-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OCAp4ZlMtaovAUPky5AL/PTsUaFbKjKHRsqCY37D31JnisePnc8Aa068Yjn6e5/0 WoVlFxE+pT+Cp9Hmkxte9Q== <SEC-DOCUMENT>0000950131-95-003558.txt : 19951222 <SEC-HEADER>0000950131-95-003558.hdr.sgml : 19951222 ACCESSION NUMBER: 0000950131-95-003558 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19951221 EFFECTIVENESS DATE: 19951221 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OBERWEIS EMERGING GROWTH FUND /IL/ CENTRAL INDEX KEY: 0000803020 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-09093 FILM NUMBER: 95603190 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04854 FILM NUMBER: 95603191 BUSINESS ADDRESS: STREET 1: ONE CONSTITUTION DRIVE CITY: AURORA STATE: IL ZIP: 60506 BUSINESS PHONE: 7088977100 MAIL ADDRESS: STREET 1: ONE CONSTITUTION DRIVE CITY: AURORA STATE: IL ZIP: 60506 </SEC-HEADER> <DOCUMENT> <TYPE>485BPOS <SEQUENCE>1 <DESCRIPTION>OBERWEIS EMERGING GROWTH <TEXT> <PAGE> SEC Filing Fees Account #0000803020 AS FILED WITH THE SECURITIES AND EXCHANGE 1933 ACT FILE NO. 33-9093 COMMISSION ON DECEMBER 21, 1995 1940 ACT FILE NO. 811-4854 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. Post-Effective Amendment No. 11 [X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 13 [X] OBERWEIS EMERGING GROWTH FUND (to be renamed The Oberweis Funds) (Exact Name of Registrant as Specified in Charter) c/o Oberweis Asset Management, Inc. One Constitution Drive Aurora, Illinois 60506 (Address of Principal Executive Offices, Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (800) 323-6166 Patrick B. Joyce Oberweis Asset Management, Inc. One Constitution Drive Aurora, Illinois 60506 (Name and Address of Agent for Service) Copies to: CATHY G. O'KELLY VEDDER, PRICE, KAUFMAN & KAMMHOLZ 222 NORTH LASALLE STREET, SUITE 2600 CHICAGO, ILLINOIS 60601 DECLARATION PURSUANT TO RULE 24f-2 Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant has declared that an indefinite number or amount of Shares of beneficial interest in the Fund has been registered under the Securities Act of 1933. The Rule 24f-2 Notice for the year ended December 31, 1994 was filed with the Securities and Exchange Commission on or about February 27, 1995. It is proposed that this filing will become effective (check appropriate box) [_] immediately upon filing pursuant to paragraph (b) [X] on January 1, 1996 pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(1) [_] on (date) pursuant to paragraph (a)(1) [_] 75 days after filing pursuant to paragraph (a)(2) [_] on (date) pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: [_] This post-effective amendment designates a new effective date for a previously filed post-effective amendment <PAGE> FORM N-1A CROSS REFERENCE SHEET <TABLE> <CAPTION> FORM N-1A ITEM NUMBER LOCATION IN PROSPECTUS - --------------------- ---------------------- <S> <C> Part A-- Item 1. Cover page Cover Page Item 2. Synopsis Synopsis of Fees Item 3. Condensed Financial Information Financial Highlights; Performance Comparison Item 4. General Description of Registrant Investment Objective, Policies and Risks; General Information Item 5. Management of the Fund Management of the Portfolios; Expenses of the Fund; The Advisory and Management Agreements Item 5A. Management's Discussion of Fund Performance Not Applicable Item 6. Capital Stock and Other Securities Distribution of Shares; Dividends, Distributions and Tax Status; General Information Item 7. Purchase of Securities Being Offered How to Purchase Shares; Shareholder Services Item 8. Redemption or Repurchase How to Redeem Shares; Shareholder Services Item 9. Pending Legal Proceedings Not Applicable LOCATION IN STATEMENT OF ADDITIONAL INFORMATION ----------------------------------- Item B-- Item 10. Cover Page Cover Page Item 11. Table of Contents Cover Page Item 12. General Information and History Not Applicable Item 13. Investment Objectives and Policies Investment Objective, Policies and Restrictions Item 14. Management of the Fund Management of the Fund Item 15. Control Persons and Principal Holders of Securities Management of the Fund Item 16. Investment Advisory and Other Services Oberweis Asset Management, Inc.; The Chicago Corporation; Distribution Plan and Agreement; Additional Information Item 17. Brokerage Allocation Portfolio Transactions Item 18. Capital Stock and Other Securities Shareholder Voting Rights [See also Item 6] Item 19. Purchase, Redemption and Pricing of Securities Redemption of Shares, Determination of Net Asset Value Being Offered Item 20. Tax Status Taxes Item 21. Underwriters See Prospectus - How to Purchase Shares Item 22. Calculations of Performance Data Calculation of Average Annual Total Return Item 23. Financial Statements Financial Statements Part C-- Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C of this Registration Statement. </TABLE> ii <PAGE> This post-effective amendment to the Registration Statement of the Oberweis Emerging Growth Fund (Post-Effective Amendment No. 11 under the Securities Act of 1933 (the "1933 Act") and Amendment No. 13 under the Investment Company Act of 1940 (the "1940 Act")) is being filed to amend Parts B and C of Post- Effective Amendment No. 10 under the 1933 Act filed on October 18, 1995. iii <PAGE> SUBJECT TO COMPLETION Preliminary Statement Of Additional Information Dated December 21, 1995 STATEMENT OF ADDITIONAL INFORMATION THE OBERWEIS FUNDS ONE CONSTITUTION DRIVE AURORA, ILLINOIS 60506 (800) 323-6166 ___________________________________ This Statement of Additional Information is not a prospectus and should be read in conjunction with the Fund's Prospectus dated _________________. A copy of the Fund's Prospectus may be obtained by writing or calling the above address or phone number. - ------------------------------------- Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to time the registration statement becomes effective. This Statement of Additional Information does not constitute a prospectus. TABLE OF CONTENTS <TABLE> <S> <C> INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS............................. 2 MANAGEMENT OF THE FUND...................................................... 5 OBERWEIS ASSET MANAGEMENT, INC.............................................. 7 DISTRIBUTION PLAN AND AGREEMENT............................................. 8 EXPENSES BORNE BY THE PORTFOLIOS............................................ 9 PORTFOLIO TRANSACTIONS...................................................... 10 SHAREHOLDER VOTING RIGHTS................................................... 12 REDEMPTION OF SHARES........................................................ 12 SHAREHOLDER SERVICES........................................................ 13 DETERMINATION OF NET ASSET VALUE............................................ 13 TAXES....................................................................... 13 CALCULATION OF AVERAGE ANNUAL TOTAL RETURN.................................. 14 ADDITIONAL INFORMATION...................................................... 14 INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS </TABLE> 1 <PAGE> INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS The following information supplements the discussion of each Portfolio's investment objective and policies in the Fund's Prospectus under the heading "Investment Objective, Policies and Risks." Investment Objective - -------------------- The investment objective of each Portfolio is to maximize capital appreciation. Each Portfolio intends to achieve its objective through investing primarily in common stocks of companies, which in the opinion of its investment adviser have a potential for above-average long-term growth in market value. The investment objective of each Portfolio is fundamental and, like all fundamental policies of a Portfolio, cannot be changed without the affirmative vote of a majority of the outstanding voting securities of that Portfolio. As used in this Statement of Additional Information and in the Fund's Prospectus, "a majority of the outstanding voting securities" of the Portfolio means the lesser of (1) the holders of more than 50% of the outstanding shares of the Portfolio, or (2) the holders of more than 67% of the shares of the Portfolio present if more than 50% of the outstanding shares of the Portfolio are present at a meeting in person or by proxy. Investment Restrictions - ----------------------- The policies set forth below are fundamental policies of each Portfolio and may not be changed without approval of a majority of that Portfolio's outstanding shares. A Portfolio individually may not: 1. purchase more than 10% of any class of securities of any one issuer other than the United States government and its instrumentalities; 2. invest more than 5% of its total assets, at the time of the investment in question, in the securities of any one issuer (other than the United States government and its instrumentalities); 3. invest more than 5% of its total assets in securities that are not readily marketable and securities of unseasoned issuers that have been in continuous operation for less than three years, including operating periods of their predecessors; 4. invest more than 5% of its total assets in securities of issuers which the Fund is restricted from selling to the public without registration under the Securities Act of 1933; 5. invest more than 5% of its total assets in warrants, and of this amount, no more than 2% of total assets may be invested in warrants that are listed on neither the New York Stock Exchange nor the American Stock Exchange; 6. purchase or retain the securities of any issuer if (i) one or more officers or directors of the Fund or the investment adviser individually own or would own, directly or beneficially, more than 1/2 of 1% of the securities of such issuer, and (ii) in the aggregate, such persons own or would own, directly or beneficially, more than 5% of such securities; 7. purchase, sell or invest in the securities of other investment companies; 8. purchase, sell or invest in interests in oil, gas or other mineral exploration or development programs; 9. purchase, sell or invest in commodities or commodity contracts; 10. purchase, sell or invest in real estate or interests in real estate, except that the Portfolio may purchase, sell or invest in marketable securities of companies holding real estate or interests in real estate, including real estate investment trusts; provided such investments do not exceed 10% of the Portfolio's total assets; 11. issue senior securities; 12. invest in companies for the purpose of exercising control or management; 13. concentrate its investments in any one industry, except that the Portfolio may invest up to 25% of its total assets in any one industry; 14. purchase securities on margin, except that the Portfolio may obtain such short-term credits as may be necessary for the clearance of purchases and sales of securities; 2 <PAGE> 15. make short sales of securities unless, at the time of each such sale and thereafter while a short position exists, the Portfolio owns an equal amount of securities of the same issue or owns securities which, without payment by the Portfolio of any consideration, are convertible into, or are exchangeable for, an equal amount of securities of the same issue; 16. participate on a joint or joint and several basis in any trading account in any securities; 17. lend its funds to other persons, except through the purchase of a portion of an issue of debt securities publicly distributed; 18. lend its portfolio securities, unless the borrower is a broker, dealer or financial institution that pledges and maintains collateral with the Portfolio consisting of cash or securities issued or guaranteed by the United States government having a value at all times not less than 100% of the value of the loaned securities, provided that the aggregate amount of such loans shall not exceed 30% of the Fund's total assets; 19. borrow money except from banks as a temporary measure for extraordinary or emergency purposes or as necessary for the clearance of purchases and sales of securities, provided that the aggregate amount of such borrowing shall not exceed 5% of the value of its total assets at the time of any such borrowing, or mortgage, pledge or hypothecate its assets, except in an amount not exceeding 5% of its total assets taken at cost to secure such borrowing; 20. engage in the business of underwriting the securities of other issuers; or 21. invest in puts, calls, straddles or any combination thereof, except that the Portfolio may write covered call options on its Portfolio securities, the aggregate market value of which is limited to 50% of the Portfolio's net assets, and the Portfolio may invest up to 5% of its assets in the purchase of put and call options including options on stock indices. The policies set forth below may be changed by the Fund's Board of Trustees, all such changes being subject to applicable law. A Portfolio individually may not: 1. purchase, sell or invest in interests in oil, gas or other mineral leases; or 2. purchase, sell or invest in limited partnership interests in real estate, except that the Portfolio may purchase, sell or invest in marketable securities of companies holding real estate or interests in real estate, including real estate investment trusts; provided such investments do not exceed 10% of the Portfolio's total assets. If a percentage restriction is adhered to at the time of investment, a later change in percentage resulting from changes in values or assets will not be considered a violation of such restriction. Other Restrictions - ------------------ Other investment restrictions are set forth in the Fund's Prospectus and elsewhere in this Statement of Additional Information. In addition, each Portfolio will not invest more than 10% of its total assets in "restricted securities" (meaning securities the resale of which is legally or contractually restricted, including repurchase agreements with maturities of seven days or more and securities that are not readily marketable). Repurchase Agreements - --------------------- Each Portfolio may enter into so-called "repurchase agreements," whereby it purchases a security and the seller (a qualified bank or securities dealer) simultaneously commits to repurchase that security at a certain date at an agreed upon price, plus an agreed upon market rate of interest that is unrelated to the coupon rate or date of maturity of the security. In these transactions, the securities purchased by the Portfolio have, at all times, a total value in excess of the value of the repurchase agreement and are held by the Fund's custodian bank until repurchased. Certain costs may be incurred by a Portfolio in connection with the sale of the securities purchased by it if the seller does not repurchase them in accordance with the repurchase agreement. The Portfolio will consider on an ongoing basis the creditworthiness of the institutions with which it enters into repurchase agreements and will monitor the value of the underlying securities to ensure that additional securities are deposited by the seller if the value of the securities purchased decreases below the resale price at any time. Under the Investment Company Act of 1940, repurchase agreements may be considered loans by the Portfolio. Each Portfolio is subject to restrictions on entering into repurchase agreements in excess of 25% of the total assets and on investing more than 10% of its total assets in restricted securities, which includes repurchase agreements with maturities of seven days or more. 3 <PAGE> Purchasing Put and Call Options - ------------------------------- Each Portfolio will commit no more than 5% of its assets to premiums when purchasing put and call options. The Portfolios may enter into