)			28.66	%			8.30	%			1.60	%			12.19	%			27.56	%
Ratios/Supplemental Data
Net Assets, End of Year (in 000's)		$	570			$	435			$	377			$	372			$	382
Ratio of Gross Expenses to Average Net Assets (b)			2.50	%			2.55	%			2.54	%			2.59	%			2.70	%
Ratio of Net Expenses to Average Net Assets (b)			2.25	%			2.25	%			2.25	%			2.25	%			2.25	%
Ratio of Net Investment Loss to Average Net Assets			(0.74	%)			(1.08	%)			(1.00	%)			(0.99	%)			(0.44	%)
Portfolio Turnover Rate			24.43	%			33.43	%			39.62	%			27.56	%			18.26	%

 

(a)	Total in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends.

(b)	The expense ratios listed above reflect total expenses prior to any waivers and reimbursements (gross expense ratio) and after any waivers and reimbursements (net expense ratio).

 

See Notes to Financial Statements

 

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Privacy Notice

FACTS	WHAT DOES CAPITAL MANAGEMENT INVESTMENT TRUST DO WITH YOUR PERSONAL INFORMATION?
Why?	Financial companies choose how they share your personal information.  Federal law gives consumers the right to limit some but not all sharing.  Federal law also requires us to tell you how we collect, share, and protect your personal information.  Please read this notice carefully to understand what we do.
What?	The types of personal information we collect and share depend on the product or service you have with us.  This information can include:  § Social Security number  § Assets  § Retirement Assets  § Transaction History  § Checking Account Information  § Purchase History  § Account Balances  § Account Transactions  § Wire Transfer Instructions When you are no longer our customer, we continue to share your information as described in this notice.
How?	All financial companies need to share your personal information to run their everyday business.  In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Capital Management Investment Trust chooses to share; and whether you can limit this sharing.
Reasons we can share your personal information		Does Capital Management Investment Trust share?	Can you limit this sharing?
For our everyday business purposes – Such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus		Yes	No
For our marketing purposes – to offer our products and services to you		No	We don’t share
For joint marketing with other financial companies		No	We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences		No	We don’t share
For our affiliates’ everyday business purposes – information about your creditworthiness		No	We don’t share
For nonaffiliates to market to you		No	We don’t share
Questions?	Call   1-888-626-3863

 

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Page 2
Who we are
Who is providing this notice?		Capital Management Investment Trust Wellington Shields & Co. LLC (Distributor) Matrix 360 Administration, LLC (Administrator)
What we do
How does Capital Management Investment Trust   protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law.  These measures include computer safeguards and secured files and buildings.   Our service providers are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information.
How does Capital Management Investment Trust   collect my personal information?		We collect your personal information, for example, when you § Open an account § Provide account information § Give us your contact information § Make deposits or withdrawals from your account § Make a wire transfer § Tell us where to send the money § Tells us who receives the money § Show your government-issued ID § Show your driver’s license We also collect your personal information from other companies.
Why can’t I limit all sharing?		Federal law gives you the right to limit only § Sharing  for affiliates’ everyday business purposes – information about your creditworthiness § Affiliates from using your information to market to you § Sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates		Companies related by common ownership or control.  They can be financial and nonfinancial companies. § Capital Management Associates, Inc., the investment adviser to the Capital Management Investment Trust, could be deemed to be an affiliate.
Nonaffiliates		Companies not related by common ownership or control.  They can be financial and nonfinancial companies § Capital Management Investment Trust does not share with nonaffiliates so they can market to you.
Joint marketing		A formal agreement between nonaffiliated financial companies that together market financial products or services to you. § Capital Management Investment Trust does not jointly market.

 

 Not part of the Prospectus

 

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CAPITAL MANAGEMENT SMALL-CAP FUND

 

A series of the

Capital Management Investment Trust

 

INSTITUTIONAL SHARES – Ticker Symbol CMSSX

INVESTOR SHARES – Ticker Symbol CMSVX

 

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PROSPECTUS

March 31, 2014

 

The Capital Management Small-Cap Fund (“Fund”) seeks long-term capital appreciation, while current income is a secondary consideration in selecting portfolio investments.

Investment Advisor

Capital Management Associates, Inc.

140 Broadway

New York, New York 10005

 

1-888-626-3863

 

The Securities and Exchange Commission has not approved or disapproved the securities being offered by this prospectus or determined whether this prospectus is accurate and complete.  Any representation to the contrary is a criminal offense.

 

Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution.  Shares are not insured by the FDIC, Federal Reserve Board, or any other agency and are subject to investment risks including possible loss of principal amount invested.  Neither the Fund nor the Fund’s distributor is a bank.  You should read the prospectus carefully before you invest or send money.

 

The SAI and the Fund’s annual and semi-annual reports are available, without charge, upon request by calling 1-888-626-3863. For shareholder inquiries about the fund please call 1-888-626-3863.

 

 

 

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Table of Contents

Page

 

SUMMARY	1
INVESTMENT OBJECTIVE	1
FEES AND EXPENSES OF THE FUND	1
SHAREHOLDER FEES	1
ANNUAL FUND OPERATING EXPENSES	1
EXPENSE EXAMPLE	1
PORTFOLIO TURNOVER	2
PRINCIPAL INVESTMENT STRATEGIES OF THE FUND	2
PRINCIPAL RISKS OF INVESTING IN THE FUND	2
PERFORMANCE	3
MANAGEMENT	4
PURCHASE AND SALE OF FUND SHARES	4
TAX INFORMATION	4
PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES	5
INVESTMENT OBJECTIVE, STRATEGIES, RISKS AND PORTFOLIO HOLDINGS	5
INVESTMENT OBJECTIVE	5
PRINCIPAL INVESTMENT STRATEGIES	5
PRINCIPAL RISKS OF INVESTING IN THE FUND	5
OTHER INVESTMENT POLICIES	7
DISCLOSURE OF PORTFOLIO HOLDINGS	7
MANAGEMENT OF THE FUND	7
THE INVESTMENT ADVISOR	7
THE ADMINISTRATOR AND TRANSFER AGENT	9
THE DISTRIBUTOR	9
ADDITIONAL INFORMATION ON EXPENSES	9
INVESTING IN THE FUND	9
PURCHASE OPTIONS	9
INSTITUTIONAL SHARES	10
INVESTOR SHARES	10
PURCHASE AND REDEMPTION PRICE	12
PURCHASING SHARES	12
REDEEMING YOUR SHARES	14
PURCHASING OR REDEEMING SHARES THROUGH A FINANCIAL INTERMEDIARY	16
FREQUENT PURCHASES AND REDEMPTIONS	16
OTHER IMPORTANT INFORMATION	17
DIVIDENDS, DISTRIBUTIONS, AND TAXES	17
BENCHMARK DESCRIPTIONS	18
FINANCIAL HIGHLIGHTS	18

 

 

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SUMMARY

 

Investment Objective.   The investment objective of the Capital Management Small-Cap Fund (“Fund”) is to seek long-term capital appreciation, while current income is a secondary consideration in selecting portfolio investments.

 

Fees and Expenses of the Fund.   This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.  You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $250,000 in certain funds in the Capital Management Investment Trust (“Trust”) with a similar sales charge.  More information about these and other discounts is available from your financial professional and in the section “Investing in the Fund – Investor Shares” beginning on page 10 of the Fund’s prospectus (“Prospectus”) and the section “Purchase of Shares – Reduced Sales Charges” beginning on page 27 of the Fund’s statement of additional information (“SAI”).

 

Shareholder Fees.   (Fees paid directly from your investment)

 

	Institutional Shares	Investor Shares
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)	None	3.00%
Redemption Fee (as a percentage of the amount redeemed, if applicable)	None	None

 

Annual Fund Operating Expenses.   (Expenses that you pay each year as a % of the value of your investment)

 

	Institutional Shares	Investor Shares
Management Fees	1.00%	1.00%
Distribution and Service (12b-1) Fees	0.00%	0.75%
Other Expenses	0.85%	0.85%
Acquired Fund Fees and Expenses	0.02%	0.02%
Total Annual Fund Operating Expenses 1	1.87%	2.62%
Fee Waiver and/or Expense Reimbursement 2	(0.35)%	(0.35)%
Total Annual Fund Operating Expenses after Fee Waiver and/or Expense Reimbursement 1,2	1.52%	2.27%

 

1	“Total Annual Fund Operating Expenses” will not correlate to the Fund’s ratio of expenses to average net assets in the Fund’s Financial Highlights, which reflects the operating expenses of the Fund and does not include “Acquired Fund Fees and Expenses.”

 

2

Capital Management Associates, Inc. (the “Advisor”) has entered into a contractual agreement with the Fund under which it has agreed to waive or reduce its fees and to assume other expenses of the Fund, if necessary, in an amount that limits “Total Annual Fund Operating Expenses” (exclusive of interest, taxes, brokerage fees and commissions, extraordinary expenses, payments, if any, under a Rule 12b-1 Plan, and Acquired Fund Fees and Expenses) to not more than 1.50%. The contractual agreement cannot be terminated prior to April 1, 2015 without the Trust’s Board of Trustees’ approval.

  

Expense 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 expense 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 expense example also assumes that your investment has a 5% return each year and the Fund’s operating expenses remain the same,   and the contractual agreement to limit expenses remains in effect only until April 1, 2015.  Although your actual costs may be higher or lower, based on the assumptions your cost would be:

 

 

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Period Invested	1 Year	3 Years	5 Years	10 Years
Institutional Shares	$155	$554	$978	$2,162
Investor Shares	$523	$1058	$1,618	$3,140

 

Portfolio Turnover.   The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio).  A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account.  These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance.  During the most recent fiscal year, the Fund’s portfolio turnover rate was 28.46% of the average value of its portfolio.

 

Principal Investment Strategies of the Fund.   The Fund pursues its investment objective by investing primarily in equity securities of small-capitalization (“small-cap”) companies.  The Fund considers a small-cap company to be one that has market capitalization within the range of $100 million to $2.5 billion .

 

The Fund’s investment in small-cap companies will be primarily in equity securities, such as common and preferred stock, securities convertible into common stock and short sales.  Under normal market conditions, the Fund will invest at least 90% of its total assets in equity securities, of which at least 80% of its total assets will be invested in the equity securities of small-cap companies.

 

While the Fund’s primary focus is investment in equity securities, the Fund has flexibility to invest in other types of securities when the Advisor believes they offer opportunities that are more attractive.  Accordingly, the Fund may invest in derivative instruments, including put and call options.  The Fund may also sell a security short (i.e., sell a security borrowed from a broker) if the Advisor expects the market price for the security to drop in the future.  When the Fund makes a short sale of a security, the Fund will have to replace the security in the future, whether or not the price declines.  The Fund may hold up to 20% of its net assets in derivative instruments and short positions at any time.

 

In selecting portfolio securities, the Advisor uses various screens and models to produce a potential universe of approximately 1,300 companies.  Then through fundamental research, the Advisor selects from that universe companies whose current share price is relatively undervalued.  The Advisor considers selling or reducing the Fund’s holding in a security if the security no longer meets the Advisor’s investment criteria, the company is no longer considered a small-cap company or the Advisor believes a more attractive investment alternative is available. Final investment decisions are made by the Advisor’s portfolio manager.

 

Principal Risks of Investing in the Fund.   An investment in the Fund is subject to investment risks, including the possible loss of some or all of the principal invested.  There can be no assurance that the Fund will be successful in meeting its investment objective.  The Fund is intended for aggressive investors seeking above-average gains and willing to accept the risks involved in investing in the securities of small-cap companies.  The following is a summary description of certain risks of investing in the Fund.

 

•       Market Risk.   Securities markets are volatile and prices of all securities may decline when markets decline generally.  Accordingly, the price of and the income generated by the Fund’s securities may decline in response to, among other things, adverse changes in investor sentiment, general economic and market conditions, regional or global instability, interest rate fluctuations or other factors that may cause the securities markets to decline generally.

 

•       Risks related to Other Equity Securities .  In addition to common stocks, the equity securities in the Fund’s portfolio may include preferred stock and convertible securities.  Like common stocks, the value of these equity securities may fluctuate in response to many factors, including the activities of the issuer, general market and economic conditions, interest rates, and specific industry changes.  Also, regardless of any one company’s particular prospects, a declining stock market may produce a decline in prices for all equity securities, which could also result in losses for the Fund.  Convertible securities entitle the holder to receive interest payments or a dividend preference until the security matures, is redeemed, or the conversion feature is exercised.  As a result of the conversion feature, the interest rate or dividend preference is generally less than if the securities were non-convertible.

 

 

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•       Small-Cap Securities Risk.   Investing in the securities of small-cap companies generally involves greater risk than investing in larger, more established companies.  This greater risk is, in part, attributable to the fact that small-cap companies may have limited product lines, operating history, markets or financial resources and their securities may therefore be more volatile than securities of larger, more established companies or market averages in general.  In addition, the market for small-cap securities may be more limited than the market for larger companies.

 

•       Portfolio Management Risk.   The strategies used and securities selected by the Fund’s Advisor may fail to produce the intended result and the Fund may not achieve its objective.  The securities selected for the Fund may not perform as well as other securities that were consistent with the Fund’s investment strategy, but were not selected for the Fund.  As a result, the Fund may suffer losses or underperform other funds with the same investment objective or strategies, even in a rising market. The performance of the Fund may be better or worse than the performance of equity funds that focus on other types of equities or have a broader investment style.

 

•       Short Sales Risk.   The Fund may establish a short position in a stock by selling borrowed shares of the stock.  When the price of any stock that the Fund has sold short rises above the price at which the Fund borrowed and sold the stock, then the Fund may lose money on the short sale.  Accordingly, the Fund is likely to lose value on its short sales in a rising market.  If the broker from whom the stock was borrowed requires that the stock be repaid, then the Fund could be forced to cover short positions earlier than the Fund otherwise would.  If the Fund does not have the assets to cover a short sale, then the Fund’s potential losses on the short will be unlimited because the security’s price may appreciate indefinitely.

 

•       Derivative Instruments Risk.   Derivative instruments such as option contracts, futures contracts, and options on future contracts are generally investments the value of which depends on (or is derived from) the value of the underlying assets, interest rate, or index.  Derivative instruments involve risks different from direct investments in the underlying securities, including: imperfect correlation between the value of the derivative instrument and the underlying assets; risks of default by the other party to the derivative instrument; risks that the transactions may result in losses of all or in excess of any gain in the portfolio positions; and risks that the derivative security may not be liquid.

 

Performance.   The bar chart and table shown below provide some indication of the risks of investing in the Fund by showing changes in the performance of the Fund’s Institutional Shares from year to year and by showing how the Fund’s average annual returns for 1, 5 and 10 years compare with those of a broad-based securities market index.  The Fund’s past performance (before and after taxes) is not necessarily an indication of how the Fund will perform in the future.

 

Calendar Year Returns

Institutional Shares

 

 

 

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Quarterly Returns During This Time Period
	Highest	33.58% (quarter ended June 30, 2009)
	Lowest	(42.69)% (quarter ended December 31, 2008)
	Year to Date	39.07% (quarter ended December 31, 2013)

 

Average Annual Total Returns (For the Period Ended December 31, 2013)	Past 1 Year	Past 5 Years	Past 10 Years
Capital Management Small-Cap Fund – Institutional Shares
Before taxes	39.07%	20.64%	9.80%
After taxes on distributions	37.52%	19.60%	8.94%
After taxes on distributions and sale of shares	22.75%	16.74%	8.00%
Capital Management Small-Cap Fund – Investor Shares Before taxes (reflects deduction for sales load)	34.47%	19.52%	9.20%
S&P 600 Small-Cap Index  (reflects no deduction for fees, expenses or taxes)	41.31%	21.36%	10.64%

 

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 an investor’s tax situation and may differ from those shown and are not applicable to investors who hold Fund shares through tax-deferred arrangements, such as an individual retirement account (IRA) or 401(k) plan.  After-tax returns are shown for only one class of shares and after-tax returns will vary for other classes.

 

Management.   Capital Management Associates, Inc. is the investment advisor for the Fund.  Ralph J. Scarpa is the President of the Advisor and has also been the portfolio manager of the Fund since January 1, 2007.

 

Purchase and Sale of Fund Shares.   The Fund’s minimum investment is as follows:

 

Institutional Shares		Investor Shares
$25,000 minimum initial investment and minimum subsequent investment is $500 ($100 if participating in the automatic investment plan).		$1,000 minimum initial investment and minimum subsequent investment is $500 ($100 if participating in the automatic investment plan).

 

You may generally purchase, redeem or exchange shares of the Fund on any business day the New York Stock Exchange is open, at the Fund’s net asset value determined after receipt of your request in good order as follows:

 

•

Through the Fund by mail or bank wire.  Mail requests should be sent to Capital Management Small-Cap Fund (specify either Institutional or Investor shares) c/o Matrix 360 Administration, LLC 4520 Main Street, Suite 1425, Kansas City, MO  64111.  For bank wire orders, please call the Fund at 1-888-626-3863   for instructions.