closing transactions, exercise their options or permit them to expire. The Portfolios may purchase put options on an underlying security owned by them. As the holder of a put option, a Portfolio would have the right to sell the underlying security at the exercise price at any time during the term of the option. While a Portfolio will not purchase options for leverage purposes, it may purchase put options for defensive purposes in order to protect against an anticipated decline (usually short-term) in the value of its securities. Such hedge protection is provided only during the life of the put option and only when the Portfolio, as the holder of the put option, is able to sell the underlying security at the put exercise price regardless of any additional decline in the security's market price. For example, a put option may be purchased in order to protect unrealized appreciation of a security where the Portfolio deems it desirable to continue to hold the security. The premium paid for the put option and any transaction costs would reduce any capital gain otherwise available for distribution when the security is eventually sold. Except as discussed below with respect to options on stock indices, each Portfolio has no current intention of purchasing put options at a time when the Portfolio does not own the underlying security; however, it reserves the right to do so. By purchasing put options on a security it does not own, the Portfolio would seek to benefit from a decline in the market price of the underlying security. If such a put option is not sold when it has remaining value, and if the market of the underlying security remains equal to or greater than the exercise price during the life of the put option, the Portfolio would lose its entire investment in the put option (i.e., the entire premium paid by the Portfolio). In order for the purchase of a put option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs, unless the put option is sold in a closing sale transaction. The Portfolios may also repurchase call options previously written on underlying securities they already own in order to preserve unrealized gains. The Portfolios may also purchase call and put options on stock indices ("stock index options") for the purpose, in part, of partially hedging against the risk of unfavorable price movements adversely affecting a Portfolio's securities or securities the Portfolio intends to buy and may sell stock index options in related closing transactions. The principal uses of stock index options would be to provide a partial hedge for a portion of the Portfolios' investment securities, and to offer a cash management tool. Purchasing stock index options could provide an efficient way to implement a partial decrease in portfolio market exposure in response to changing market conditions. Although techniques other than the purchase of options could be used to hedge the Portfolios' investments, the Portfolios may be able to hedge their exposure more effectively, and perhaps at a lower cost, through the use of stock index options. The Portfolios propose to invest only in stock index options for which the underlying index is a broad market index such as the Standard & Poor's Index, the Major Market Index, or the Russell 2000 Index. The Portfolios would propose to purchase broad stock index options only if they are listed on a national securities exchange and traded, in the opinion of the Fund's investment adviser, with some significant volume. The Portfolios will not enter into a stock index option if, as a result thereof, more than five percent (5%) of the Fund's total assets (taken at market value at the time of entering into the contract) would be committed to options, whether options on individual securities or options on stock indices. There are several risks in connection with the Portfolios' use of stock index options as a hedging device. One risk arises because of the imperfect correlation between movements in the prices of the stock index options and movements in the prices of securities held by the Portfolios. Successful use of stock index options by the Portfolios for hedging purposes is also subject to the Fund's adviser's ability to correctly predict movements in the direction of the market. In addition, due to market distortions, the price movements of the stock index options might not correlate perfectly with price movements in the underlying stock index. Increased participation by speculators in the options market might also cause temporary price distortions. The ability to establish and close out positions on options will be subject to the liquidity of the index options market. Absence of a liquid market on an exchange may be due to: (i) insufficient trading interest in certain options; (ii) restrictions imposed by an exchange on opening transactions or closing transactions, or both; (iii) trading halts, suspensions or other restrictions imposed with respect to particular classes or series of options, or underlying securities; (iv) unusual or unforeseen circumstances, such as severe stock market fluctuations, interrupting normal exchange operations; (v) inadequacy of an exchange's or a clearing corporation's facilities to handle increased trading volume; or (vi) discontinuance of the trading of options (or a particular class or series of options) by an exchange, for economic or other reasons. Higher than anticipated trading activity or other unforeseen events also could cause an exchange or clearing corporation to institute special procedures which may interfere with the timely execution of customers' orders. 4 <PAGE> Stock index options may be closed out only on an exchange which provides a market for such options. For example, OEX stock index options currently can be purchased or sold only on the CBOE. Although the Portfolios intend to purchase or sell stock index options only on exchanges where there appear to be active markets, there is no assurance that a liquid market will exist for any particular options contract at any particular time. In such event, it might not be possible to close a stock index option position. Lending of Securities - --------------------- The Portfolios may lend their investment securities in an amount up to 30% of its total assets to qualified institutional investors who need to borrow securities in order to complete certain transactions. By lending its investments securities, a Portfolio attempts to increase its income through the receipt of interest on the loan. Any gain or loss in the market price of the securities loaned that might occur during the term of the loan would be for the account of the Portfolio. A Portfolio may lend its portfolio securities to qualified brokers, dealers, domestic and foreign banks or other financial institutions, so long as the terms and the structure of such loans are not inconsistent with the Investment Company Act of 1940, or the Rules and Regulations or interpretations of the Securities and Exchange Commission (the "Commission") thereunder, which currently require that (a) the borrower pledge and maintain with the Portfolio collateral consisting of cash, an irrevocable letter of credit issued by a domestic U.S. bank, or securities issued or guaranteed by the U.S. government having a value at all times of not less than 100% of the value of the securities loaned, (b) the borrower add to such collateral whenever the price of the securities loaned rises (i.e., the borrower "marks to the market" on a daily basis), (c) the loan be made subject to termination by the Portfolio at any time, and (d) the Portfolio receives reasonable interest on the loan or its collateral (which may include the Portfolio investing any cash collateral in interest-bearing short-term investments), any dividends and distributions paid on the loaned securities and any increase in their market value. Arbitrage - --------- The Portfolios have no current intention to engage in arbitrage (meaning the simultaneous purchase and sale of the same security in different markets but not on the purchase of call and put options on stock indices). MANAGEMENT OF THE FUND All of the Fund officers and two of its Trustees are employees and/or officers of Oberweis Asset Management, Inc. ("OAM"), the Fund's investment adviser, manager and shareholder service agent, and/or The Chicago Corporation ("TCC"), the Fund's distributor. James D. Oberweis, a Trustee and President of the Fund, is the President and a Director of OAM, and with his wife, Elaine M. Oberweis, and his children, is the controlling shareholder of OAM. Mr. Oberweis is also a Senior Vice President of TCC. Peter H. Wendell, a Trustee of the Fund, is an Executive Vice President and a Director of TCC. The Trustees and officers of the Fund, their ages and their principal occupations during the past five (5) years are: THOMAS J. BURKE, Trustee (64) ** 143 South Lincoln Avenue, Aurora, Illinois 60505; President - Burke Medical Associates, 1968 to present; retired medical physician, practicing medical physician until November 1, 1995. DOUGLAS P. HOFFMEYER, Trustee (48) ** 620 Stetson, St. Charles, Illinois 60174; Vice President-Finance - Teltrend, Inc. (manufacturer of telecommunications equipment), October, 1986 to present. JAMES D. OBERWEIS, Trustee and President (49) * One Constitution Drive, Aurora, Illinois 60506; President and Director - Oberweis Asset Management, Inc., September, 1994 to present; Senior Vice President - The Chicago Corporation, October, 1994 to present; Senior Vice President - Alpha Source Asset Management, Inc., February, 1990 to October, 1994; Director of Fund Investments - Hamilton Investments, Inc., December, 1988 to October, 1994; President of the Fund, 1986 to present; Chairman of the Board of Oberweis Dairy, Inc. EDWARD F. STREIT, Trustee (60) ** 2000 West Galena, Aurora, Illinois 60506; licensed attorney in private practice, 1962 - present. 5 <PAGE> PETER H. WENDELL, Trustee (54) * 208 South LaSalle Street, Chicago, Illinois 60604; Executive Vice President and Director - The Chicago Corporation, January 1988 to present. PATRICK B. JOYCE, Executive Vice President and Treasurer (36) One Constitution Drive, Aurora, Illinois 60506; Executive Vice President, Secretary and Director - Oberweis Asset Management, Inc., September, 1994 to present; Administrator - The Chicago Corporation, October, 1994 to present; Vice President - Carr Asset Management, Inc./Indosuez Carr Futures, Inc., August, 1993 to September, 1994; Vice President of Operations and Assistant Treasurer - Selected Financial Services, Inc., September, 1989 to August, 1993. MARTIN L. YOKOSAWA, Vice President (35) One Constitution Drive, Aurora, Illinois 60506; Vice President - The Chicago Corporation - October, 1994 to present; Vice President - Oberweis Asset Management, Inc., September, 1994 to present; Registered Representative - Hamilton Investments, Inc., November, 1988 to October, 1994. JAMES M. ROBERTS, Vice President (35) One Constitution Drive, Aurora, Illinois 60506; Vice President - The Chicago Corporation, October, 1994 to present; Vice President - Oberweis Asset Management, Inc., September, 1995 to present; Registered Representative - Hamilton Investments, Inc., January, 1990 to October, 1994. ANITA I. MRAZ, Secretary (29) One Constitution Drive, Aurora, Illinois 60506; Administrative Assistant - The Chicago Corporation, October, 1994 to present; Administrative Assistant - Alpha Source Asset Management, Inc., April, 1991 to October, 1994; Manager - Glenn's Steak House, January, 1990 to April, 1991. MARY JANE MURPHY, Assistant Secretary (36) One Constitution Drive, Aurora, Illinois 60506; Fund Administrator - Oberweis Asset Management, Inc., October 1994 to Present; Fund Administrator - Alpha Source Asset Management, Inc., November, 1990 to October, 1994. __________________ * "Interested person" of the Fund as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended. ** Member of audit committee and nominating committee. NOTE: In some cases a trustee or officer may have held different positions during the last five years with the employer or employers listed. The Fund pays each Trustee of the Fund who is not also affiliated with OAM and/or TCC for such services an annual fee of $1,000, plus $500 for each day or part of a day in attendance at a meeting of the Board of Trustees or one of its Committees. The Fund reimburses travel and other expenses incurred by its non-interested Trustees for each such meeting attended. Trustees and officers of the Fund who are affiliated with OAM and/or TCC and officers of the Fund will receive no compensation or reimbursement from the Fund for acting in those capacities. However, Trustees and officers of the Fund who are affiliated with OAM and/or TCC may directly or indirectly benefit from fees or other remuneration received from the Fund by OAM and/or TCC. Regular meetings of the Board of Trustees are held quarterly and the audit committee usually holds two regular meetings during each year. The following table sets forth the compensation received by all trustees of the Fund for the fiscal year ended December 31, 1994. 6 <PAGE> <TABLE> <CAPTION> PENSION OR RETIREMENT ESTIMATED BENEFITS ANNUAL AGGREGATE ACCRUED AS BENEFITS COMPENSATION PART OF UPON TOTAL TRUSTEE FROM THE FUND FUND EXPENSES RETIREMENT COMPENSATION ------- ------------- ------------- ---------- ------------ <S> <C> <C> <C> <C> Robert A. Ebersole(1)....... $ 0 0 0 $ 0 Thomas J. Burke............. 3,500 0 0 3,500 Douglas P. Hoffmeyer........ 3,000 0 0 3,000 James D. Oberweis........... 0 0 0 0 Edward F. Streit............ 3,500 0 0 3,500 Laurence B. Siegel(1)....... 1,750 0 0 1,750 Peter H. Wendell(2)......... 