 

•

Through authorized Broker-Dealers and Financial Intermediaries.  Please contact your broker-dealer or financial intermediary for information.

 

If your account was opened through the Fund, redemption and exchange requests may be made by telephone by calling the Fund at   1-888-626-3863.

 

If you have questions about purchasing, redeeming or exchanging shares of the Fund please call the Fund at the number referenced above.

 

Tax Information.   The Fund’s distributions will generally be taxable to you as ordinary income or capital gains, unless you are investing through a tax deferred arrangement, such as a 401(k) plan or an individual retirement account (“IRA”).  Distributions on investments made through tax deferred vehicles, such as 401(k) plans or IRAs, may be taxed later upon withdrawal of assets from those accounts.

 

 

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Payments to Broker-Dealers and Other Financial Intermediaries.   If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund may pay the intermediary for the sale of Fund shares and related services.  These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment.  Ask your salesperson or visit your financial intermediary’s website for more information.

INVESTMENT OBJECTIVE, STRATEGIES, RISKS AND PORTFOLIO HOLDINGS

INVESTMENT OBJECTIVE

 

The investment objective of the Capital Management Small-Cap Fund is to seek long-term capital appreciation.  Current income is a secondary consideration in selecting portfolio investments. The Fund’s investment objective may be changed without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

 

The Fund, which is a diversified separate investment portfolio of the Trust, pursues its investment objective by investing primarily in equity securities of small-capitalization (“small-cap”) companies.  The Fund considers a small-cap company to be one that has market capitalization, measured at the time the Fund purchases the security, within the range of $100 million to $2.5 billion .

 

The Fund’s investments in small-cap companies will be primarily in equity securities of such companies, such as common and preferred stock and securities convertible into common stock.  The Fund intends to invest in a diversified group of small-cap companies and will not concentrate its investments in any one industry or group.

 

Under normal market conditions, the Fund will invest at least 90% of its total assets in equity securities, of which at least 80% of its total assets will be invested in the equity securities of small-cap companies, as measured at the time of purchase.  This investment policy may be changed without shareholder approval upon at least 60 days’ prior written notice to the shareholders.

 

While the Fund’s primary focus is investment in equity securities, the Fund has flexibility to invest in other types of securities when the Advisor believes they offer opportunities that are more attractive.  Accordingly, the Fund may invest in derivative instruments, such as purchasing put and call options.  The Fund may also sell a security short (i.e., sell a security borrowed from a broker) if the Advisor expects the market price for the security to drop in the future.  When the Fund makes a short sale of a security, the Fund will have to replace the security in the future, whether or not the price declines.  The Fund may hold up to 20% of its net assets in derivative instruments and short positions at any time.

 

In selecting portfolio securities, the Advisor uses various screens and models to produce a potential universe of approximately 1,300 companies.  Then through fundamental research, the Advisor selects from that universe companies whose current share price is relatively undervalued.  This process often includes visits and/or meetings with company management and contacts with industry experts and suppliers.  Final investment decisions are made by the Advisor’s Portfolio Manager.

 

The Advisor considers selling or reducing the Fund’s holding in a security if the security no longer meets the Advisor’s investment criteria, the company is no longer considered a small-cap company or the Advisor believes a more attractive investment alternative is available.

PRINCIPAL RISKS OF INVESTING IN THE FUND

 

An investment in the Fund is subject to investment risks, including the possible loss of some or all of the principal amount invested.  There can be no assurance that the Fund will be successful in meeting its investment objective.  The Fund is intended for aggressive investors seeking above-average gains and willing to accept the risks involved in investing in the securities of small-cap companies.

 

 

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Since the Fund’s investment strategy utilizes equity securities (concentrating on small-cap company securities), short-term investment instruments, derivative instruments, and short sales, the Fund has some exposure to the risks associated with each of these investments.

 

Market Risk.   Securities markets are volatile and prices of all securities may decline when markets decline generally.  Accordingly, the price of and the income generated by the Fund’s securities may decline in response to, among other things, adverse changes in investor sentiment, general economic and market conditions, regional or global instability, interest rate fluctuations or other factors that may cause the securities markets to decline generally.

 

Risks related to Other Equity Securities .  In addition to common stocks, the equity securities in the Fund’s portfolio may include preferred stock and convertible securities.  Like common stocks, the value of these equity securities may fluctuate in response to many factors, including the activities of the issuer, general market and economic conditions, interest rates, and specific industry changes.  Also, regardless of any one company’s particular prospects, a declining stock market may produce a decline in prices for all equity securities, which could also result in losses for the Fund.  Convertible securities entitle the holder to receive interest payments or a dividend preference until the security matures, is redeemed, or the conversion feature is exercised.  As a result of the conversion feature, the interest rate or dividend preference is generally less than if the securities were non-convertible.

Small-Cap Securities .  Investing in the securities of small cap companies generally involves substantially greater risk than investing in larger, more established companies.  This greater risk is, in part, attributable to the fact that the securities of small-cap companies usually have more limited marketability and, therefore, may be more volatile than securities of larger, more established companies or the market averages in general.  Because small-cap companies normally have fewer shares outstanding than larger companies, it may be more difficult to buy or sell significant amounts of such shares without an unfavorable impact on prevailing prices.  Another risk factor is that small-cap companies often have limited product lines, markets, or financial resources and may lack management depth.  Additionally, small-cap companies are typically subject to greater changes in earnings and business prospects than are larger, more established companies.  Small-cap companies may not be well-known to the investing public, may not be followed by the financial press or industry analysts, and may not have institutional ownership.  These factors affect the Advisor’s access to information about the companies and the stability of the markets for the companies’ securities.  Small-cap companies may be more vulnerable than larger companies to adverse business or economic developments.  Although investing in securities of small companies offers potential above average returns if the companies are successful, the risk exists that the companies will not succeed.  If the companies do not succeed, the prices of the companies’ shares could dramatically decline in value.  Therefore, an investment in the Fund may involve a substantially greater degree of risk than an investment in other mutual funds that seek capital growth by investing in more established, larger companies.  The Advisor’s ability to choose suitable investments also has a significant impact on the ability of the Fund to achieve its investment objective.

 

Derivative Instruments Risk.   Derivative instruments such as option contracts, futures contracts, and options on future contracts are generally investments the value of which depends on (or is derived from) the value of the underlying assets, interest rate, or index.  Derivative instruments involve risks different from direct investments in the underlying securities, including: imperfect correlation between the value of the derivative instrument and the underlying assets; risks of default by the other party to the derivative instrument; risks that the transactions may result in losses of all or in excess of any gain in the portfolio positions; and risks that the derivative instrument may not be liquid.

 

Portfolio Management Risk.   The strategies used and securities selected by the Fund’s Advisor may fail to produce the intended result and the Fund may not achieve its objective.  The securities selected for the Fund may not perform as well as other securities that were consistent with the Fund’s investment strategy, but were not selected for the Fund.  As a result, the Fund may suffer losses or underperform other funds with the same investment objective or strategies, even in a rising market.  The performance of the Fund will decline and may be worse than the performance of equity funds that focus on other types of equities or have a broader investment style when the Advisor’s management style (generally, value-oriented small-cap equity) is out-of-favor in the market.  Since different types of equity securities ( e.g. , large-cap, mid-cap, small-cap) tend to shift into and out of favor with investors depending on market and economic conditions, the performance of the Fund may also be worse than the performance of equity funds that focus on other types of equities or have a broader investment style when the Advisor’s management style is out-of-favor. The performance of the Fund may be better or worse than the performance of equity funds that focus on other types of equities or have a broader investment style.

 

 

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Short Sales Risk.   As explained above, the Fund may establish a short position in a stock by selling borrowed shares of the stock.  Borrowed shares must be repaid (i.e., short positions must be “covered”) whether or not the stock’s price declines.  When the price of any stock that the Fund has sold short rises above the price at which the Fund borrowed and sold the stock, then the Fund may lose money on the short sale.  Accordingly, the Fund is likely to lose value on its short sales in a rising market.  If the broker from whom the stock was borrowed requires that the stock be repaid, then the Fund could be forced to cover short positions earlier than the Fund otherwise would.  If the Fund does not have the assets to cover a short sale, then the Fund’s potential losses on the short will be unlimited because the security’s price may appreciate indefinitely.

OTHER INVESTMENT POLICIES

 

An investment in the Fund should not be considered a complete investment program.  Whether the Fund is an appropriate investment for an investor will depend largely on his/her financial resources and individual investment goals and objectives.  Investors who engage in short-term trading and/or other speculative strategies and styles will not find the Fund to be an appropriate investment vehicle if they want to invest in the Fund for a short period of time.

 

As a temporary defensive measure in response to adverse market, economic, political, or other conditions, the Advisor may determine from time to time that market conditions warrant investing in investment-grade bonds, U.S. government securities, repurchase agreements, money market instruments, and to the extent permitted by applicable law and the Fund’s investment restrictions, shares of other investment companies.  Under such circumstances, the Advisor may invest up to 100% of the Fund’s assets in these investments.  Since investment companies investing in other investment companies pay management fees and other expenses relating to those investment companies, shareholders of the Fund would indirectly pay both the Fund’s expenses and the expenses relating to those other investment companies with respect to the Fund’s assets invested in such investment companies.  To the extent the Fund is invested in short-term investments, it will not be pursuing and may not achieve its investment objective.  Under normal circumstances, however, the Fund may also hold money market or repurchase agreement instruments for funds awaiting investment, to accumulate cash for anticipated purchases of portfolio securities, to allow for shareholder redemptions, and to provide for Fund operating expenses.

 

DISCLOSURE OF PORTFOLIO HOLDINGS

 

A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund’s SAI.

MANAGEMENT OF THE FUND

THE INVESTMENT ADVISOR

 

The Fund’s investment advisor is Capital Management Associates, Inc., 140 Broadway, New York, New York 10005.  The Advisor serves in that capacity pursuant to an advisory contract with the Trust on behalf of the Fund.  Subject to the authority of the Board of Trustees of the Trust (“Trustees”), the Advisor provides guidance and policy direction in connection with its daily management of the Fund’s assets.  The Advisor manages the investment and reinvestment of the Fund’s assets.  The Advisor is also responsible for the selection of broker-dealers through which the Fund executes portfolio transactions, subject to the brokerage policies established by the Trustees, and it provides certain executive personnel to the Fund.

 

The Advisor is registered as an investment advisor with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended.  The Advisor, organized as a New York corporation in 1982, is controlled by its officers and directors, with the principal shareholders being J.V. Shields, Jr. and David V. Shields.  The Shields brothers have been affiliated with the Advisor since 1982.  Ralph J. Scarpa is responsible for the day-to-day management of the Fund’s portfolio (“Portfolio Manager”).  Mr. Scarpa has been the President of the Advisor since January 1, 2007 and has been affiliated with the Advisor since 1995.  Prior to becoming President of the Advisor, Mr. Scarpa served as a Portfolio Manager of the Advisor.  Mr. Scarpa is also Co-CEO and Managing Member of Wellington Shields & Co., LLC (“WSC”), the distributor for the Fund.  The Advisor has been managing the Fund since its inception and has been providing investment advice to investment companies, individuals, corporations, pension and profit sharing plans, endowments, and other business and private accounts since its inception. Mr. Scarpa also serves as Co-CEO and President of Wellington Shields Capital Management, an investment advisory firm registered with the SEC and an affiliate of WSC.  The Fund’s SAI provides additional information about the Portfolio Manager’s compensation, other accounts managed by the Portfolio Manager, and the Portfolio Manager’s ownership of securities in the Fund.

 

 

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The Advisor’s Compensation.   As full compensation for the investment advisory services provided to the Fund, the Fund pays the Advisor monthly compensation based on the Fund’s daily average net assets at the annual rate of 1.00% of the first $100 million of the Fund’s net assets, 0.90% of the next $150 million, 0.85% of the next $250 million, and 0.80% of all assets over $500 million.  During the fiscal year ended November 30, 2013, the Advisor waived a portion of its advisory fee in the amount of $49,202.  As a result, the advisory fee paid to the Advisor by the Fund as a percentage of average annual net assets for the last fiscal year was approximately 0.65%.

 

Disclosure Regarding Approval of the Investment Advisory Contract.   A discussion regarding the Trustees’ basis for approving the renewal of the investment advisory contract for the Fund is available in the Fund’s Annual Report to shareholders for the fiscal year ended November 30, 2013 and, when available, the Annual Report for the fiscal year ending November 30, 2014.  You may obtain a copy of these Annual Reports, free of charge, upon request to the Fund.

 

Expense Limitation Agreement.   In the interest of limiting expenses of the Fund, the Advisor has entered into an expense limitation agreement with the Trust, with respect to the Fund (“Expense Limitation Agreement”), pursuant to which the Advisor has agreed to waive or limit its fees and to assume other expenses so that the total annual operating expenses of the Fund (other than interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with generally accepted accounting principles, other extraordinary expenses not incurred in the ordinary course of the Fund’s business, Acquired Fund Fees and Expenses, and amounts, if any, payable pursuant to a Rule 12b-1 Plan) are limited to 1.50% of the average daily net assets of the Fund through the period ending April 1, 2015.  It is expected that the Expense Limitation Agreement will continue from year-to-year thereafter, provided such continuance is specifically approved by a majority of the Trustees who (i) are not “interested persons” of the Trust or any other party to the Expense Limitation Agreement, as defined in the Investment Company Act of 1940, as amended (“1940 Act”); and (ii) have no direct or indirect financial interest in the operation of the Expense Limitation Agreement.  The Expense Limitation Agreement may also be terminated by the Advisor and the Trust at the end of the then current term upon not less than 90 days’ notice to the other party as set forth in the Expense Limitation Agreement.

  

The Fund may at a later date reimburse the Advisor the management fees waived or limited and other expenses assumed and paid by the Advisor pursuant to the Expense Limitation Agreement during any of the previous three fiscal years, provided the Fund has reached a sufficient asset size to permit such reimbursement to be made without causing the total annual expense ratio of the Fund to exceed the percentage limits stated above.  Consequently, no reimbursement by the Fund will be made unless: (i) the Fund’s assets exceed $10 million; (ii) the Fund’s total annual expense ratio is less than the percentage limits stated above; and (iii) the payment of such reimbursement has been approved by the Trustees on a quarterly basis.

 

Brokerage Practices.   In selecting brokers and dealers to execute portfolio transactions, the Advisor may consider research and brokerage services furnished to the Advisor or its affiliates.  The Advisor may not consider sales of shares of the Fund as a factor in the selection of brokers and dealers, but may place portfolio transactions with brokers and dealers that promote or sell the Fund’s shares so long as such transactions are done in accordance with the policies and procedures established by the Trustees that are designed to ensure that the selection is based on the quality of execution and not on sales efforts.

 

When placing portfolio transactions with a broker or dealer, the Advisor may aggregate securities to be sold or purchased for the Fund with those to be sold or purchased for other advisory accounts managed by the Advisor.  In aggregating such securities, the Advisor will average the transaction as to price and will allocate available investments in a manner that the Advisor believes to be fair and reasonable to the Fund and such other advisory accounts.  An aggregated order will generally be allocated on a pro rata basis among all participating accounts, based on the relative dollar values of the participating accounts, or using any other method deemed to be fair and reasonable to the Fund and the participating accounts, with any exceptions to such methods involving the Trust being reported by the Advisor to the Trustees.  Certain securities trades will be cleared through Wellington Shields & Co., LLC, a registered broker-dealer affiliate of the Advisor and the distributor of the Fund.

 

 

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The 1940 Act generally prohibits the Fund from engaging in principal securities transactions with an affiliate of the Advisor.  Thus, the Fund does not engage in principal transactions with any affiliate of the Advisor.  The Fund has adopted procedures, under Rule 17e-1 under the 1940 Act, that are reasonably designed to provide that any brokerage commission the Fund pays to an affiliate of the Advisor does not exceed the usual and customary broker’s commission.  In addition, the Fund will adhere to Section 11(a) of the Securities Exchange Act of 1934 and any applicable rules thereunder governing floor trading.

 

THE ADMINISTRATOR AND TRANSFER AGENT

 

Matrix 360 Administration, LLC (“Matrix”) serves as the Fund administrator providing the Fund with certain administrative, fund accounting, and compliance services.  In addition, Matrix serves as the transfer agent and dividend disbursing agent of the Fund.  As indicated later in the section of this prospectus entitled “Investing in the Fund,” Matrix will handle your orders to purchase and redeem shares of the Fund and will disburse dividends paid by the Fund.  Matrix also makes available the office space, equipment, personnel, and facilities required to provide the foregoing services to the Fund.

  

THE DISTRIBUTOR

 

Wellington Shields & Co., LLC (“Distributor”) is the principal underwriter and distributor of the Fund’s shares and serves as the Fund’s exclusive agent for the distribution of Fund shares.  The Distributor may sell the Fund’s shares to or through qualified securities dealers or others.