0 0 0 0 </TABLE> - --------------------- (1) Served on the Board through September 1994. (2) Elected to serve on the Board in January 1995. As of November 30, 1995, the officers and Trustees of the Fund as a group owned of record or beneficially 1.3% of the outstanding shares of the Emerging Growth Portfolio. OBERWEIS ASSET MANAGEMENT, INC. The Fund's investment adviser, since October 1, 1994, is Oberweis Asset Management, Inc. ("OAM"), an investment adviser based in Aurora, Illinois. For additional details concerning OAM, see the Fund's Prospectus under the heading "Management of the Portfolios." Pursuant to a written contract between the Fund and OAM (the "Investment Advisory Agreement"), OAM is responsible for managing the investment and reinvestment of each Portfolio's assets, determining in its discretion the securities to be purchased or sold and the portion of the Portfolio's assets to be held uninvested, providing the Fund with records concerning OAM's activities which the Fund is required to maintain under applicable law, and rendering regular reports to the Fund's Trustees and officers concerning Portfolio responsibilities. OAM's investment advisory services to the Fund are all subject to the control of the Trustees, and must be in compliance with the investment objective, policies and restrictions set forth in the Fund's Prospectus and this Statement of Additional Information and with applicable laws and regulations. In addition, OAM is authorized to select broker-dealers, including TCC, that may execute purchases and sales of the securities for the Portfolios. (See "Portfolio Transactions.") The investment adviser is obligated to pay the salaries and fees of any officers of the Fund as well as the Trustees of the Fund who are interested persons (as defined in the Investment Company Act of 1940) of the Fund, who are employed full time by the investment adviser to perform services for the Portfolio under the Investment Advisory Agreement. As compensation for its investment advisory services, the investment adviser receives from the Emerging Growth Portfolio at the end of each month a fee at an annual rate equal to .45% of the first $50 million of the average daily net assets of the Portfolio and .40% of the average daily net assets of the Portfolio in excess of $50 million, and from the Micro-Cap Portfolio at the end of each month a fee at the annual rate of .60% of the average daily net assets of the Portfolio. For the year ended December 31, 1994, the advisory fees incurred by the Emerging Growth Portfolio and payable to Alpha Source were $297,924 for the period January 1, 1994 through September 30, 1994, and advisory fees incurred and payable to OAM were $96,759 for the period October 1, 1994 through December 31, 1994. For the year ended December 31, 1993, the advisory fees incurred by the Emerging Growth Portfolio and paid to Alpha Source were $381,178. However, pursuant to the expense limitation provisions of the Investment Advisory Agreement, Alpha Source was required to rebate $10,228 to the Portfolio. (See also "Expenses Borne by the Fund.") For the year ended December 31, 1992, the advisory fees incurred by the Emerging Growth Portfolio and payable to Hamilton Investments (the Fund's investment adviser through April 30, 1992) were $44,113 and those payable to Alpha Source were $115,208. Pursuant to the expense limitations of the Investment Advisory Agreement, Hamilton Investments and Alpha Source were required to rebate $96,497 and $50,661, respectively, to the Emerging Growth Portfolio. OAM also provides the Fund with non-investment advisory, management and administrative services pursuant to a written contract (the "Management Agreement"). OAM is responsible under the Management Agreement for providing the Fund with those management and administrative services which are reasonably necessary for conducting the business affairs of the Fund, with the exception of investment advisory services, and distribution of each Portfolio's shares and shareholder services, which are subject to 7 <PAGE> the Fund's Rule 12b-1 Plan. (See "Rule 12b-1 Plan and Related Distribution and Shareholder Service Agreements.") In addition, OAM provides the Fund with office space and basic facilities for management of the Fund's affairs, and bookkeeping, accounting, record keeping and data processing facilities and services. OAM is responsible for preparing and updating the Fund's SEC and state registration statement and filings, tax reports to shareholders and similar documents. OAM pays the compensation of all officers and personnel of the Fund for their services to the Fund as well as the Trustees of the Fund who are interested persons of the Fund. OAM also provides information and certain administrative services to shareholders of each Portfolio. These services include, among other things, transmitting redemption requests to the Fund's Transfer Agent and transmitting the proceeds of redemption of shares of the Fund pursuant to a shareholder's instructions when such redemption is effected through OAM; providing telephone and written communications with respect to its shareholders' account inquiries; assisting its shareholders in altering privileges and ownership of their accounts; and serving as a source of information for its existing shareholders in answering questions concerning the Fund and their transactions with the Fund. For its services under the Management Agreement, OAM is paid by the Portfolios on a monthly basis an annual management fee equal to .40% of the average daily net assets of each Portfolio. OAM will bear all expenses in connection with the performance of its services to the Fund and each of the Portfolios under the Management Agreement. The Fund is responsible for all other expenses. See the Fund's Prospectus under the heading "Expenses of the Fund." However, the Management Agreement provides that OAM is obligated to reimburse the Portfolios for 100% of the amount by which the Portfolio's ordinary operating expenses during any fiscal year, including the management and advisory fees, exceed either (i) the most restrictive expense limitation applicable to the Portfolio imposed by the securities laws or regulations thereunder of any state in which the Portfolio's shares are qualified for sale, as such limitations may be raised or lowered from time to time, or (ii) the following amounts expressed as a percentage of the Portfolio's average daily net assets: 2.0% of the first $25,000,000; plus 1.8% of the next $25,000,000; plus 1.6% of average daily net assets in excess of $50,000,000. Excluded from the calculation of ordinary operating expenses are expenses such as interest, taxes and brokerage commissions and extraordinary items such as litigation costs. There is no state expense limitation applicable to the Portfolios which is currently more restrictive than that set forth above. Any such reimbursement is computed and accrued on a daily and settled on a monthly basis based upon the expenses and average net assets computed through the last business day of the month. As of the end of the Fund's fiscal year, the aggregate amounts of reimbursement, if any, by the Manager to a Portfolio in excess of the amount necessary to limit the operating expenses on an annual basis to said expense limitation shall be refunded to the Manager. In no event will the Manager be required to reimburse a Portfolio in an amount exceeding its management and investment advisory fees, except to the extent required by applicable law. For the period January 1, 1994 through September 30, 1994, the management fees incurred by the Emerging Growth Portfolio and paid to Hamilton Investments were $279,225. For the periods October 1, 1994 through December 31, 1994, the management fees incurred by the Emerging Growth Portfolio and paid to OAM were $90,458. Neither Hamilton Investments nor OAM was required to reimburse the Emerging Growth Portfolio pursuant to the expense limitation for the year ended December 31, 1994. (See also "Expenses Borne by the Fund.") For the years ended December 31, 1993 and 1992, management fees incurred by the Emerging Growth Portfolio and paid to Hamilton Investments were $356,178 and $141,760, respectively, and pursuant to the expense limitation provisions of the then existing management agreement, Hamilton Investments was required to rebate to the Portfolio $10,228 and $73,579, respectively, of such amounts. DISTRIBUTION PLAN AND AGREEMENT As discussed in the Fund's Prospectus under the heading "Distribution of Shares," the Fund has adopted a Plan of Distribution (the "Distribution Plan") and a Distribution and Shareholder Service Agreement (the "Distribution Agreement") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (collectively the "Plan and Agreement") under which the Fund compensates TCC in connection with the distribution of each Portfolio's shares. Reference should be made to the Prospectus for details not provided below. TCC will act as the primary distributor of each Portfolio's shares and as the primary shareholder servicing agent for each Portfolio. The Fund pays TCC a monthly distribution and shareholder servicing fee at an annual rate of .25% of each Portfolio's average daily net assets and may also reimburse certain out of pocket costs incurred by TCC for the Fund. Pursuant to the Plan and Agreement, TCC has agreed, directly or through other firms, to advertise and promote the Fund and provide information and services to existing and potential shareholders. These services include, among other things, processing new shareholder account applications; converting funds into or advancing federal funds for the purchase of shares of the Fund as well as transmitting purchase orders to the Fund's Transfer Agent; transmitting redemption requests to the Fund's Transfer Agent and transmitting the proceeds of redemption of shares of the Fund pursuant to a shareholder's instructions; providing telephone and written communications with respect to shareholder account inquiries and serving as the primary source of information for existing and potential shareholders in answering questions concerning the Fund and their transactions with the Fund; and providing literature distribution, advertising and promotion as is necessary or appropriate for providing information and services to existing and potential shareholders. 8 <PAGE> TCC will be reimbursed by the Fund for certain out-of-pocket costs, if any, of providing certain services contemplated by the Distribution Agreement, which include the costs of postage, data entry, modification and printout, stationery, tax forms, and all other external forms or printed material that may be required for performance by TCC of the services contemplated in the Distribution Agreement. TCC proposes to compensate its account executives annually for servicing and administering a shareholder's account. The Plan and Agreement provides that TCC may appoint various broker-dealer firms to assist in providing distribution services for the Fund, including literature distribution, advertising and promotion, and may appoint broker-dealers and other firms (including depository institutions such as commercial banks and savings and loan associations) to provide administrative services for their clients as shareholders of the Fund under related service agreements. To provide these services, these firms will furnish, among other things, office space and equipment, telephone facilities, and personnel as is necessary or beneficial for providing information and services related to the distribution of the Portfolios' shares to TCC in servicing accounts of such firms' clients who own shares of the Fund. The Glass-Steagall Act generally prohibits federally chartered or supervised banks from engaging in the business of underwriting, selling, or distributing securities. Although the scope of this prohibition under the Glass-Steagall Act has not been fully defined, in TCC's opinion it should not prohibit banks from being paid for shareholder servicing and record-keeping. If, because of changes in law or regulation, or because of new interpretations of existing law, a bank or a fund were prevented from continuing these arrangements, it is expected that other arrangements would be made for these services and that shareholders would not suffer adverse financial consequences. In addition, state securities laws on this issue may differ from the interpretations of federal law expressed herein, and banks and other financial institutions may be required to register as dealers pursuant to state law. The Plan provides that the Fund's asset-based sales charges (as defined in the NASD's Rules of Fair Practice) shall not exceed those permitted by Article III, Section 26 of the NASD's Rules of Fair Practice. Further, as permitted by the NASD's Rules, the Emerging Growth Portfolio has elected to calculate its permissible amount of asset-based sales charges on new gross sales of the Portfolio since the Portfolio's inception. The Board of Trustees has determined that, in its judgment, there is a reasonable likelihood that the Plan and Agreement will benefit the Portfolios and their shareholders. If the sizes of the Portfolios are increased rapidly, fixed expenses will be reduced as a percentage of each shareholder's investment. The 12b-1 expenses will also provide TCC and others an incentive to promote the Portfolios and to offer individual shareholders prompt and efficient services. As required by Rule 12b-1, the Plan, as amended, and Agreement was approved by the Board of Trustees, including a majority of Trustees who are not interested persons, as defined in the Investment Company Act of 1940, of the Fund, who are not parties to the Distribution Agreement or Shareholder Service Agreement and who have no direct or indirect financial interest in the operation of the Plan. Unless terminated earlier as described below, the Plan and Agreement will continue in effect from year to year if approved annually by the Board of Trustees of the Fund, including a majority of the Trustees who are not parties to the Plan and Agreement (or have a direct or indirect financial interest in the operation thereof) and who are not interested persons of the Fund. The Plan may be terminated with respect to the Fund or a Portfolio at any time by (1) a vote of a majority of the Trustees who are not interested persons of the Fund, who are not parties to the Distribution Agreement and who have no direct or indirect financial interest therein, or (2) by the vote of a majority of shareholders of that Portfolio. The Distribution Agreement may be terminated similarly without penalty upon 60 days written notice by either party and will automatically terminate if assigned, as defined in the 1940 Act. For the period January 1, 1994 through September 30, 1994 (the day the Fund ceased 12b-1 payments to Hamilton Investments), total 12b-1 fees paid by the Emerging Growth Portfolio to Hamilton Investments were $349,031. For the period October 1, 1994 through December 31, 1994, total 12b-1 fees paid by the Portfolio to TCC and OAM were $78,609 and $34,464, respectively. During that time period, TCC was appointed by the Fund to act as the principal distributor of the Emerging Growth Portfolio's shares pursuant to a Distribution Agreement dated October 1, 1994 between the Fund and TCC and OAM was appointed by the Fund to act as the Emerging Growth Portfolio's primary shareholder service agent pursuant to a Shareholder Service Agreement dated October 1, 1994 between the Fund and OAM. During that period, the Fund was authorized to pay an annual fee not to exceed .50% the Emerging Growth Portfolio's average daily net assets for distribution and shareholder services provided to the Portfolio and from the total 12b-1 fees, TCC was paid fees for distribution services at an annual rate of .35% of the Portfolio's average daily net assets and OAM was paid fees for shareholder services at an annual rate of .15% of the Portfolio's average daily net assets. For the 12 month period ended December 31, 1994, the Emerging Growth Portfolio paid the following amounts under the Rule 12b-1 Plan in the approximate amounts noted: $27,120 in sales promotion and literature expenses, $247,389 in service fees paid to brokers, $90,476 in salary expenses and employment services, $12,132 in telephone expenses, $41,280 in professional fees, and $529 in miscellaneous operating expenses. There was no reimbursement of out-of-pocket expenses for such period. 