ADDITIONAL INFORMATION ON EXPENSES

 

Other Expenses.   In addition to the management fees and Rule 12b-1 fees for the Investor Shares of the Fund, the Fund pays all expenses not assumed by the Fund’s Advisor, including, without limitation: the fees and expenses of its administrator, custodian, transfer agent, independent registered public accounting firm, and legal counsel; the costs of printing and mailing to shareholders annual and semi-annual reports, proxy statements, prospectuses, statements of additional information, and supplements thereto; the costs of printing registration statements; bank transaction charges; any proxy solicitors’ fees and expenses; filing fees; any federal, state, or local income or other taxes; any interest; any membership fees of the Investment Company Institute and similar organizations; fidelity bond and Trustees’ liability insurance premiums; and any extraordinary expenses, such as indemnification payments or damages awarded in litigation or settlements made.  All general Trust expenses are allocated among and charged to the assets of each separate series of the Trust, such as the Fund, on a basis that the Trustees deem fair and equitable, that may be on the basis of relative net assets of each series or the nature of the services performed and relative applicability to each series.

 

Annual Fund Operating Expenses.   In the section entitled “Summary – Fees and Expenses of the Fund” the “Total Annual Fund Operating Expenses” and “Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement” are based upon actual expenses incurred by the Fund for the fiscal year ended November 30, 2013.

INVESTING IN THE FUND

 

PURCHASE OPTIONS

 

The Fund offers two different classes of shares through this prospectus.  Fund shares may be purchased by any account managed by the Advisor and any other institutional investor or broker-dealer authorized to sell shares of the Fund.  The share classes available to an investor may vary depending on how the investor wishes to purchase shares of the Fund.  The following is a summary of each share class.

 

Institutional Shares

 

•

No front-end sales charge.

•

No contingent deferred sales charge.

•

No distribution and service plan (Rule 12b-1) fees.

•

$25,000 minimum initial investment.

•

$500 minimum additional investment ($100 if participating in the automatic investment plan).

•

No conversion feature.

 

 

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Investor Shares

 

•

A maximum front-end sales charge of 3.00%, as described below.

•

No contingent deferred sales charge.

•

Distribution and service plan (Rule 12b-1) fees of 0.75%.

•

$1,000 minimum initial investment.

•

$500 minimum additional investment ($100 if participating in the automatic investment plan).

•

No conversion feature.

 

When you purchase shares of the Fund, you must choose a share class.  If none is chosen, your investment will be made in the Investor Shares.

 

INSTITUTIONAL SHARES

 

Institutional Shares are sold and redeemed at net asset value.  Shares may be purchased by any account managed by the Advisor and any other institutional investor or any broker-dealer authorized to sell shares in the Fund.  The minimum initial investment is $25,000 and the minimum additional investment is $500 ($100 for those participating in the automatic investment plan).  The Fund may, in the Advisor’s sole discretion, accept certain accounts with less than the minimum investment.

 

INVESTOR SHARES

 

Investor Shares are sold subject to a maximum front-end sales charge (load) of 3.00%, so that the term “offering price” includes the front-end sales charge (load).  Shares are redeemed at net asset value.  Shares may be purchased by any account managed by the Advisor and any broker-dealer authorized to sell Fund shares.

 

The minimum initial investment is $1,000.  The minimum additional investment is $500 ($100 for those participating in the automatic investment plan).  The Fund may, in the Advisor’s sole discretion, waive such minimum investment amounts.

 

Sales Charges

 

The public offering price of Investor Shares of the Fund equals net asset value plus a sales charge.  The Distributor receives this sales charge and may reallow it in the form of dealer discounts and brokerage commissions as follows:

 

Amount of Transaction At Public Offering Price	Sales Charge As % of Net Amount Invested	Sales Charge As % of Public Offering Price	Dealer Discounts and Brokerage Commissions as % of Public Offering Price
Less than $250,000	3.09%	3.00%	2.80%
$250,000 but less than $500,000	2.56%	2.50%	2.30%
$500,000 or more	2.04%	2.00%	1.80%

 

From time to time, dealers who receive dealer discounts and brokerage commissions from the Distributor may reallow all or a portion of such dealer discounts and brokerage commissions to other dealers or brokers.  Pursuant to the terms of the Distribution Agreement, the sales charge payable to the Distributor and the dealer discounts may be suspended, terminated, or amended.  The Distributor, at its expense, may, from time to time, provide additional promotional incentives to dealers who sell Fund shares.

  

Reduced Sales Charges

 

Concurrent Purchases.   For purposes of qualifying for a lower sales charge for Investor Shares, investors have the privilege of combining concurrent purchases of the Fund and any other series of the Trust affiliated with the Advisor and sold with a sales charge.  This privilege may be modified or eliminated at any time or from time to time by the Trust without notice thereof.

 

 

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Rights of Accumulation .  The sales charge applicable to a purchase of Investor Shares is determined by adding the purchase price of shares to be purchased, including any concurrent purchases as described above, to the aggregate value (at the current offering price) of shares of the Fund previously purchased and then owned, provided the Distributor is notified by such person or his or her broker-dealer each time a purchase is made which would so qualify.  For example, a person who is purchasing Investor Shares with an aggregate value of $50,000 and who currently owns shares of the Fund with a value of $200,000 would pay a sales charge of 2.50% of the offering price on the new investment and 3.00% on the amount previously invested.

 

Letter of Intent.   Sales charges may also be reduced through an agreement to purchase a specified quantity of shares over a designated thirteen-month period by completing the “Letter of Intent” section of the Fund Shares Application.  Information about the “Letter of Intent” procedure, including its terms, is contained in the SAI.

 

Group Plans.   Shares of the Fund may be sold at a reduced or eliminated sales charge to certain Group Plans under which a sponsoring organization makes recommendations to, permits group solicitation of, or otherwise facilitates purchases by, its employees, members, or participants.  Information about such arrangements is available from the Distributor.

 

In order to obtain a reduced sales charge, it may be necessary at the time of purchase for a shareholder to inform the Fund, the Distributor, or his/her broker-dealer of the existence of other accounts or purchases which are eligible to be aggregated to obtain a reduced sales charge.  A shareholder may be required to provide to the Fund, the Distributor, or his/her broker-dealer certain information to verify his/her eligibility for a reduced sales charge.  This information may include, to the extent applicable, the following: (i) information or records regarding shares of the Fund or other funds eligible to be aggregated that are in accounts (e.g., retirement accounts) held by the shareholder at the Fund; (ii) information or records regarding shares of the Fund or other funds eligible to be aggregated that are in accounts held by the shareholder at broker-dealers; and (iii) information or records regarding shares of the Fund or other funds eligible to be aggregated that are in accounts held by related parties of the shareholder, such as members of the same family or certain qualified groups, at the Fund or at any broker-dealers.

 

See the SAI for additional information on reduced sales charges.  Complete information regarding the Fund's sales charges, as well as information regarding reduced sales charges (such as concurrent purchases, rights of accumulation, letters of intent, and group plans) and the terms and conditions for the purchase, pricing, and redemption of Fund shares is not available on the internet since the Fund does not have an internet website; however, further information is available by calling the Fund at 1-888-626-3863.

 

Distribution of the Fund’s Shares

 

For the Investor Shares of the Fund, the Fund has adopted a Distribution Plan in accordance with Rule 12b-1 (“Distribution Plan”) under the 1940 Act.  Pursuant to the Distribution Plan, the Fund compensates the Distributor for services rendered and expenses borne in connection with activities primarily intended to result in the sale of the Fund’s Investor Shares (this compensation is commonly referred to as “12b-1 fees”).  Because the 12b-1 fees are paid out of the Fund’s assets on an on-going basis, these fees, over time, will increase the cost of your investment and may cost you more than paying other types of fees such as sales loads.

  

The Distribution Plan provides that the Fund may pay annually up to 0.75% of the average daily net assets of the Fund’s Investor Shares for activities primarily intended to result in the sale of those shares, including reimbursing entities for providing distribution and shareholder servicing with respect to the Fund’s Investor Shares.  Such expenditures, paid as service fees to any person who sells Investor Shares, may not exceed 0.25% of the Investor Shares’ average annual net asset value.

 

The Distribution Plan is known as a “compensation” plan because payments are made for services rendered to the Fund with respect to Investor Shares regardless of the level of expenditures made by the Distributor.  The Trustees will, however, take into account such expenditures for purposes of reviewing operations under the Distribution Plan and concerning their annual consideration of the Distribution Plan’s renewal.  The Distributor has indicated that it expects its expenditures to include, without limitation: (i) the printing and mailing to prospective investors of Fund prospectuses, statements of additional information, any supplements thereto and shareholder reports with respect to the Investor Shares of the Fund; (ii) the development, preparation, printing, and mailing of advertisements, sales literature, and other promotional materials describing and/or relating to the Investor Shares of the Fund; (iii) holding seminars and sales meetings designed to promote the distribution of the Fund’s Investor Shares; (iv) obtaining information and providing explanations to wholesale and retail distributors of the Fund’s investment objectives and policies and other information about the Fund; (v) training sales personnel regarding the Investor Shares of the Fund; and (vi) financing any other activity that the Distributor determines is primarily intended to result in the sale of Investor Shares.  The Distributor may also use a portion of the 12b-1 fees received to provide compensation to financial intermediaries and third-party broker-dealers for their services in connection with the sale of Investor Shares.