9 <PAGE> EXPENSES BORNE BY THE PORTFOLIOS Other than those expenses payable by OAM and/or TCC, the Portfolios will pay all of their expenses, including the following: (a) Federal, state and local or other governmental agency taxes or fees levied against the Fund. (b) Costs, including the interest expense, of borrowing money. (c) Brokerage fees and commissions and other transaction costs in connection with the purchase or sale of portfolio securities for the Portfolios. (d) Fees and expenses of the Trustees other than those who are "interested persons" (as defined in the Investment Company Act of 1940) of the Fund. (e) Expenses incident to holding meetings of the Fund's Shareholders, including proxy solicitations of the Fund or its Board of Trustees therefor, and meetings of the Board of Trustees and committees of the Board of Trustees. (f) Fees and expenses in connection with legal services rendered to the Fund, the Board of Trustees of the Fund and duly appointed committees of the Board of Trustees of the Fund, including fees and expenses of special counsel to those Trustees who are not interested persons of the Fund, and litigation. (g) Audit and accounting expenses of the independent auditors. (h) Custodian and transfer and dividend paying agent fees and expenses and shareholder service expenses. (i) Fees and expenses related to registering, qualifying and maintaining registration and qualification of the Fund and its Shares for distribution under federal, state and other laws. (j) Fees and expenses incident to the preparation and filing of reports with regulatory agencies. (k) Expenses of preparing, printing (including typesetting) and mailing prospectuses, shareholder reports, proxy materials and notices to shareholders of the Fund. (l) Premiums for trustee's and officer's liability insurance and insurance carried by the Fund pursuant to the requirements of Section 17(g) of the Investment Company Act of 1940, or otherwise required by law or deemed desirable by the Board of Trustees. (m) Fees and expenses incurred in connection with any investment company organization or trade association of which the Fund may be a member. (n) Costs and expenses incurred for promotion or advertising of the Fund's Shares, but only pursuant to a Plan duly adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940 and to the extent that such Plan may from time to time provide. (o) Expenses related to issuance or redemption of the Portfolios' shares. For the fiscal year ended December 31, 1994, total expenses incurred by the Emerging Growth Portfolio were $1,647,254 and the ratio of such total expenses to the Portfolio's average net asset value was 1.78%. PORTFOLIO TRANSACTIONS Effective October 1, 1994, decisions with respect to the purchase and sale of portfolio securities on behalf of the Fund's Portfolios are made by OAM. Prior to October 1, 1994, decisions with respect to the purchase and sale of portfolio securities on behalf of the Emerging Growth Portfolio were made by Alpha Source. Actual portfolio turnover may vary considerably from year to year. However, in order to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code, less than 30% of the Fund's gross income may be derived from the sale or other disposition of stock or securities held for less than three months. OAM is authorized to place orders for securities with various broker-dealers, including TCC, subject to the requirements of applicable laws and regulations. OAM may place a significant portion of the Portfolios' agency orders with TCC, as it believes by so doing a Portfolio is able to achieve more control over and better execution of its orders. Orders for securities transactions are placed by OAM with a view to obtaining the best combination of price and execution available. In seeking to achieve the best combination of 10 <PAGE> price and execution, OAM attempts to evaluate the overall quality and reliability of the broker-dealers and the services provided, including research services, general execution capability, reliability and integrity, willingness to take positions in securities, general operational capabilities and financial condition. However, the responsibility of OAM to attempt to obtain the best combination of price and execution does not obligate it to solicit a competitive bid for each transaction. Furthermore, under the Advisory Agreement, OAM is not obligated to seek the lowest available cost to the Portfolio, so long as it determines in good faith that the broker-dealer's commission, spread or discount is reasonable in relation to the value of the execution and research services provided by such a broker-dealer to the Portfolio, or OAM when viewed in terms of that particular transaction or its overall responsibilities with respect to all of its clients, including the Portfolio, as to which it offers advice or exercises investment discretion. OAM, with the prior consent of the Fund's Trustees, may place orders with affiliated persons of OAM, TCC or the Fund subject to (i) the provisions of Sections 10(f) and 17(e)(2) of the Investment Company Act of 1940 and Rules 10f- 3 and 17e-1 thereunder, Rule 206(3)-2 under the Investment Advisers Act of 1940, Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)(a)(2) thereunder and any other applicable laws or regulations, and (ii) procedures properly adopted by the Fund with respect thereto. The Fund has been advised by OAM that it may place a significant portion of the Portfolios' orders for securities with TCC, but only when it believes that the combination of price and execution are comparable to that of other broker-dealers. OAM, with the prior consent of the Fund's Trustees, may engage in agency cross transactions subject to (i) the provisions of Section 17(a) of the Investment Company Act of 1940 and Rule 17a-7 thereunder and other applicable laws or regulations, (ii) the provisions of Section 206 of the Investment Advisers Act of 1940 and Rule 206(3)-2 thereunder, and (iii) procedures properly adopted by the Fund with respect thereto. OAM has agreed to furnish certain information quarterly to the Fund's Trustees to enable them to evaluate the quality of execution and cost of all orders executed by TCC. The Fund requires that OAM, as investment adviser, record and furnish to the Fund quarterly the following information: (A) Exchange Transactions A listing showing for each transaction executed by TCC for the Portfolios during the month, in time sequence, the date of the transaction, the price, the commission, the exchange where executed, the security and the number of shares. (B) Over-the-Counter Transactions A listing showing for each transaction executed by TCC for the Portfolios during the month, in time sequence, the date of execution, the price, the best bid and ask at the time, the commission for the transaction, the security and the number of shares. (C) Transactions Through Other Brokers A list of all transactions during each quarter through other brokers, showing the price and commission for the transaction, and a summary of commission charges by all other brokers executing transactions for the Portfolios. A greater discount, spread or commission may be paid to non-affiliated broker- dealers that provide research services, which research may be used by OAM in managing assets of its clients, including the Portfolios. Research services may include data or recommendations concerning particular securities as well as a wide variety of information concerning companies, industries, investment strategy and general economic, financial and political analysis and forecasting. In some instances, OAM may receive research, statistical and/or pricing services it might otherwise have had to perform itself. However, OAM cannot readily determine the extent to which net prices or commission rates charged by most broker-dealers reflect the value of its research, statistical and/or pricing services. As OAM is the principal source of information and advice to the Fund and is responsible for managing the investment and reinvestment of the Portfolios' assets and determining the securities to be purchased and sold, it is believed by the Fund's management to be in the interests of the Fund for OAM, in fulfilling its responsibilities to the Fund, to be authorized to receive and evaluate the research and information provided by other securities brokers or dealers, and to compensate such brokers or dealers for their research and information services. Any such information received may be utilized by OAM for the benefit of its other accounts as well, in the same manner that the Fund might also benefit from information obtained by OAM in performing services for its other accounts. Although it is believed that research services received directly or indirectly benefit all of OAM's accounts, the degree of benefit varies by account and is not directly related to the commissions or other remuneration paid by such account. Transactions of the Portfolios in the over-the-counter market and the third market may be executed for the Portfolios by TCC as agent with primary market makers acting as principal, except where OAM believes that better prices or execution may be obtained otherwise. Transactions with primary market makers reflect the spread between the bid and the ask prices. Occasionally, the Portfolios may make purchases of underwritten issues at prices which include underwriting discount fees. 11 <PAGE> OAM may place orders with broker-dealers other than TCC that sell shares of the Fund, provided the price and execution are reasonably believed to be comparable with other nonaffiliated broker dealers. OAM and the Fund's Board of Trustees review quarterly the Portfolios' brokerage transactions for execution and services furnished. Such quarterly review may from time to time result in changes of brokers being utilized to execute transactions because of services furnished or to be furnished to OAM or the Fund. For the period January 1, 1994 through September 30, 1994, the total brokerage commissions paid by the Emerging Growth Portfolio was $79,554, of which 35%, or $27,659, was paid to Hamilton Investments. The total amount of securities transactions on which the Portfolio paid brokerage commission during such period was $27,827,404. Thirty-six percent (36%), or $10,032,294, of the securities transactions on which the Portfolio paid brokerage commissions were effected through Hamilton Investments. For the period October 1, 1994 through December 31, 1994, the total brokerage commissions paid by the Emerging Growth Portfolio was $17,248, of which 49%, or $8,463, was paid to TCC. The total amount of securities transactions on which the Portfolio paid brokerage commissions during such period was $10,765,934. Forty-four percent (44%), or $4,718,944, of the securities transactions on which the Portfolio paid brokerage commissions were effected through TCC. The total amount of principal transactions of the Portfolio for the year ended December 31, 1994, for which no commission was incurred, was $95,896,610. For the years ended December 31, 1993 and 1992, the total brokerage commissions paid by the Emerging Growth Portfolio were $153,239 and $127,450, respectively, of which $130,033 and $120,370, respectively, was paid to Hamilton Investments. The total amount of securities transactions on which the Portfolio paid brokerage commissions during such periods was $65,833,808 and $34,900,116, respectively. The total amount of principal transactions of the Portfolio for such period, for which no commission was incurred, was $99,743,039 and 36,146,491, respectively. SHAREHOLDER VOTING RIGHTS Reference should be made to the Prospectus under the heading "General Information" for a description of certain shareholder rights and information concerning the shares of the Portfolios. As a general rule, the Fund is not required to and will not hold annual or other meetings of the shareholders. Special meetings of shareholders for actions requiring a shareholder vote may be requested in writing by holders of at least twenty-five percent (25%) (or ten percent (10%) if the purpose of the meeting is to determine if a Trustee is to be removed from office) of the outstanding shares of the Fund or as may be required by applicable law. Under the Declaration of Trust, shareholders are entitled to vote in connection with following matters: (1) for the election or removal of Trustees if a meeting is called for such purpose; (2) with respect to the adoption of any contract for which approval is required by the Investment Company Act of 1940; (3) with respect to any termination or reorganization of the Portfolios to the extent and as provided in the Declaration of the Trust; (4) with respect to any amendment of the Declaration of Trust (other than amendments changing the name of the Fund or the Portfolios, supplying any omission, curing any ambiguity or curing, correcting or supplementing any defective or inconsistent provision thereof); (5) as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Fund or the shareholders, to the same extent as the stockholders of a Massachusetts business corporation; and (6) with respect to such additional matters relating to the Fund as may be required by law, the Declaration of Trust, the By-Laws of the Fund, or any registration of the Fund with the Securities and Exchange Commission or any state, or as the Trustees may consider necessary or desirable. The Declaration of Trust specifically authorizes the Board of Trustees to terminate the Fund (or any portfolio of the Fund) without shareholder approval by notice to the shareholders. Each Trustee serves until the next meeting of shareholders, if any, called for the purpose of electing Trustees and until the election and qualification of his successor or until such Trustee sooner dies, resigns, retires or is removed by the majority vote of the shareholders or by the Trustees. REDEMPTION OF SHARES Reference should be made to the Fund's Prospectus under the heading "How to Redeem Shares" for other information concerning redemption of the shares of a Portfolio. The Fund may suspend the right to redeem shares or postpone the date of payment for more than seven (7) days for any period during which: (a) the New York Stock Exchange is closed, other than weekend and holiday closings, or the Securities and Exchange Commission determines that trading on the New York Stock Exchange is restricted; (b) the Securities and Exchange Commission determines there is an emergency as a result of which it is not reasonably practical for a Portfolio to sell the investment securities or to calculate their Net Asset Value; or (c) the Securities and Exchange Commission permits such suspension for the protection of Portfolio's shareholders. In the case of a suspension of the right of redemption, a shareholder may either withdraw his request for redemption or receive payment at the Net Asset Value of his shares existing after termination of the suspension. Although it is the Fund's present policy to make payment of redemption proceeds in cash, if the Fund's Trustees determine it to be appropriate, redemption proceeds may be paid in whole or in part by a distribution in kind of securities held by the Portfolios, subject to the limitation that, pursuant to an election under Rule 18f-1 under the Investment Company Act of 1940, each Portfolio is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of a Portfolio during any 90-day period for 12 <PAGE> any one account. The value of such securities shall be determined as of the close of trading of the New York Stock Exchange on the business day on which the redemption is effective. In such circumstances, a shareholder might be required to bear transaction costs to dispose of such securities. SHAREHOLDER SERVICES The Fund's Prospectus under the headings "How to Purchase Shares," "How to Redeem Shares" and "Shareholder Services" describes information in addition to that set forth below. When a shareholder makes an initial investment in a Portfolio, a shareholder account is opened in accordance with the Fund's Account Application instructions. After each transaction for the account of a shareholder, confirmation of all deposits, purchases, reinvestments, redemptions, withdrawal payments, and other transactions in the shareholder's account will be forwarded to the shareholder. A Portfolio will generally not issue certificates for its shares, except that certificates for full amounts will be issued upon a shareholder's written request to the Transfer Agent. The investor will be the record owner of all shares in his account with full shareholder rights, irrespective of whether share certificates are issued. Certain of the functions performed by the Fund in connection with the operation of the accounts described above have been delegated by the Fund to its Transfer Agent. In addition to the purchase and redemption services described above, the Fund offers its shareholders the special accounts and services described in the Fund's Prospectus. Applications and information about any shareholder services may be obtained from OAM. DETERMINATION OF NET ASSET VALUE See the Fund's Prospectus under the headings "How to Purchase Shares" and "Net Asset Value," for descriptions of certain details concerning the determination of Net Asset Value. The Net Asset Value of the shares of the Portfolios are computed once daily, as of the later of the close of the New York Stock Exchange or the Chicago Board Options Exchange, on each day the New York Stock Exchange is open for trading (except the Net Asset Value for the Micro-Cap Portfolio was computed on January 1, 1996, the New Year's Day Holiday, which was the first day shares of the Portfolio were offered to the public). All securities in the Portfolios other than options are priced as of the close of trading on the New York Stock Exchange. The options in the Portfolios are priced as of the close of trading on the Chicago Board Options Exchange. The Net Asset Value per share is computed by dividing the value of the Portfolio's securities plus all other assets minus all liabilities by the total number of Portfolio shares outstanding. In valuing the Portfolio's securities, each listed and unlisted security for which last sale information is regularly reported is valued at the last reported sale price prior to the close of the New York Stock Exchange, except for options which are based on the close of the Chicago Board Options Exchange. If there has been no sale on such day, the last reported bid price is used. Any unlisted security for which last sale information is not regularly reported and any listed debt security which has an inactive listed market for which over-the-counter market quotations are readily available is valued at the highest bid price as of the close of the New York Stock Exchange determined on the basis of reasonable inquiry. Restricted securities and any other securities or other assets for which market quotations are not readily available are valued by appraisal at their fair values as determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Trustees. Short-term debt obligations, commercial paper and repurchase agreements are valued on the basis of quoted yields for securities of comparable maturity, quality and type or on the basis of amortized cost. TAXES As stated in the Fund's Prospectus under the heading "Dividends, Distributions and Tax Status" each of the Portfolios has elected to qualify under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), so that the Portfolio will not be liable for Federal income taxes to the extent that its net investment income and net realized capital gains are currently distributed to its shareholders. Each of the Portfolios will qualify for this status as long as it: (a) derives at least 90% of its gross income from dividends, interest, gains from the sale or other distribution of securities or foreign currencies, and certain other investment income including gain from options, futures or forward contracts; (b) derives less than 30% of its gross income from the sale or other disposition of securities it has held for less than three months; (c) invests in securities that satisfy certain diversification requirements; and (d) distributes at least 90% of its net investment income and net short-term capital gains to its shareholders each year. A Portfolio may be limited in its options transactions in order to comply with these rules. Except for those shareholders exempt from Federal income taxes, dividends and capital gains distributions are taxable to shareholders for purposes of the Federal income tax, whether paid in cash or reinvested in additional shares of the Portfolio. Dividends from net investment income are taxable to non-exempt shareholders as ordinary income for Federal income tax purposes. For corporate shareholders, such income dividends may be eligible for the deduction for dividends received from domestic corporations. Distribution of long-term capital gains are taxable to non-exempt shareholders as long-term capital gains regardless of the length of time that such shareholders have owned shares in a Portfolio. Short-term capital gain distributions are taxable to non-exempt shareholders as ordinary income. Losses incurred by such shareholders on the redemption of shares of a Portfolio held six months or less will be treated as long-term capital losses to the extent of any capital gains distributions made by the Portfolio with respect 13 <PAGE> to such shares. Shareholders will be notified annually as to the Federal income tax status of dividends and capital gains distributions. Such dividends and distributions may also be subject to state and local taxes. Income dividends are taxed as ordinary income at rates up to a maximum of 39.6% for individuals. Long-term capital gain distributions are taxable at a maximum rate of 28% for individual shareholders and at the same rate as ordinary income for corporate shareholders. In order to avoid an excise tax on undistributed amounts, each Portfolio must declare, by the end of the calendar year, a dividend to shareholders of record that represents 98% of its net investment income for the calendar year plus 98% of its capital gain net income for the period from November 1 of the previous year through October 31 of the current year plus any undistributed net investment income from the prior calendar year, plus any undistributed capital gain net income for the one-year period ended October 31 of the prior calendar year, less any overdistribution in the prior calendar year. Each Portfolio intends to declare or distribute dividends during the appropriate periods in an amount sufficient to avoid the 4% excise tax. Federal law requires the Fund to withhold 31% from dividends and/or redemption proceeds (including from exchanges) that occur in certain shareholder accounts if the shareholder has not properly furnished a certified correct Taxpayer Identification Number (in the case of individuals, a social security number) or has not certified that withholding does not apply. Amounts withheld are applied to the shareholder's Federal income tax liability and a refund may be obtained from the Internal Revenue Service if withholding results in overpayment of taxes. Federal law also requires the Fund to withhold the applicable tax treaty rate from dividends that are paid to certain nonresident alien, foreign partnership and foreign corporation shareholder accounts. The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury Regulations in effect on the date of the Fund's Prospectus and this Statement of Additional Information, which provisions are subject to change by legislative or administrative action. Investors are advised to consult their own tax advisers regarding the tax consequences of an investment in the Portfolios. Shareholders are likewise advised to consult their own tax advisers regarding specific questions as to state or local taxes. CALCULATION OF AVERAGE ANNUAL TOTAL RETURN Average annual total return measures both the net investment income generated by, and the effect of any realized and unrealized appreciation or depreciation of, the underlying investments of a Portfolio. A Portfolio's average annual total return quotation is computed in accordance with a standardized method prescribed by the rules of the Securities and Exchange Commission. The Emerging Growth Portfolio's average annual total return figures for the one-year and five-year periods ended June 30, 1995 were 48.0% and 17.8 %, respectively, and for the period from the commencement of operations on January 7, 1987 through June 30, 1995 was 15.6%, as calculated in accordance with the following formula pursuant to applicable regulations of the Securities and Exchange Commission: P(1+T)/n/ = ERV Where P = a hypothetical initial payment of $1,000 T = average annual total return n = time period the Fund's registration statement has been in effect expressed in years or portion thereof ERV = the ending redeemable value of a hypothetical $1,000 payment made at January 7, 1987 (the date the Fund commenced operations) A sales load of 4% was charged until December 31, 1991 which is not reflected in these total return numbers. ADDITIONAL INFORMATION Custodian and Transfer Agent - ---------------------------- The Custodian for the Fund is Investors Fiduciary Trust Company, P.O. Box 419042, Kansas City, Missouri 64141, a national bank organized under the laws of the United States. The Fund has authorized the Custodian to deposit certain securities of the Portfolios in central depository systems as permitted by federal law. The Portfolios may invest in obligations of the Custodian and may purchase or sell securities from or to the Custodian. The Custodian is also the Fund's Transfer Agent and acts as dividend disbursing agent. 14 <PAGE> Independent Auditors and Reports to Shareholders - ------------------------------------------------ The Fund's Independent Auditors audit and report on the Fund's annual financial statements, review certain regulatory reports and prepare the Fund's federal income tax return, and perform other professional accounting, auditing and advisory services when engaged to do so by the Fund. Beginning with the 1994 fiscal year, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606, serves as the Fund's independent auditors. For the 1993 fiscal year and prior years, Checkers, Simon & Rosner LLP, One South Wacker Drive, Chicago, Illinois 60606, served as the Fund's independent auditors. Shareholders will receive annual audited financial statements and semi-annual unaudited financial statements. Counsel - ------- Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street, Chicago, Illinois 60601, is legal counsel to the Fund. Other Information - ----------------- The Fund's Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement, which the Fund has filed with the Securities and Exchange Commission under the Securities Act of 1933, and reference is hereby made to the Registration Statement for further information with respect to the Fund and the securities offered hereby. This Registration Statement is available for inspection by the public at the Securities and Exchange Commission in Washington, D.C. 15 <PAGE> OBERWEIS MICRO-CAP PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES OCTOBER 2, 1995 ASSETS: Cash $100,000 Deferred organizational costs 55,000 -------- $155,000 LIABILITIES: Organizational costs accrued 55,000 -------- NET ASSETS $100,000 ======== Shares outstanding (unlimited number of shares authorized, no par value) 10,000 ======== Net asset value, offering price and redemption price per share $ 10.00 ======== NOTES: =========== 1. Organization. The Oberweis Funds (the "Fund") offers two portfolios, currently consisting of the Oberweis Emerging Growth and Oberweis Micro-Cap Portfolios. The Fund is registered under the Investment Company Act of 1940 as a diversified open-end management investment company. The Fund is authorized to operate numerous portfolios under various trading strategies. The Fund commenced operations of the Oberweis Emerging Growth Portfolio on January 7, 1987. The Oberweis Micro-Cap Portfolio has had no operations, other than those relating to organizational matters, including the sale and issuance of 10,000 shares to Oberweis Asset Management, Inc. ("OAM") on October 2, 1995 for $100,000. 2. Organization Costs. Costs incurred by the Oberweis Micro-Cap Portfolio in connection with their organization, registration and the initial public offering of shares have been deferred and will be amortized on a straight-line basis over a period of five years from the date upon which the Portfolio commences their investment activities. If any of the original shares of the Portfolio are redeemed by any holder prior to the end of the amortization period, the redemption proceeds will be reduced by the pro rata share of the unamortized organization costs as of the date of redemption. OAM has advanced all of the organizational costs of the Oberweis Micro-Cap Portfolio. The Portfolio will reimburse OAM for those costs upon the commencement of operations. <PAGE> 3. The Advisory, Management, and Distribution Agreements. The Fund has agreements with OAM to provide investment advisory and management services for each Portfolio. Under the terms of these agreements, the Micro-Cap Portfolio will pay OAM .60% and .40% of the average daily net assets for investment advisory and management services, respectively. The Fund also has a rule 12b-1 Plan and a Distribution and Shareholder Service Agreement (collectively, the "Plan and Agreement") with The Chicago Corporation ("TCC"). Under the Plan and Agreement, the Fund is to pay TCC a monthly fee at an annual rate of .25% of each Portfolio's average daily net assets for distribution and shareholder services and will reimburse TCC for certain out-of-pocket expenses. 4. Federal Income Taxes. The Micro-Cap Portfolio intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and to make the requisite distributions of the income to its shareholders which will be sufficient to relieve it from all or substantially all Federal income taxes. <PAGE> PRESIDENT'S LETTER FEBRUARY 9, 1995 Dear Emerging Growth Fund Shareholder: For the first time in the history of your fund I must report to you that we experienced a loss for a full calendar year. Even in 1990, a year during which the NASDAQ Composite and Russell 2000 indices were each down by double digit amounts, we were able to achieve a small positive return. Unfortunately, in 1994 fund shares declined by 3.5%, similar to the 3.2% decline in the NASDAQ Composite and the 1.7% decline in the Russell 2000 index. At the beginning of last year, price/earnings ratios were quite high by historical standards. The entire year seemed to be a battle to lower those P.E. ratios through higher earnings before they would be reduced by a significant stock market decline. The battle ended in a draw. Higher earnings did reduce P.E. ratios, but not fast enough to allow stocks to gain ground. The outlook for this year appears more favorable since P.E.s are significantly lower than a year ago and earnings continue to expand. However, since interest rates are considerably higher than last year, fixed income investments offer more attractive alternatives than they did a year ago. Thus investors have much more attractive alternatives than they did a year ago. Unless interest rates rise another 200 basis points this year, I believe that the opportunities for stock market investors are significantly better than a year ago. While no investment strategy works perfectly every year, we believe our method of identifying some of the fastest growing companies in the world, selling at reasonable prices in relation to their growth rates and prospects, will produce above average investment results over longer periods of time. As you can see from the graph on the next page, this has generally been true over the eight- year life of the fund. A $10,000 investment in the fund at its January 7, 1987 inception would have grown to $27,157 at the end of last year, assuming reinvestment of capital gains distributions and no tax liability, for a 13.3% average annual return. Our latest five-year average annual return is an even higher 17.7%. We believe that the long term growth prospects for the type of stocks owned by the fund are excellent. We expect average gains in the S&P 500 this year, and we hope that emerging growth stocks will do even better. In my opinion, small company stocks, especially emerging growth companies, represent better value today than large company shares. Any significant reduction in capital gains taxes should benefit growth stocks more than larger, dividend paying company shares. Finally, I would like to thank all of you for investing in our fund. Share prices can be quite volatile on a day-to-day basis but over the long run, accepting that volatility should produce reasonable rewards. I would like to remind you that that very volatility makes this