 

 

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PURCHASE AND REDEMPTION PRICE

 

Determining the Fund’s Net Asset Value.   The price at which you purchase or redeem shares is based on the next calculation of net asset value after an order is received, subject to the order being accepted by the Fund in good form.  An order is considered to be in good form if it includes a complete and accurate application and payment in full of the purchase amount.  The Fund’s net asset value per share is calculated by dividing the value of the Fund’s total assets, less liabilities (including Fund expenses, which are accrued daily), by the total number of outstanding shares of the Fund.  The net asset value per share of the Fund is normally determined at the time regular trading closes on the New York Stock Exchange (“NYSE”), currently 4:00 p.m. Eastern time, Monday through Friday, except when the NYSE closes earlier.  The Fund does not calculate net asset value on days when the NYSE is closed.

 

The pricing and valuation of portfolio securities is determined in good faith in accordance with procedures established by, and under the direction of, the Trustees.  In determining the value of the Fund’s total assets, portfolio securities are generally calculated at market value by quotations from the primary market in which they are traded.  Instruments with maturities of 60 days or less are valued at amortized cost, which approximates market value.  The Fund normally uses third party pricing services to obtain market quotations.  Securities and assets for which representative market quotations are not readily available or that cannot be accurately valued using the Fund’s normal pricing procedures are valued at fair value as determined in good faith under policies approved by the Trustees.  Fair value pricing may be used, for example, in situations where (i) a portfolio security, such as a small-cap stock, is so thinly traded that there have been no transactions for that stock over an extended period of time; (ii) the exchange on which the portfolio security is principally traded closes early; (iii) trading of the particular portfolio security is halted during the day and does not resume prior to the Fund’s net asset value calculation; or (iv) the validity of a market quotation received is questionable.  Pursuant to policies adopted by the Trustees, the Advisor consults with Matrix on a regular basis regarding the need for fair value pricing.  The Advisor is responsible for notifying the Trustees (or the Trust’s Fair Value Committee) when it believes that fair value pricing is required for a particular security.  The Fund’s policies regarding fair value pricing are intended to result in a calculation of the Fund’s net asset value that fairly reflects portfolio security values as of the time of pricing.  A portfolio security’s “fair value” price may differ from the price next available for that portfolio security using the Fund’s normal pricing procedures, and may differ substantially from the price at which the security may ultimately be traded or sold.  If the fair value price differs from the price that would have been determined using the Fund’s normal pricing procedures, a shareholder may receive more or less proceeds or shares from redemptions or purchases of Fund shares, respectively, than a shareholder would have otherwise received if the portfolio security were priced using the Fund’s normal pricing procedures.  The performance of the Fund may also be affected if a portfolio security’s fair value price were to differ from the security’s price using the Fund’s normal pricing procedures.  To the extent the Fund invests in other open-end investment companies that are registered under the 1940 Act, the Fund’s net asset value calculations are based upon the net asset value reported by such registered open-end investment companies, and the prospectuses for those companies explain the circumstances under which they will use fair value pricing and the effects of using such fair value pricing.  The Trustees monitor and evaluate the Fund’s use of fair value pricing, and periodically review the results of any fair valuation under the Fund’s policies.

  

Additional information on the Fund’s valuation policies is available in the SAI.

 

Other Matters.   Purchases and redemptions of shares of the same class by the same shareholder on the same day will be netted for the Fund.

 

PURCHASING SHARES

 

You may make purchases directly from the Fund by mail or bank wire.  The Fund has also authorized one or more brokers to accept purchase and redemption orders on its behalf and such brokers are authorized to designate intermediaries to accept orders on behalf of the Fund.  Orders will be deemed to have been received by the Fund when an authorized broker, or broker-authorized designee, receives the order, subject to the order being accepted by the Funds in good form.  The orders will be priced at the Fund’s net asset value next computed after the orders are received by the authorized broker or broker-authorized designee.  Investors may also be charged a fee by a broker or agent if shares are purchased through a broker or agent.

 

 

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The Fund reserves the right to (i) refuse to accept any request to purchase shares of the Fund for any reason; or (ii) suspend its offering of shares at any time.

 

Regular Mail Orders.   Payment for shares must be made by check from a U.S. financial institution and payable in U.S. dollars.  Cash, money orders, and traveler’s checks will not be accepted by the Fund.  If checks are returned due to insufficient funds or other reasons, your purchase will be canceled.  You will also be responsible for any losses or expenses incurred by the Fund and Matrix.  The Fund will charge a $35 fee and may redeem shares of the Fund already owned by the purchaser or shares of another identically registered account in another series of the Trust to recover any such loss.  For regular mail orders, please complete a Fund Shares Application and mail it, along with your check made payable to the “ Capital Management Small-Cap Fund ,” to:

 

Capital Management Small-Cap Fund

Institutional Shares or Investor Shares (please specify)

c/o Matrix 360 Administration, LLC

4520 Main Street

Suite 1425

Kansas City, MO  64111

The application must contain your Social Security Number (“SSN”) or Taxpayer Identification Number (“TIN”).  If you have applied for a SSN or TIN at the time of completing your account application but you have not received your number, please indicate this on the application and include a copy of the form applying for the SSN or TIN.  Taxes are not withheld from distributions to U.S. investors if certain Internal Revenue Service (“IRS”) requirements regarding the SSN or TIN are met and we have not been notified by the IRS that the particular U.S. investor is subject to back-up withholding.

By sending your check to the Fund, please be aware that you are authorizing the Fund to make a one-time electronic debit from your account at the financial institution indicated on your check.  Your bank account will be debited as early as the same day the Fund receives your payment in the amount of your check.  Your original check will be destroyed once processed, and you will not receive your canceled check back.  If the Fund cannot post the transaction electronically, you authorize the Fund to present an image copy of your check for payment.

Bank Wire Orders.   Purchases may also be made through bank wire orders.  To establish a new account or add to an existing account by wire, please call the Fund at 1-888-626-3863 for instructions.

 

Subsequent Investments.   You may also add to your account by mail or wire at any time by purchasing shares at the then current public offering price.  The minimum subsequent investment is $500.  Before adding funds by bank wire, please call the Fund at 1-888-626-3863 for wire instructions and to advise the Funds of the investment, dollar amount, and the account identification number.  Mail orders should include, if possible, the “Invest by Mail” stub that is attached to your Fund confirmation statement.  Otherwise, please identify your account in a letter accompanying your purchase payment.

 

Automatic Investment Plan.   The automatic investment plan enables shareholders to make regular monthly or quarterly investments in shares through automatic charges to their checking account.  With shareholder authorization and bank approval, the Fund will automatically charge the checking account for the amount specified ($100 minimum), that will be automatically invested in shares at the public offering price on or about the 21st day of the month.  The shareholder may change the amount of the investment or discontinue the plan at any time by writing to the Fund.

 

Exchange Feature.   You may exchange shares of the Fund for shares of any other series of the Trust offered for sale in the state in which you reside.  Shares may be exchanged for shares of any other series of the Trust at the net asset value plus the percentage difference between the sales charge applicable to those shares and any sales charge previously paid in connection with the shares being exchanged.  Prior to making an investment decision or giving us your instructions to exchange shares, please read the prospectus for the series in which you wish to invest.  The Trustees reserve the right to suspend, terminate, or amend the terms of the exchange privilege upon prior written notice to the shareholders.

 

 

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Stock Certificates.   The Fund normally does not issue stock certificates.  Evidence of ownership of shares is provided through entry in the Fund’s share registry.  Investors will receive periodic account statements (and, where applicable, purchase confirmations) that will show the number of shares owned.