fund a good candidate for periodic additional investments (dollar-cost averaging), which is a recommended strategy for long term investors. I realize it's hard to invest more in a fund after it had a loss for the year, but that may in fact be an excellent time to do so. Fund shareholders with 2000 shares or more held at our custodian bank should be receiving complimentary copies of The Oberweis Report, our monthly investment advisory letter. If you have any questions about your account, please call shareholder services at 1-800-245-7311 during normal business hours. If you have any questions about the fund's portfolio or investment policy, please feel free to call me or either of our assistant portfolio managers, Martin Yokosawa and Chip Roberts, at 1-800-323-6166. We're usually in the office from 7:30 A.M. until 6:00 P.M. central time during the week, and from 9:00 until noon on Saturday. We would like to hear from you! Sincerely, Jim Oberweis 1 <PAGE> MANAGEMENT DISCUSSION AND ANALYSIS The Oberweis Emerging Growth Fund is positioned to take advantage of the long- term price appreciation that occurs when the market places an appropriately high value on the fastest-growing companies. The market for such companies (and most other investments) was not particularly strong in 1994, causing the fund to have a return similar to the NASDAQ Composite and the Russell 2000 indices. (The before-cost return of the Fund was -1.7%, the same as the Russell 2000, and somewhat better than the 3.2% decline in the NASDAQ Composite; after deducting costs, the Fund lost 3.5%.) The steep rise in interest rates in 1994 tended to cause investors to lower the price they were willing to pay for each $1 of corporate earnings. At the same time, total corporate earnings were rising rapidly, helping to hold stock prices up. The relatively weak performance of the stocks of fast-growing companies in 1994 enabled the Fund to accumulate such stocks at reasonable prices, laying the groundwork for higher returns in the future. The Fund's performance was helped by a continuing reduction in expenses. In 1994, the Fund's expense ratio declined to 1.78% from 1.80% in 1993, and from almost 2% in 1992. The fund is not specifically committed either to investing in small companies or to a "growth" style of investing, where stocks are purchased (regardless of their price) based on the manager's expectation of growing earnings. Nor is the fund subject to a "momentum" style of investing where stocks are purchased solely because they are moving up in price. Rather, the Fund identifies and purchases the stocks of fast-growing companies that are attractively priced. Typically, the Fund seeks to buy companies whose revenues and earnings are growing at a rate in excess of 30% per annum, and whose shares sell at a P.E. not greater than one-half of the company's rate of growth. This strategy combines the best features of growth and value investing. Historically, most of the companies identified by this strategy are smaller than the median New York Stock Exchange-listed company, although there are notable exceptions. A majority of portfolio companies have generally been traded over-the-counter. Portfolio turnover in 1994 was a moderate 66%, down slightly from 1993's 70%. 2 <PAGE> MANAGEMENT DISCUSSION AND ANALYSIS AVERAGE ANNUAL RETURNS (1) PERIODS ENDED DECEMBER 31, 1994 <TABLE> <CAPTION> 5 LIFE OF FUND 1 YEAR YEAR (1/7/87) - -------------------------------------------------------- <S> <C> <C> <C> Oberweis Emerging Growth Fund (3.5)% 17.7% 13.3% S&P 500 1.3 % 8.7% 11.1% Russell 2000 (1.7)% 10.2% 9.2% </TABLE> GROWTH OF AN ASSUMED $10,000 INVESTMENT FROM 1/7/87 TO 12/31/94 <TABLE> [GRAPH APPEARS HERE] <CAPTION> Measurement Period (Fiscal Year Covered) OBERWEIS S&P 500 RUSSELL 2000 - ------------------- -------- ------- ------------ <S> <C> <C> <C> Measurement Pt- $10,000 $10,000 $10,000 1987 $ 9,094 $ 9,948 $ 8,537 1988 $ 9,612 $11,598 $10,664 1989 $12,012 $15,267 $12,395 1990 $12,062 $14,822 $ 9,977 1991 $22,573 $19,345 $14,571 1992 $25,653 $20,822 $17,254 1993 $28,147 $22,909 $20,515 1994 $27,157 $23,206 $20,166 </TABLE> (1) Performance is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares. Results include the reinvestment of all dividends and capital gains distributions. The Standard & Poor's Stock Index is an unmanaged index generally representative of the U.S. stock market. The Russell 2000 Index is an unmanaged index consisting of 2000 small cap securities with an average market capitalization of approximately $255 million. A sales load of 4% was charged until December 31, 1991 and is not reflected in the total return figures or graph above. 3 <PAGE> OBERWEIS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1994 (Market Value in thousands) Equity Securities - 92.5% <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> AIRLINES--2.1% 90,000 ValuJet Airlines, Inc.@21.25 $ 1,913 APPAREL--0.5% 20,000 Kenneth Cole Productions@21.00 420 AUDIO/VIDEO HOME PRODUCTS--0.9% 90,000 HTP International, Inc.@4.593 414 65,000 Curtis Mathes Holding Corp.@2.187 142 15,000 Recoton Corp.@18.75 281 SUBTOTAL 837 AUTO/TRUCK EQUIPMENT--1.0% 11,500 *ABS Industries, Inc.@11.75 135 **12,000 *Breed Technologies, Inc.@28.375 341 120,000 Williams Controls, Inc.@3.50 420 SUBTOTAL 896 BUILDING AND BUILDING PRODUCTS--0.3% 20,000 *Slocan Forest Products, Ltd.@11.412 228 BUILDING--MOBILE HOMES & RV--2.5% 52,400 *Cavalier Homes, Inc.@10.875 570 69,200 *Decorator Industries, Inc.@7.25 502 105,000 *Shelter Components Corp.@11.375 1,194 SUBTOTAL 2,266 CHEMICALS--0.4% 30,000 Methanex Corp.@13.00 390 COMPUTER GRAPHICS--0.3% 15,000 Pinnacle Systems, Inc.@15.00 225 COMPUTER--LOCAL NETWORKS--8.3% 10,000 Alantec Corp.@32.25 323 105,000 Apertus Technologies, Inc.@10.00 1,050 20,500 Ascend Communications, Inc.@40.75 835 15,000 Chipcom Corp.@50.00 750 175,000 Madge N.V.@11.812 2,067 30,000 Network Peripherals, Inc.@27.25 818 20,000 Standard Microsystems Corp.@30.00 600 57,500 Xircom, Inc.@17.75 1,021 SUBTOTAL 7,464 COMPUTER--MEMORY DEVICES--0.9% 26,000 Alliance Semiconductor Corp.@31.25 813 COMPUTER--MINI/MICRO--1.2% 10,000 Compaq Computer Corp.@39.50 395 22,000 Pyxis Corp.@19.00 418 26,000 *Scientific Technologies, Inc.@8.50 221 SUBTOTAL 1,034 </TABLE> <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> COMPUTER PERIPHERALS--14.3% 40,000 Cornerstone Imaging, Inc.@15.25 $ 610 60,000 Eltron International, Inc.@19.75 1,185 100,000 Encad, Inc.@12.375 1,237 60,000 Microtouch Systems, Inc.@45.00 2,700 112,000 Mylex Corp.@11.187 1,253 75,000 PC Service Source, Inc.@9.00 675 40,000 Proxima Corp.@28.875 1,155 12,000 Sonic Solutions, Inc.@15.75 189 90,000 U.S. Robotics, Inc.@43.25 3,892 SUBTOTAL 12,896 COMPUTER SERVICES--4.4% 50,000 AmeriData Technologies, Inc.@10.00 500 119,000(a) AmeriData Technologies, Inc. Common Stock and Warrants@10.00 1,190 100,000 CIBER, Inc.@10.00 1,000 10,000 *Keane, Inc.@23.75 238 25,000 Network Six, Inc.@10.50 262 100,000 Quality Systems, Inc.@3.25 325 10,000 Quick Response Services, Inc.@12.625 126 50,000 Wave Technologies International@6.375 319 SUBTOTAL 3,960 COMPUTER SOFTWARE--5.7% 40,000 BTG, Inc.@8.25 330 5,000 Cambridge Technology Partners@22.25 111 25,500 Hummingbird Communications Ltd.@20.375 520 10,000 Infosoft International, Inc.@35.125 351 10,000 MapInfo Corp.@25.75 257 4,000 Mercury Interactive Corp.@13.25 53 27,000 Natural MicroSystems Corp.@13.25 358 20,000 NetManage, Inc.@40.50 810 21,000 Platinum Technology, Inc.@22.625 475 15,000 Softdesk, Inc.@19.375 291 55,000 Systemsoft Corp.@9.00 495 60,000 VMark Software, Inc.@17.75 1,065 SUBTOTAL 5,116 CONSUMER PRODUCTS--1.1% 39,060 Celex Group, Inc.@18.25 713 57,000 Creative Technology Ltd.@4.875 278 SUBTOTAL 991 DRUGS--4.8% 35,000 Barr Laboratories, Inc.@25.25 884 100,000 Future HealthCare, Inc.@20.625 2,063 **10,000 Roberts Pharmaceuticals, Inc.@31.75 318 41,000 Watson Pharmaceuticals, Inc.@26.25 1,076 SUBTOTAL 4,341 </TABLE> 4 See accompanying notes to financial statements. <PAGE> Equity Securities - continued <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> ELECTRICAL & ELECTRONIC EQUIPMENT--0.7% 15,000 Datamarine International, Inc.@11.75 $ 176 37,500 Symetrics Industries, Inc.@12.75 478 SUBTOTAL 654 ELECTRONICS--COMPONENTS/ SEMICONDUCTORS--5.8% 34,400 Atmel Corp.@33.50 1,152 27,500 *Cerprobe Corp.@5.50 151 45,000 Flextronics International Ltd.@15.25 686 10,000 Fusion Systems Corp.@25.50 255 30,000 Integrated Device Technology, Inc.@29.50 885 30,000 Level One Communications, Inc@15.50 465 20,000 Mattson Technology, Inc.@19.25 385 15,000 Micrel Semiconductor, Inc.@14.50 217 60,000 Micrion Corp.@11.75 705 10,000 Quality Semiconductor, Inc.@12.50 125 40,000 Submicron System Corp.@4.937 198 SUBTOTAL 5,224 ELECTRONICS--PARTS DISTRIBUTOR--0.9% 150,000 All American Semiconductor, Inc.@1.875 281 50,000 Bell Microproducts, Inc.@10.75 537 SUBTOTAL 818 FARM MACHINERY--1.4% 22,500 *AGCO Corp.@30.375 684 10,000 *AGCO Corp. Convertible Preferred@59.50 595 SUBTOTAL 1,279 FINANCIAL/BUSINESS SERVICES--2.2% 20,000 Express Scripts, Inc. Class A@36.75 735 100,000 Leasing Solutions, Inc.@6.875 688 15,000 *The Money Store, Inc.@18.50 278 58,000 Sherwood Group, Inc.@5.375 312 SUBTOTAL 2,013 HEALTH MAINTENANCE ORGANIZATION--4.0% 30,600 Coventry Corp.@24.50 750 **28,000 PacifiCare Health Systems, Inc.@66.00 1,848 40,000 Wellcare Management Group, Inc.@24.50 980 SUBTOTAL 3,578 HOUSEHOLD APPLIANCES--0.4% 10,000 Duracraft Corp.@31.875 319 LEISURE & RECREATION PRODUCTS--1.5% 45,000 Regal Cinemas, Inc.@25.50 1,148 20,000 Ride Snowboard Company@10.375 208 SUBTOTAL 1,356 </TABLE> <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> MACHINERY--0.3% 8,000 *JLG Industries, Inc.@36.50 $ 292 MEDIA--RADIO/TV--2.3% 85,000 United Video Satellite Group, Inc.@24.00 2,040 MEDICAL EQUIPMENT & SUPPLIES--2.7% 21,000 Chad Therapeutics, Inc.@7.875 165 105,000 FluoroScan Imaging Systems, Inc.@6.125 643 32,000 Medplus, Inc.@7.75 248 7,000 *Omnicare, Inc.@43.75 306 65,000 Safeskin Corp.@14.25 926 5,000 Ventritex, Inc.@27.00 135 SUBTOTAL 2,423 MEDICAL--HOSPITALS--0.7% 35,000 Quorum Health Group, Inc.@19.00 665 MEDICAL--NURSING HOMES, OUTPATIENT HOMECARE--1.3% 20,000 Lincare Holdings, Inc.@29.00 580 40,000 *Retirement Care Associates, Inc.@7.312 293 12,800 Sun Healthcare Group, Inc.@25.375 323 SUBTOTAL 1,196 METAL ORES--GOLD--0.3% 20,000 *Santa Fe Pacific Gold Corp.@13.00 260 OIL & GAS--1.1% 40,000 *International Colin Energy Corp.@6.875 275 40,000 *Smith International, Inc.@12.344 494 10,000 *Snyder Oil Corp. Convertible Preferred @20.125 201 SUBTOTAL 970 PERSONNEL PLACEMENT--0.9% 5,000 Alternative Resources Corp.@31.50 157 22,000 On Assignment, Inc.@16.00 352 15,000 Right Management Consultants, Inc.@20.25 304 SUBTOTAL 813 POLLUTION CONTROL--1.5% 20,000 *Peerless Manufacturing Company@11.00 220 43,000 United Waste Systems, Inc.@25.00 1,075 SUBTOTAL 1,295 RESTAURANTS--5.0% 135,000 Checkers Drive-In Restaurants@2.281 308 20,000 Landry's Seafood Restaurants, Inc.@28.50 570 100,000 Lone Star Steakhouse & Saloon@20.00 2,000 </TABLE> 5 See accompanying notes to financial statements. <PAGE> Equity Securities - continued Convertible Debt Obligations-6.5% <TABLE> <CAPTION> Face Amount Value <S> <C> <C> COMPUTER MEMORY DEVICES--0.5% $ 600,000 *Seagate Technology 6.75% due 5-01-12 @83.00 $ 498 COMPUTER PERIPHERALS--2.6% 600,000 *SCI Systems, Inc. 5.625% due 3-01-12 @96.50 579 1,500,000 *Western Digital Corp. 9.00% due 6-01-14 @120.25 1,804 SUBTOTAL 2,383 EYECARE SERVICES--0.6% 500,000 *Benson Eyecare Corp. 8.00% due 5-15-01 @101.25 506 FERTILIZERS--0.3% 300,000 *Freeport-McMoran 6.55% due 1-15-01 @90.75 272 MEDICAL EQUIPMENT & SUPPLIES--0.2% 100,000 *Omnicare, Inc. 5.75% due 10-01-03 @143.00 143 MEDICAL-NURSING HOMES--1.4% 1,500,000 *GranCare, Inc. 6.50% due 1-15-03 @84.00 1,260 POLLUTION CONTROL--0.7% 580,000(a) *Growth Environmental, Inc. 9.00% due 4-30-97 @102.767 596 RETAIL--0.2% 200,000 *Proffitts, Inc. 4.75% due 11-01-03 @75.25 151 600,000(a) *Zam's, Inc. 7.50% due 10-31-00 @6.875 41 SUBTOTAL 192 TOTAL CONVERTIBLE DEBT OBLIGATIONS (COST: $6,141,000) 5,850 Short-Term Investments-0.9% 812,294 United Missouri Bank 4.7182% due 1-03-95@100.00 $ 812 TOTAL INVESTMENT--99.9% (COST: $74,948,000) 89,911 ------- </TABLE> <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> 30,000 Outback Steakhouse, Inc.@23.50 $ 705 20,000 Papa John's International, Inc.@28.75 575 35,000 Pollo Tropical, Inc.@9.625 337 SUBTOTAL 4,495 RETAIL--CONSUMER ELECTRONICS--0.1% 10,000 Campo Electronics, Appliances and Computers Inc.@10.75 108 RETAIL/WHOLESALE COMPUTERS--1.0% 7,000 Micro Warehouse, Inc.@35.00 245 40,000 Tech Data Corp.@17.00 680 SUBTOTAL 925 RUBBER--0.2% 40,000 American United Global, Inc.@3.437 138 SCHOOLS--0.5% 80,000 Youth Services International, Inc.@6.00 480 SECURITY/SAFETY EQUIPMENT--0.5% 20,000 First Alert, Inc.@14.625 292 5,000 Safety 1st, Inc.@29.25 146 SUBTOTAL 438 TELECOMMUNICATIONS--7.4% 20,000 Applied Digital Access, Inc.@25.375 507 22,000 Cidco, Inc.@29.00 638 25,000 Gilat Satellite Networks Ltd.@12.00 300 8,000 Glenayre Technologies, Inc.@57.75 462 80,000 Incomnet, Inc.@13.312 1,065 2,000 IPC Information Systems, Inc.@11.25 22 20,000 Qualcomm, Inc.@24.00 480 40,000 Spectrian Corp.@28.125 1,125 55,000 Transaction Network Services, Inc.@14.50 798 80,000 Wholesale Cellular USA, Inc.@15.50 1,240 SUBTOTAL 6,637 TEXTILE PRODUCTS--0.6% 20,000 *St. John Knits, Inc.@28.625 573 TOYS & SPORTING GOODS--0.1% 10,000 Lewis Galoob Toys, Inc. Convertible Preferred @11.375 114 TRUCKING--0.4% 25,000 Knight Transportation, Inc.@14.25 356 TOTAL EQUITY SECURITIES (COST: $67,995,000) 83,249 </TABLE> 6 See accompanying notes to financial statements. <PAGE> Covered Call Options-(0.0%) <TABLE> <CAPTION> Contracts Value <C> <S> <C> 120 Breed Technologies, Inc., January $40 $ (1) 25 PacifiCare Health Systems, Inc. February $75 (2) 100 Roberts Pharmaceutical, January $35 (7) ------- Total Covered Call Options (Premiums received: $53,000) (10) OTHER ASSETS LESS LIABILITIES--0.1% 113 ------- NET ASSETS--100.0% $90,014 ======= </TABLE> Notes to Portfolio of Investments * Income producing security during the year ended December 31, 1994. **The aggregate market value of stocks held in escrow at December 31, 1994 covering open covered call options written was $2,507,000. Based on the cost of investments of $74,948,000 for federal income tax purposes at December 31, 1994, the aggregate gross unrealized appreciation was $23,123,000, the aggregate gross unrealized depreciation was $8,160,000, and the net unrealized appreciation of investments was $14,963,000. (a) The following securities are subject to legal or contractual restrictions on sale. They were valued at cost on the dates of acquisition and at fair value as determined by the board of trustees of the Fund as of December 31, 1994. The aggregate value of restricted securities was $1,827,000, or 2.0% of net assets, at year end. AmeriData Technologies, Inc. 119,000 common stock and warrants purchased in March, 1994 at a cost of $1,309,000. Growth Environmental, Inc. $580,000 face amount convertible debt purchased in May, 1994 at a cost of $580,000. Zam's, Inc. $600,000 face amount convertible debt purchased in November, 1993 at a cost of $600,000. 7 See accompanying notes to financial statements. <PAGE> OBERWEIS EMERGING GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 (in thousands) <TABLE> <S> <C> <C> ASSETS: Investment securities at market value (Cost: $74,948,000) $89,911 Cash 9 Receivables: Fund shares sold 59 Securities sold 239 Dividends and interest 114 ---- Total receivables 412 Prepaid expenses 26 ------- Total Assets 90,358 LIABILITIES: Options written, at value (Premiums received: $53,000) 10 Payables: Fund shares repurchased $142 Securities purchased 88 Payable to adviser 72 Payable to distributor 26 ---- Total Payables 328 Accrued expenses 6 ------- Total Liabilities 344 NET ASSETS $90,014 ======= ANALYSIS OF NET ASSETS: Aggregate paid in capital $75,025 Accumulated net realized loss from investment transactions (17) Net unrealized appreciation of investments 15,006 ------- Net assets $90,014 ======= THE PRICING OF SHARES: Net asset value, offering and redemption price per share ($90,014,406 divided by 4,203,507 shares outstanding) $ 21.41 ======= </TABLE> See accompanying notes to financial statements. 8 <PAGE> OBERWEIS EMERGING GROWTH FUND STATEMENT OF OPERATIONS Year ended December 31, 1994 (in thousands) <TABLE> <S> <C> <C> INVESTMENT INCOME: Dividends $142 Interest 526 ---- Total Investment Income $ 668 EXPENSES: Distribution fees 428 Advisory fees 395 Management fees 370 Custodian fees 149 Transfer agent fees 130 Professional fees 81 Shareholder servicing fees 34 Shareholder reports 19 Insurance 14 Trustee fees 13 Registration fees 12 Other 2 ---- Total Expenses 1,647 ------- NET INVESTMENT LOSS (979) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from investment transactions (783) Net realized gain from covered call options written 766 ------- Total net realized loss (17) Decrease in unrealized appreciation of investments (3,046) ------- Net realized and unrealized loss on investments (3,063) ------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(4,042) ------- </TABLE> See accompanying notes to financial statements. 9 <PAGE> OBERWEIS EMERGING GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS (in thousands) <TABLE> <CAPTION> YEARS ENDED DECEMBER 31, ------------------ 1994 1993 -------- -------- <S> <C> <C> FROM OPERATIONS: Net investment loss $ (979) $ (931) Net realized gain (loss) from investment transactions (17) 5,623 Increase (decrease) in unrealized appreciation of investments (3,046) 5,625 -------- -------- Net increase (decrease) in net assets resulting from operations (4,042) 10,317 -------- -------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Distributions from net realized gains on investments -- (3,381) -------- -------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 26,882 83,936 Redemption of shares (37,150) (43,816) Shares issued in reinvestment of distribution -- 3,205 -------- -------- Net increase (decrease) from capital share transactions (10,268) 43,325 -------- -------- Total increase (decrease) in net assets (14,310) 50,261 NET ASSETS: Beginning of year 104,324 54,063 -------- -------- End of year $ 90,014 $104,324 ======== ======== </TABLE> See accompanying notes to financial statements. 10 <PAGE> NOTES TO FINANCIAL STATEMENTS December 31, 1994 1. SIGNIFICANT ACCOUNTING POLICIES Description of Business. Oberweis Emerging Growth Fund (the "Fund") is registered under the Investment Company Act of 1940 as a diversified open-end management investment company. The Fund is authorized to operate numerous portfolios under various trading strategies. The Fund commenced operations of one portfolio on January 7, 1987. Investment valuation. Investments are stated at value. Each listed and unlisted security for which last sale information is regularly reported is valued at the last reported sales price on that day. If there has been no sale on such day, then such security is valued at the current day's bid price. Any unlisted security for which last sale information is not regularly reported and any listed debt security which has an inactive listed market for which over-the- counter market quotations are readily available is valued at the highest closing bid price determined on the basis of reasonable inquiry. Restricted securities and any other securities or other assets for which market quotations are not readily available are valued by appraisal at their fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Trustees. Short-term debt obligations, commercial paper and repurchase agreements are valued on the basis of quoted yields for securities of comparable maturity, quality and type or on the basis of amortized costs. Fund share valuation. Fund shares are sold and redeemed on a continuous basis at net asset value. On each day the New York Stock Exchange is open for trading, the net asset value per share is determined as of the later of the close of the New York Stock Exchange or the Chicago Board Options Exchange by dividing the total value of the Fund's investments and other assets, less liabilities, by the number of Fund shares outstanding. Investment transactions and investment income. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed). Dividend income is recorded on the ex-dividend date, and interest income is recorded on the accrual basis and includes amortization of money market instrument premium and discount. Realized gains and losses from investment transactions are reported on an identified cost basis. Gains and losses on premiums from expired options are recognized on date of expiration. Change in Accounting for Distributions to Shareholders. During the year ended December 31, 1994, the Fund adopted AICPA Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. The statement requires that the classification of distributions to shareholders be changed in the financial statements to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, the Fund reclassified $3,408,000 of net operating losses incurred by the Fund since 1987 and which cannot be utilized to paid in capital. Federal income taxes and dividends to shareholders. The Fund has complied with the special provisions of the Internal Revenue Code available to investment companies and therefore no federal income tax provision is required. Dividends payable to its shareholders are recorded by the Fund on the ex-dividend date. The accumulated net realized loss from investment transactions for federal income tax purposes at December 31, 1994, amounting to approximately $17,000, is available to offset future taxable gains. If not applied, the loss carryforward expires during the year in 2002. 11 <PAGE> 2. TRANSACTIONS WITH AFFILIATES Effective October 1, 1994 Oberweis Asset Management, Inc. ("OAM") became the Fund's investment adviser, manager and primary shareholder service agent; and The Chicago Corporation ("TCC") became the Fund's principal distributor. Prior to October 1, 1994, Hamilton Investments, Inc. acted as the fund's manager, distributor and shareholder service agent; and Alpha Source Asset Management, a subsidiary of Hamilton Investments, Inc., served as the Fund's investment adviser. Advisory agreement. During 1994, pursuant to written agreements, the Fund paid monthly investment advisory fees at an annual rate equal to .45% of the first $50,000,000 of average daily net assets and .40% of average daily net assets in excess of $50,000,000. Management agreement. During 1994, for management services and facilities furnished, the Fund paid a monthly fee at an annual rate equal to .40% of average daily net assets. Expense Reimbursement. The manager and investment adviser are obligated to reduce their investment advisory and management fees or reimburse the Fund to the extent that total ordinary operating expense, as defined, exceed in any one year the following amounts expressed as a percentage of the Fund's average daily net assets: 2% of the first $25,000,000; plus 1.8% of the next $25,000,000; plus 1.6% of average daily net assets in excess of $50,000,000; or such lower percentage as may be required by any state where the Fund's shares are registered. For the year ended December 31, 1994, Hamilton Investments, Inc., Alpha Source Asset Management, Inc. and OAM were not required to rebate any of the investment adviser or management fees to the Fund. Officers and trustees. Certain officers or trustees of the Fund are also officers or directors of OAM. During the year ended December 31, 1994, the fund made no direct payments to its officers and paid $12,560 to its unaffiliated trustees. James D. Oberweis, the Fund's portfolio manager, is employed by OAM and TCC. Distribution and shareholder service expense. Effective October 1, 1994, the Fund pays The Chicago Corporation a monthly distribution fee at the annual rate of .35% of the average daily net assets and reimbursement for certain out-of- pocket expenses. The Fund also pays OAM a monthly shareholder service expense equal to .15% of average daily net assets and reimbursement for out-of-pocket expenses. Prior to this agreement, the Fund paid Hamilton Investments, Inc. a monthly fee at an annual rate equal to .50% of average daily net assets for its distribution service. Commissions. During 1994, the Fund paid Hamilton Investments, Inc. and TCC for executing some of the Fund's agency security transactions at competitive rates, typically $.03 to $.05 per share. 12 <PAGE> The following summarizes fees incurred by the Fund for the services provided by Hamilton Investments, Inc. and Alpha Source Asset Management, Inc. for the nine months ended September 30, 1994, and OAM and TCC for the three months ended December 31, 1994: <TABLE> <CAPTION> ALPHA HAMILTON SOURCE OAM TCC -------- -------- ------- ------- <S> <C> <C> <C> <C> Advisory fees -- $298,000 $97,000 -- Management fees $279,000 -- $91,000 -- Distribution fees $349,000 -- -- $79,000 Shareholder service fees -- -- $34,000 -- Commissions $ 28,000 -- -- $ 9,000 </TABLE> 3. INVESTMENT TRANSACTIONS The cost of securities purchased and proceeds from securities sold during 1994, other than options written and money market investments, aggregated $61,146,000 and $71,457,000, respectively. Transactions in options written for the year ended December 31, 1994 were as follows: <TABLE> <CAPTION> NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- ----------- <S> <C> <C> Options outstanding at beginning of year 700 $ 104,000 Options written 12,938 1,681,000 Options expired (9,356) (1,034,000) Options closed (1,543) (206,000) Options assigned (2,494) (492,000) ------ ----------- Options outstanding at end of year 245 $ 53,000 </TABLE> The premiums received provide a partial hedge (protection) against declining prices and enables the Fund to generate a higher return during periods when OAM does not expect the underlying security to make any major price moves in the near future but still deems the underlying security to be, over the long term, an attractive investment for the Fund. 4. CAPITAL SHARE TRANSACTIONS The following table summarizes the activity in capital shares of the Fund: <TABLE> <CAPTION> YEARS ENDED DECEMBER 31, ------------------------------------------------- 1994 1993 ------------------------ ----------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ----------- <S> <C> <C> <C> <C> Shares sold 1,272,000 $ 26,882,000 4,069,000 $83,936,000 Shares issued in reinvestment of dividends -- -- 144,000 3,205,000 Less shares redeemed (1,771,000) (37,150,000) (2,098,000) (43,816,000) ---------- ------------ ---------- ----------- Net increase (decrease) from capital share transactions (499,000) $(10,268,000) 2,115,000 $43,325,000 </TABLE> 13 <PAGE> FINANCIAL HIGHLIGHTS Per share income and capital changes for a share outstanding throughout the year is as follows (c): <TABLE> <CAPTION> YEARS ENDED DECEMBER 31, ------------------------------------------------- 1994 1993 1992 1991 1990 ------- ---------- ---------- -------- ---------- <S> <C> <C> <C> <C> <C> Net asset value at beginning of year $ 22.19 $ 20.90 $ 18.39 $ 12.11 $ 12.06 Income from investment operations: Net investment loss (.22) (.22) (.21) (.09) (.24) Net realized and unrealized gain (loss) on investments (.56) 2.25 2.72 10.64 .29 ------- ---------- ---------- -------- ---------- Total from investment operations (.78) 2.03 2.51 10.55 .05 Less Distributions: Distribution from net realized gains on investments -- (.74) -- (4.27) -- ------- ---------- ---------- -------- ---------- Net asset value at end of year $ 21.41 $ 22.19 $ 20.90 $ 18.39 $ 12.11 ======= ========== ========== ======== ========== Total Return(b) (3.5%) 9.7% 13.7% 87.1% 0.4% Ratio/Supplemental Data Net Assets at end of year (in thousands) $90,014 $104,324 $54,063 $19,730 $11,604 Ratio of expenses to average daily net assets 1.78% 1.80%(a) 1.99%(a) 2.13%(a) 2.15%(a) Ratio of net investment loss to average net assets (1.06%) (1.04%)(a) (1.14%)(a) (1.27%) (1.24%)(a) Portfolio turnover rate 66% 70% 63% 114% 62% </TABLE> - -------- Notes: (a) Net of expense reimbursement from related parties. Expense ratios would have been 1.82%, 2.41%, 3.01%, and 3.48% for 1993, 1992, 1991 and 1990, respectively before expense reimbursement. (b) A sales load of 4% was charged until December 31, 1991 and is not reflected in the total return figures above. (c) The per share data was determined using average shares outstanding during the year. 14 <PAGE> REPORT OF INDEPENDENT AUDITORS The Board of Trustees and Shareholders Oberweis Emerging Growth Fund We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Oberweis Emerging Growth Fund as of December 31, 1994, the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statement of changes in net assets for the year ended December 31, 1993 and the financial highlights for each of the years prior to 1994 were audited by other auditors whose report dated February 6, 1994 expressed an unqualified opinion. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of December 31, 1994, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oberweis Emerging Growth Fund at December 31, 1994, the results of its operations, the changes in its net assets and the financial highlights for the year ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Ernst & Young LLP Chicago, Illinois January 27, 1995 15 <PAGE> [LOGO] Oberweis Emerging Growth Fund - -------------------------------------------------------------------------------- James D. Oberweis Thomas J. Burke Trustee and President Trustee Douglas P. Hoffmeyer Edward F. Streit Trustee Trustee Patrick B. Joyce Martin L. Yokosawa Executive Vice President Vice President Treasurer Anita I. Mraz James M. Roberts Secretary Vice President Mary Jane Murphy Assistant Secretary MANAGER AND INVESTMENT ADVISOR Oberweis Asset Management, Inc. One Constitution Drive, Aurora, Illinois 60506 DISTRIBUTOR The Chicago Corporation 208 South LaSalle, Chicago, Illinois 60604 CUSTODIAN AND TRANSFER AGENT Investors Fiduciary Trust Company P.O. Box 419042, Kansas City, Missouri 64141 COUNSEL Vedder, Price, Kaufman & Kammholz 222 North LaSalle Street, Chicago, Illinois 60601 INDEPENDENT PUBLIC ACCOUNTANTS Ernst & Young LLP 233 South Wacker Drive, Chicago, Illinois 60606 ANNUAL REPORT --------------------------------------- DECEMBER 31, 1994 [LOGO] Oberweis Emerging Growth Fund One Constitution Drive Aurora, IL 60506 (800) 323-6166 <PAGE> PRESIDENT'S LETTER JULY 24, 1995 Dear Emerging Growth Fund Shareholder: What a difference a year makes! I'm pleased to report that your fund had an exceptionally strong first half with the net asset value rising 25.5%. That performance is better than almost all broad market averages and significantly better than the average mutual fund, which underperformed the S&P 500 for the first half of this year. For the first six months of 1995, the S&P 500 total return index gained 20.1%, the NASDAQ Composite gained 24.1%, and the smaller company oriented Russell 2000 gained 14.4%. Our first half performance looks particularly favorable when compared to the Russell 2000. The Russell 2000 is an unmanaged index consisting of 2,000 small cap securities with an average market capitalization of approximately $255 million. This year has been an excellent reminder of the pitfalls of market timing. After a very difficult 1994, it was not easy to be bullish. After a strong first quarter this year, many market timers locked in their profits by selling stocks and mutual fund shares. It is very difficult