  

Important Information about Procedures for Opening a New Account.   Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act of 2001), the Fund is required to obtain, verify, and record information to enable the Fund to form a reasonable belief as to the identity of each customer who opens an account.  Consequently, when an investor opens an account, the Fund will ask for the investor’s name, street address, date of birth (for an individual), social security or other tax identification number (or proof that the investor has filed for such a number), and other information that will allow the Fund to identify the investor.  The Fund may also ask to see the investor’s driver’s license or other identifying documents.  An investor’s account application will not be considered “complete” and, therefore, an account will not be opened and the investor’s money will not be invested until the Fund receives this required information.  If after opening the investor’s account the Fund is unable to verify the investor’s identity after reasonable efforts, as determined by the Fund in its sole discretion, the Fund may (i) restrict redemptions and further investments until the investor’s identity is verified; and (ii) close the investor’s account without notice and return the investor’s redemption proceeds to the investor.  If the Fund closes an investor’s account because the Fund was unable to verify the investor’s identity, the Fund will value the account in accordance with the Fund’s next net asset value calculated after the investor’s account is closed.  In that case, the investor’s redemption proceeds may be worth more or less than the investor’s original investment.  The Fund will not be responsible for any losses incurred due to the Fund’s inability to verify the identity of any investor opening an account.

 

REDEEMING YOUR SHARES

 

Regular Mail Redemptions.   Regular mail redemption requests should be addressed to:

 

Capital Management Small-Cap Fund

Institutional Shares or Investor Shares (please specify)

c/o Matrix 360 Administration, LLC

4520 Main Street

Suite 1425

Kansas City, MO  64111

Regular mail redemption requests should include the following:

 

(1)

Your letter of instruction specifying the account number and number of shares, or the dollar amount, to be redeemed.  This request must be signed by all registered shareholders in the exact names in which they are registered;

(2)

Any required signature guarantees (see “Signature Guarantees” below); and

(3)

Other supporting legal documents, if required, in the case of estates, trusts, guardianships, custodianships, corporations, partnerships, pension or profit sharing plans, and other organizations.

 

Your redemption proceeds normally will be sent to you within 7 days after receipt of your redemption request.  The Fund may delay forwarding a redemption check for recently purchased shares while it determines whether the purchase payment will be honored.  Such delay (which may take up to 15 days from the date of purchase) may be reduced or avoided if the purchase is made by certified check or wire transfer.  For all redemptions, the net asset value next determined after receipt of the request for redemption will be used in processing the redemption request.

 

Telephone and Bank Wire Redemptions.   Unless you decline the telephone transaction privileges on your account application, you may redeem shares of the Fund by telephone.  You may also redeem shares by bank wire under certain limited conditions.  The Fund will redeem shares in this manner when so requested by the shareholder only if the shareholder confirms redemption instructions in writing, using the instructions above.

 

 

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The Fund may rely upon confirmation of redemption requests transmitted via facsimile (FAX# 215-830-8995).  The confirmation instructions must include the following:

 

(1)

The name of the Fund and the designation of class (Institutional or Investor);

(2)

Shareholder(s) name and account number;

(3)

Number of shares or dollar amount to be redeemed;

(4)

Instructions for transmittal of redemption proceeds to the shareholder; and

(5)

Shareholder(s) signature(s) as it/they appear(s) on the application then on file with the Fund.

 

Redemption proceeds will not be distributed until written confirmation of the redemption request is received, per the instructions above.  You can choose to have redemption proceeds mailed to you at your address of record, your financial institution, or to any other authorized person, or you can have the proceeds sent by wire transfer to your financial institution ($5,000 minimum).  Redemption proceeds cannot be wired on days in which your financial institution is not open for business.  You can change your redemption instructions anytime you wish by filing a letter including your new redemption instructions with the Fund.  See “Signature Guarantees” below.

 

The Fund, in its discretion, may choose to pass through to redeeming shareholders any charges imposed by the Fund’s custodian for wire redemptions.  If this cost is passed through to redeeming shareholders by the Fund, the charge will be deducted automatically from your account by redemption of shares in your account.  Your bank or brokerage firm may also impose a charge for processing the wire.  If wire transfer of funds is impossible or impractical, the redemption proceeds will be sent by mail to the designated account.

 

You may redeem shares, subject to the procedures outlined above, by calling the Fund at 1-888-626-3863.  Redemption proceeds will only be sent to the financial institution account or person named in your account application currently on file with the Fund.  Telephone redemption privileges authorize the Fund to act on telephone instructions from any person representing himself or herself to be the investor and reasonably believed by the Fund or its agents to be genuine.  The Fund or its agents will employ reasonable procedures, such as requiring a form of personal identification, to confirm that instructions are genuine.  The Fund, however, will not be liable for any losses due to unauthorized or fraudulent instructions.  The Fund will also not be liable for following telephone instructions reasonably believed to be genuine.

 

Systematic Withdrawal Plan.   A shareholder who owns shares of the Fund valued at $250,000 or more at the current offering price may establish a systematic withdrawal plan to receive a monthly or quarterly check in a stated amount not less than $100.  Each month or quarter, as specified, the Fund will automatically redeem sufficient shares from your account to meet the specified withdrawal amount.  The shareholder may establish this service whether dividends and distributions are reinvested in shares of the Fund or paid in cash.  Call or write the Fund for an application form.

 

Small Accounts.   The Trustees reserve the right to redeem involuntarily any account having a balance of less than $250,000 for the Institutional Shares or $1,000 for the Investor Shares (due to redemptions, exchanges, or transfers, and not due to market action) upon 30-days’ prior written notice.  If the shareholder brings his account balance up to the applicable minimum for the share class during the notice period, the account will not be redeemed.  Redemptions from retirement plans may be subject to federal income tax withholding.

  

Signature Guarantees.   To protect your account and the Fund from fraud, signature guarantees may be required to be sure that you are the person who has authorized a change in registration or standing instructions for your account.  Signature guarantees are generally required for (i) change of registration requests; (ii) requests to establish or to change exchange privileges or telephone and bank wire redemption service other than through your initial account application; (iii) transactions where proceeds from redemptions, dividends, or distributions are sent to an address or financial institution differing from the address or financial institution of record; and (iv) redemption requests in excess of $50,000.  Signature guarantees are acceptable from a member bank of the Federal Reserve System, a savings and loan institution, credit union (if authorized under state law), registered broker-dealer, securities exchange, or association clearing agency and must appear on the written request for change of registration, establishment or change in exchange privileges, or redemption request.

 

Redemptions in Kind.   The Fund does not intend, under normal circumstances, to redeem its securities by payment in kind.  It is possible, however, that conditions may arise in the future which would, in the opinion of the Trustees, make it undesirable for the Fund to pay for all redemptions in cash.  In such cases, the Trustees may authorize payment to be made in readily marketable portfolio securities of the Fund.  Securities delivered in payment of redemptions would be valued at the same value assigned to them in computing the Fund’s net asset value per share.  Shareholders receiving them would incur brokerage costs when these securities are sold.  An irrevocable election has been filed under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay redemptions in cash, rather than in kind, to any shareholder of record of the Fund who redeems during any 90-day period, the lesser of (i) $250,000 or (ii) one percent (1%) of the Fund’s net asset value at the beginning of such period.

 

 

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Miscellaneous .  All redemption requests will be processed and payment with respect thereto will normally be made within seven (7) days after tender.  The Fund reserves the right to suspend any redemption request involving recently purchased shares until the check for the recently purchased shares has cleared. The Fund may suspend redemptions, if permitted by the 1940 Act, for any period during which the NYSE is closed or during which trading is restricted by the SEC or if the SEC declares that an emergency exists.  Redemptions may also be suspended during other periods permitted by the SEC for the protection of the Fund’s shareholders.  During drastic economic and market changes, telephone redemption privileges may be difficult to implement.

 

PURCHASING OR REDEEMING SHARES THROUGH A FINANCIAL INTERMEDIARY

 

You may purchase or redeem shares of the Fund through an authorized financial intermediary (such as a financial planner or advisor).  To purchase or redeem shares based upon the net asset value of any given day, your financial intermediary must receive your order before the close of regular trading on the NYSE that day.  Your financial intermediary is responsible for transmitting all purchase and redemption requests, investment information, documentation, and money to the Fund on time.  Your financial intermediary may charge additional transaction fees for its services.

 

Certain financial intermediaries may have agreements with the Fund that allow them to enter confirmed purchase and redemption orders on behalf of clients and customers.  Under this arrangement, the financial intermediary must send your payment to the Fund by the time the Fund prices its shares on the following business day.

 

The Fund is not responsible for ensuring that a financial intermediary carries out its obligations.  You should look to the financial intermediary through whom you wish to invest for specific instructions on how to purchase or redeem shares of the Fund.

FREQUENT PURCHASES AND REDEMPTIONS

 

Frequent purchases and redemptions (“Frequent Trading”) of shares of the Fund may present a number of risks to other shareholders of the Fund.  These risks may include, among other things, dilution in the value of shares of the Fund held by long-term shareholders, interference with the efficient management by the Advisor of the Fund’s portfolio holdings, and increased brokerage and administration costs.  Due to the potential of a thin market for the Fund’s small-cap portfolio securities, as well as overall adverse market, economic, political, or other conditions affecting the sale price of portfolio securities, the Fund could face untimely losses as a result of having to sell portfolio securities prematurely to meet redemptions.  Current shareholders of the Fund may face unfavorable impacts as small-cap securities may be more volatile than securities for larger, more established companies and it may be more difficult to sell a significant amount of shares to meet redemptions in a limited market.  Frequent Trading may also increase portfolio turnover that may result in increased capital gains taxes for shareholders of the Fund.  These capital gains could include short-term capital gains taxed at ordinary income tax rates.

 

The Trustees have adopted a policy that is intended to identify and discourage Frequent Trading by shareholders of the Fund.  Under the Fund’s policy, the Advisor has the discretion to refuse to accept further purchase and/or exchange orders from an investor if the Advisor believes the investor has a pattern of Frequent Trading that the Advisor considers not to be in the best interests of the other shareholders.  To assist the Advisor in identifying possible Frequent Trading patterns, Matrix provides a daily record of shareholder trades to the Advisor.  Matrix also assists the Advisor in monitoring and testing shareholder purchase and redemption orders for possible incidents of Frequent Trading.  Under the Fund’s policy regarding Frequent Trading, the Fund intends to limit investments from investor accounts that purchase and redeem shares over a period of less than ten days in which (i) the redemption amount is within ten percent of the previous purchase amount(s); (ii) the redemption amount is greater than $10,000; and (iii) two or more such redemptions occur during a 60 calendar day period.  In the event such a purchase and redemption pattern occurs, an investor account and any other account with the same taxpayer identification number will be precluded from investing in the Fund (including investments that are part of an exchange transaction) for at least 30 calendar days after the redemption transaction.

 

 

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This policy is intended to apply uniformly, except that the Fund may not be able to identify or determine that a specific purchase and/or redemption is part of a pattern of Frequent Trading or that a specific investor is engaged in Frequent Trading, particularly with respect to transactions made through accounts such as omnibus accounts or accounts opened through third-party financial intermediaries such as broker-dealers and banks (“Intermediary Accounts”).  Therefore, this policy is not applied to omnibus accounts or Intermediary Accounts.  Omnibus account arrangements permit multiple investors to aggregate their respective share ownership positions and to purchase, redeem, and exchange Fund shares without the identity of the particular shareholders being known to the Fund.  Like omnibus accounts, Intermediary Accounts normally permit investors to purchase, redeem, and exchange Fund shares without the identity of the underlying shareholder being known to the Fund.  Accordingly, the ability of the Fund to monitor and detect Frequent Trading through omnibus accounts and Intermediary Accounts would be very limited, and there would be no guarantee that the Fund could identify shareholders who might be engaging in Frequent Trading through such accounts or curtail such trading.  The policy will not apply if the Advisor determines that a purchase and redemption pattern is not a Frequent Trading pattern intended to respond to short-term fluctuations in the securities markets, such as inadvertent errors that result in frequent purchases and redemptions.  Inadvertent errors shall include purchases and/or redemptions made unintentionally or by mistake (e.g., where an investor unintentionally or mistakenly invests in the Fund and redeems immediately after recognizing the error).  The investor shall have the burden of proving to the sole satisfaction of the Advisor that a frequent purchase and redemption pattern was the result of an inadvertent error.  In such a case, the Advisor may choose to accept further purchase and/or exchange orders for such investor account.

  

Intermediaries may apply frequent trading policies that differ from those described in this prospectus.  If you invest with the Fund through an intermediary, please read that firm’s program materials carefully to learn of any rules or fees that may apply.

 

Although the Fund has taken steps to discourage Frequent Trading of the Fund’s shares, there is no guarantee that such trading will not occur.

 

OTHER IMPORTANT INFORMATION

 

Commodity Exchange Act Matters. To the extent the Fund makes investments regulated by the Commodities Futures Trading Commission, it intends to so in accordance with Rule 4.5 under the Commodity Exchange Act (“CEA”). The Trust, on behalf of the Fund, has filed a notice of eligibility for exclusion from the definition of the term “commodity pool operator” in accordance with Rule 4.5 and therefore, the Fund is not subject to registration or regulation as a commodity pool operator under the CEA.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

 

The following information is meant as a general summary for U.S. taxpayers.  Additional tax information appears in the SAI.  Shareholders should rely on their own tax advisors for advice about the particular federal, state, and local tax consequences of investing in the Fund.

 

The Fund will distribute most of its income and realized gains to its shareholders every year.  Dividends paid by the Fund derived from net investment income, if any, will generally be paid annually and capital gains distributions, if any, will be made at least annually.  Shareholders may elect to take dividends from net investment income or capital gains distributions, if any, in cash or reinvest them in additional Fund shares.  Although the Fund will not be taxed on amounts it distributes, shareholders will generally be taxed on distributions, regardless of whether distributions are paid by the Fund in cash or are reinvested in additional Fund shares.  Distributions may be subject to state and local taxes, as well as federal taxes.

 

In general, a shareholder who sells or redeems shares will realize a capital gain or loss, which will be long-term or short-term depending upon the shareholder’s holding period for the Fund shares.  An exchange of shares may be treated as a sale and may be subject to tax.

 

As with all mutual funds, the Fund may be required to withhold U.S. federal income tax at the fourth lowest rate for taxpayers filing as unmarried individuals (presently 28%) for all taxable distributions payable to shareholders who fail to provide the Fund with their correct taxpayer identification numbers or to make required certifications, or who have been notified by the IRS that they are subject to backup withholding.  Backup withholding is not an additional tax; rather, it is a way in which the IRS ensures it will collect taxes otherwise due.  Any amounts withheld may be credited against a shareholder’s U.S. federal income tax liability.

 

 

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Shareholders should consult with their own tax advisors to ensure that distributions and sale of Fund shares are treated appropriately on their income tax returns.

 

A particular dividend distribution generally will be taxable as qualified dividend income, long-term capital gains, or ordinary income.  Qualified dividend income generally includes dividends paid by U.S. corporations and certain qualifying foreign corporations, provided the foreign corporation is not a passive foreign investment company.  Any distribution resulting from such qualified dividend income received by the Fund will be designated as qualified dividend income.  If the Fund designates a dividend distribution as qualified dividend income, it generally will be taxable to individual shareholders at the long-term capital gains tax rate provided certain holding period requirements are met.  If the Fund designates a dividend distribution as a capital gains distribution, it generally will be taxable to shareholders as long-term capital gains, regardless of how long the shareholders have held their Fund shares.  To the extent the Fund engages in increased portfolio turnover, short-term capital gains may be realized and any distribution resulting from such gains will be considered ordinary income for federal tax purposes.  All taxable dividends paid by the Fund other than those designated as qualified dividend income or capital gains distributions will be taxable as ordinary income to shareholders.

  

Taxable distributions paid by the Fund to corporate shareholders will be taxed at corporate tax rates.  Corporate shareholders may be entitled to a dividends received deduction (“DRD”) for a portion of the dividends paid and designated by the Fund as qualifying for the DRD.

 

If the Fund declares a dividend in October, November, or December but pays it in January, it will be taxable to shareholders as if the dividend had been received in the year it was declared.  Every year, each shareholder will receive a statement detailing the tax status of any Fund distributions for that year.  Distributions may be subject to state and local taxes, as well as federal taxes.

 

BENCHMARK DESCRIPTIONS

 

The S&P 600 Small-Cap Index is the Standard & Poor’s Composite Index of 600 small-cap stocks and is a widely recognized unmanaged index of common stock prices. You cannot invest directly in this index.  This index does not have an investment advisor and does not pay any commissions, expenses or taxes.  If this index did pay commissions, expenses or taxes, its returns would be lower.

FINANCIAL HIGHLIGHTS

 

The financial highlights tables on the following page are intended to help you understand the Fund’s financial performance for the previous five (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).  The financial data included in the table below have been derived from audited financial statements of the Fund and have been audited by BBD, LLP, an independent registered public accounting firm, whose report covering such years is incorporated by reference to the SAI.  This information should be read in conjunction with the Fund’s latest audited annual financial statements and notes thereto, which are also incorporated by reference to the SAI, a copy of which may be obtained at no charge by calling the Fund at 1-888-626-3863.  Further information about the performance of the Fund is contained in the Annual Report of the Fund, a copy of which may also be obtained at no charge by calling the Fund.

 

 

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Capital Management Small-Cap Fund

FINANCIAL HIGHLIGHTS

For a share outstanding during each  fiscal year ended

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