emotionally for an investor who sold shares at the end of the first quarter at $23.52, up 10% in just three months, to now buy them back at $26.87 at the end of June. Unfortunately, I have seen some of our shareholders sell shares after a rise, believing they are catching a temporary top. Sometimes they are lucky enough to buy them back 5% cheaper, feeling quite proud of their success. But if the market keeps going up, they refuse to buy them back, so as to not have to admit a mistake. As a result, they may miss a 100% or greater profit over a period of time. Shares of this fund can be quite volatile over the short run. However, for investors with a longer term time horizon, those ups and downs tend to get averaged out, and we hope the performance will continue to provide investors with above market returns. For the last five years, the fund has provided an average annual return of almost 18%, compared to 15% for the NASDAQ Composite and 13% for the Russell 2000. Since the fund's inception on January 7, 1987 the average annual return has been almost 16%. Technology stocks have been particularly strong during the first half of the year. We attempt to diversify the fund's investments over as many different industries as possible. We don't try to buy technology stocks when we think they're attractive or medical stocks when we think they're attractive. Like market timing, industry timing can also be a very dangerous game. Many professional and individual investors were selling their technology stocks in May after nice gains because they "knew" that technology stocks are "always" weak during the summer months. We follow a much simpler approach of just trying to identify the companies that are most successful in the real world and invest in them. If you and I are buying 50% or 100% more each year of whatever a company produces and the company's profits are rising at a similar rate, and if we can buy those companies at a P.E. ratio of less than half their growth rate, I believe we should be able to achieve above average returns over a long period of time. Thanks for having the confidence to invest your money with us. If you have any questions about your account, please call shareholder services at 1-800-245- 7311 during normal business hours. If you have any questions about the fund's portfolio or investment policy, please feel free to call me or either of our assistant portfolio managers, Martin Yokosawa and Chip Roberts, at 1-800-323- 6166. We're usually in the office from 7:30 A.M. until 6:00 P.M. central time during the week, and from 9:30 until noon on Saturday. We would like to hear from you! Sincerely, Jim Oberweis 1 <PAGE> OBERWEIS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS JUNE 30, 1995 (Market Value in thousands) Equity Securities - 93.9% <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> AIRLINES--5.1% **180,000 ValuJet Airlines, Inc.@32.875 $ 5,917 APPAREL--0.6% 20,000 Kenneth Cole Productions, Inc.@33.375 667 AUTO/TRUCK EQUIPMENT--0.6% 12,000 *Breed Technologies, Inc.@24.0 288 120,000 Williams Controls, Inc.@3.25 390 678 BUILDING AND BUILDING PRODUCTS--0.1% 15,056 *Slocan Forest Products, Ltd.@8.929 134 BUILDING--MOBILE HOMES & RV--1.2% 24,900 *Cavalier Homes, Inc.@11.75 293 92,800 *Shelter Components Corp.@11.75 1,090 1,383 CHEMICALS--1.1% 60,000 Applied Extrusion Technologies@14.875 893 10,000 *Borden Chemical & Plastic Co.@18.25 183 30,000 Methanex Corp.@8.375 251 1,327 COMMERCIAL SERVICES--1.2% 10,000 American Oncology Resources@27.75 278 14,000 Central Sprinkler Corp.@24.50 343 25,000 Luminart, Inc.@3.280 82 31,000 RTW, Inc.@18.25 566 12,100 Sterling Healthcare Group@15.00 182 1,451 COMPUTER GRAPHICS--0.5% 10,000 Diamond Multimedia Systems, Inc.@20.50 205 15,000 Pinnacle Systems, Inc.@22.50 338 543 COMPUTER--INTEGRATED SYSTEMS--0.9% 20,000 Data Research Associates, Inc.@13.00 260 20,000 Kronos, Inc.@37.125 742 1,002 COMPUTER--LOCAL NETWORKS--4.6% 10,000 Alantec Corp.@34.25 342 180,000 Apertus Technologies, Inc.@8.75 1,575 **100,000 Madge N.V.@28.00 2,800 30,000 Network Peripherals, Inc.@21.812 654 5,371 </TABLE> <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> COMPUTER--MEMORY DEVICES--3.8% **39,000 Alliance Semiconductor Corp.@49.00 $ 1,911 **25,000 C-Cube Microsystems, Inc.@27.25 681 103,806 Western Digital Corp.@17.375 1,804 4,396 COMPUTER--MINI/MICRO--1.6% 20,000 Compaq Computer Corp.@45.375 908 26,000 *Scientific Technologies, Inc.@36.00 936 1,844 COMPUTER--OPTICAL RECOGNITION--0.4% 30,000 Robotic Vision Systems, Inc.@14.50 435 COMPUTER PERIPHERALS--11.0% 1,000 Discreet Logic, Inc.@33.00 33 120,000 Eltron International, Inc.@20.25 2,430 100,000 Encad, Inc.@27.00 2,700 **40,000 Microtouch Systems, Inc.@20.562 822 132,000 Mylex Corp.@13.25 1,749 30,000 Proxima Corp.@23.875 716 10,000 Scansource, Inc.@9.50 95 **40,000 U.S. Robotics Corp.@109.00 4,360 12,905 COMPUTER SERVICES--3.1% 100,000 AmeriData Technologies, Inc.@9.25 925 11,900 AmeriData Technologies, Inc. Warrants@0.00 0 20,000 AmeriData Technoligies, Inc. Convertible Preferred @29.25 585 100,000 CIBER, Inc.@17.75 1,775 25,000 Renaissance Solutions, Inc.@13.75 344 3,629 COMPUTER SOFTWARE--10.4% 40,000 BTG, Inc.@9.125 365 30,000 Firefox Communications, Inc.@25.75 772 25,000 Datastream Systems, Inc.@23.75 594 25,000 Electronics For Imaging, Inc.@52.25 1,306 10,000 Epic Design Technology, Inc.@35.50 355 1,000 HNC Software@21.25 21 35,000 Hummingbird Communications Ltd.@29.25 1,024 10,000 MapInfo Corp.@35.50 355 60,000 Natural MicroSystems Corp.@18.50 1,110 40,000 NetManage, Inc.@17.00 680 100,000 Number Nine Visual Technology@20.75 2,075 21,000 Platinum Technology, Inc.@18.12 381 15,000 Remedy Corp.@36.25 544 </TABLE> See notes to Portfolio of Investments. 2 <PAGE> Equity Securities - continued <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> 10,000 Seer Technologies, Inc.@20.75 $ 208 500 Software Artistry, Inc.@22.25 11 10,000 Spyglass, Inc.@28.625 286 55,000 Systemsoft Corp.@14.50 797 30,000 Tecnomatix Technologies@7.375 221 60,000 VMark Software, Inc.@17.75 1,065 12,170 COSMETICS/PERSONAL CARE--0.4% 32,000 Parlux Frangrances, Inc.@14.625 468 DIVERSIFIED OPERATIONS--0.1% 4,000 ACX Technologies, Inc.@41.75 167 DRUGS--3.0% 40,000 Barr Laboratories, Inc.@21.625 865 21,800 K V Pharmaceutical Co. Class A@8.25 180 30,000 *Mylan Laboratories, Inc.@30.75 923 **40,000 Watson Pharmaceuticals, Inc.@39.00 1,560 3,528 ELECTRICAL & ELECTRONIC EQUIPMENT--2.3% 30,000 Datamarine International, Inc.@9.00 270 5,000 Itron, Inc.@31.25 156 15,000 *Robbins & Meyers, Inc.@27.50 413 56,250 Symetrics Industries, Inc.@10.75 605 35,000 Zygo Corp.@33.75 1,181 2,625 ELECTRONICS--COMPONENTS/ SEMICONDUCTORS--8.4% 25,000 AG Associates, Inc.@17.50 438 **34,400 Atmel Corp.@55.375 1,905 60,000 Flextronics International Ltd.@21.875 1,312 10,000 Fusion Systems Corp.@34.25 343 143,061 Genus, Inc.@13.562 1,940 20,000 Information Storage Devices, Inc.@25.00 500 12,500 Integrated Device Technology, Inc.@46.25 578 **5,000 Integrated Silicon Solution@52.25 261 25,000 Mattson Technology, Inc.@47.00 1,175 **35,500 Oak Technology, Inc.@36.75 1,305 9,757 ELECTRONICS--LASER SYSTEMS/ COMPONENTS--2.6% 63,000 II-VI, Inc.@27.75 1,748 10,000 Cyberoptics Corp.@25.375 254 **30,000 Electro Scientific Industries, Inc.@33.25 998 3,000 </TABLE> <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> FARM MACHINERY--0.7% 22,500 *AGCO Corp.@37.50 $ 844 FINANCIAL/BUSINESS SERVICES--1.7% 20,000 Express Scripts, Inc. Class A@35.25 705 15,000 Mercer International, Inc.@21.00 315 **15,000 *The Money Store, Inc.@35.812 537 58,000 Sherwood Group, Inc.@8.25 479 2,036 FOOD--MISCELLANEOUS--0.4% 25,000 Odwalla, Inc.@20.25 506 HEALTH MAINTENANCE ORGANIZATION--1.5% 23,000 Coventry Corp.@14.125 325 **28,000 PacifiCare Health Systems, Inc.@51.00 1,428 1,753 INSURANCE--0.2% 10,000 HCC Insurance Holdings, Inc.@26.00 260 LEISURE & RECREATION PRODUCTS--2.6% 45,000 Regal Cinemas, Inc.@32.00 1,440 40,000 Ride Snowboard Company@27.25 1,090 20,000 West Marine, Inc.@25.625 512 3,042 MACHINERY--1.7% 5,000 3D Systems Corp.@18.50 92 10,000 Gleason Corp.@22.125 221 10,000 Indresco, Inc.@15.50 155 58,000 *JLG Industries, Inc.@26.50 1,537 2,005 MEDIA--RADIO/TV--2.1% 85,000 United Video Satellite Group, Inc.@29.25 2,486 MEDICAL EQUIPMENT & SUPPLIES--0.9% 21,000 Chad Therapeutics, Inc.@14.875 312 100,000 FluoroScan Imaging Systems, Inc.@7.75 775 1,087 MEDICAL--NURSING HOMES, OUTPATIENT HOMECARE--2.6% 10,000 American Homepatient, Inc.@29.75 298 10,000 American Medical Response@28.00 280 10,000 Medpartners, Inc.@19.25 193 5,000 Physician Reliance Network, Inc.@19.50 97 127,816(a) Retirement Care Associates, Inc.@11.952 1,528 35,000 Transworld Healthcare, Inc.@16.75 586 2,982 </TABLE> See notes to Portfolio of Investments. 3 <PAGE> Equity Securities - continued <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> TRUCKING--0.3% 25,000 Knight Transportation, Inc.@13.50 $ 338 TOTAL EQUITY SECURITIES (COST: $70,762,549) 109,824 Convertible Debt Obligations-5.0% <CAPTION> Face Amount Value <C> <S> <C> COMPUTER MEMORY DEVICES--0.5% $600,000 *Seagate Technology 6.75% due 5-01-12 @105.00 $ 630 COMPUTER PERIPHERALS--0.6% 600,000 *SCI Systems, Inc. 5.625% due 3-01-12 @118.50 711 EYECARE SERVICES--0.5% 500,000 *Benson Eyecare Corp. 8.00% due 5-15-01 @125.50 627 FARM MACHINERY--0.6% 250,000 *Agco Corp. 6.50% due 6-1-08@296.052 740 MEDICAL--NURSING HOMES--1.9% 1,500,000 *GranCare, Inc. 6.50% due 1-15-03 @86.00 1,290 1,000,000 *Theratx, Inc. 8.00% due 2-1-02@92.5 925 2,215 OIL & GAS--0.4% 500,000 *Snyder Oil Corp. 7.00% due 5-15-01@89.00 445 POLLUTION CONTROL--0.3% 580,000(a) *Growth Environmental, Inc. 9.00% due 4-30-97 @58.049 337 RETAIL--0.2% 200,000 *Proffitts, Inc. 4.75% due 11-01-03 @89.00 178 600,000(a) *Zam's, Inc. 7.50% due 10-31-00 @1.146 7 185 TOTAL CONVERTIBLE DEBT OBLIGATIONS (COST: $6,155,260) 5,890 </TABLE> <TABLE> <CAPTION> Shares Company (Closing Price) Value <C> <S> <C> OIL & GAS--0.8% 40,000 International Colin Energy Corp.@5.25 $ 210 40,000 Smith International, Inc.@16.75 670 880 PERSONNEL PLACEMENT--0.7% 10,000 Alternative Resources Corp.@26.50 265 30,000 On Assignment, Inc.@19.00 570 835 RESTAURANTS--4.6% 100,000 Lone Star Steakhouse & Saloon, Inc.@30.312 3,031 30,000 Outback Steakhouse, Inc.@28.875 866 20,000 Papa John's International, Inc.@35.00 700 100,000 Pollo Tropical, Inc.@8.00 800 5,397 RETAIL/WHOLESALE COMPUTERS--0.6% 40,500 Pomeroy Computer Resources@18.25 739 SCHOOLS--0.7% 80,000 Youth Services International, Inc.@10.625 850 TELECOMMUNICATIONS--7.8% 20,000 ACT Networks, Inc.@17.25 345 20,000 Applied Innovation, Inc.@47.75 955 **16,300 Cidco, Inc.@31.375 511 60,000 Coherent Communication Systems Corp.@16.75 1,005 25,000 Gilat Satellite Networks Ltd.@22.75 569 20,000 Pairgain Technologies, Inc.@19.125 383 **20,000 Qualcomm, Inc.@34.562 691 39,000 Spectrian Corp.@39.75 1,550 5,000 STM Wireless, Inc.@12.75 64 **20,000 Stratacom, Inc.@48.75 975 29,500 Unitech Industries, Inc.@10.75 317 82,000 Wholesale Cellular USA, Inc.@21.50 1,763 9,128 TEXTILE PRODUCTS--0.9% 20,000 *St. John Knits, Inc.@44.875 897 11,000 Supreme International Co.@17.00 187 1,084 TOYS & SPORTING GOODS--0.1% 10,000 Lewis Galoob Toys, Inc. Convertible Preferred @17.5 175 </TABLE> See notes to Portfolio of Investments 4 <PAGE> Long Put Options-1.3% <TABLE> <CAPTION> Contracts Value <S> <C> <C> 1,000 S&P 100 Stock Index Sep $520 $ 938 1,000 S&P 100 Stock Index Aug $510 512 1,000 S&P 100 Stock Index Jul $500 100 Total Put Options 1,550 (Cost: $2,318,500) Repurchase Agreement--1.8% 2,095,716 State Street Bank and Trust Co. Dated 6/30/95, collateralized by U.S. Treasury Notes 4.90%, 7/03/95 $ 2,096 TOTAL INVESTMENT - 102.0% 119,360 (COST: $81,332,025) Covered Call Options-(1.8%) Contracts Value 390 Alliance Semiconductor Corp. Jul $55 $ (39) 344 Atmel Corp. Aug $55 (133) 100 C-Cube Microsystems, Inc. Aug $22 (58) 150 C-Cube Microsystems, Inc. Nov $30 (47) 60 Cidco, Inc. Jul $35 (2) 90 Electro Scientific Inds. Jul $35 (8) 50 Electro Scientific Inds. Aug $35 (10) 160 Electro Scientific Inds. Sep $35 (45) 50 Integrated Silicon Solution Jul $55 (8) 200 Madge N.V. Aug $25 (85) 750 Madge N.V. Aug $30 (122) 270 Microtouch Systems, Inc. Sep $40 (3) 150 The Money Store, Inc. Jul $35 (30) 150 Oak Technology, Inc. Jul $35 (40) 100 Oak Technology, Inc. Sep $35 (48) 50 PacifiCare Health Systems, Inc. Aug $75 (0) 100 PacifiCare Health Systems, Inc. Aug $80 (0) 100 Qualcomm, Inc. Jul $40 (5) 100 Qualcomm, Inc. Oct $40 (25) 5 Stratacom, Inc. Aug $50 (2) 300 U.S. Robotics Corp. Aug $75 (1,035) 100 U.S. Robotics Corp. Aug $80 (298) 100 ValuJet Airlines, Inc. Jul $35 (10) 100 ValuJet Airlines, Inc. Aug $40 (5) 600 ValuJet Airlines, Inc. Sep $40 (56) 100 Watson Pharmaceuticals, Inc. Jul $40 (6) </TABLE> <TABLE> <CAPTION> Contracts Value <S> <C> <C> 90 Watson Pharmaceuticals, Inc. Aug $35 $ (33) Total Covered Call Options (2,153) (Premium received: $899,000) OTHER ASSETS LESS LIABILITIES--(0.2%) (283) NET ASSETS--100.0% $116,924 </TABLE> Notes to Portfolio of Investments * Income producing security during the period ended June 30, 1995. **The aggregate market value of stocks held in escrow at June 30, 1995 covering open covered call options written was $19,862,869. Based on the cost of investments of $81,332,025 for federal income tax purposes at June 30, 1995, the aggregate gross unrealized appreciation was $41,786,382, the aggregate gross unrealized depreciation was $3,758,120, and the net unrealized appreciation of investments was $38,028,262. (a) The following securities are subject to legal or contractual restrictions on sale. They were valued at cost on the dates of acquisition and at fair value as determined by the board of trustees of the Fund as of June 30, 1995. The aggregate value of restricted securities was $926,223 or 0.8% of net assets, at June 30, 1995. Growth Environmental, Inc. $580,000 face amount convertible debt purchased in May, 1994 at a cost of $580,000. Retirement Care Associates, Inc. 23,625 shares purchased in February, 1995 at a cost of $168,328 and 25,441 shares purchased in June, 1995 at a cost of $225,789. Zam's, Inc. $600,000 face amount convertible debt purchased in November, 1993 at a cost of $600,000. See notes to Portfolio of Investments. 5 <PAGE> OBERWEIS EMERGING GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (in thousands) <TABLE> <S> <C> <C> ASSETS: Investment securities at market value (Cost: $76,917,809) $115,714 Options purchased, at value (Cost: $2,318,500) 1,550 Repurchase agreement 2,096 Cash 395 Receivables: Fund shares sold $892 Securities sold 258 Dividends and interest 126 ---- Total receivables 1,276 Prepaid expenses 20 -------- Total Assets 121,051 LIABILITIES: Options written, at value (Premiums received: $899,000) 2,153 Payables: Fund shares repurchased $874 Securities purchased 978 Payable to adviser 80 Payable to distributor 31 ---- Total Payables 1,963 Accrued expenses 11 -------- Total Liabilities 4,127 NET ASSETS $116,924 ======== ANALYSIS OF NET ASSETS: Aggregate paid in capital $ 78,213 Accumulated net realized gain from investment transactions 1,937 Net unrealized appreciation of investments 36,774 -------- Net assets $116,924 ======== THE PRICING OF SHARES: Net asset value, offering and redemption price per share ($116,923,548 divided by 4,350,806 shares outstanding) $ 26.87 ======== </TABLE> See accompanying notes to financial statements. 6 <PAGE> OBERWEIS EMERGING GROWTH FUND STATEMENT OF OPERATIONS Six months ended June 30, 1995 (in thousands) <TABLE> <S> <C> <C> INVESTMENT INCOME: Dividends $ 61 Interest 257 ---- Total Investment Income $ 318 EXPENSES: Advisory fees 212 Management fees 200 Distribution fees 175 Shareholder servicing fees 75 Custodian fees 80 Transfer agent fees 71 Professional fees 57 Registration fees 16 Shareholder reports 15 Insurance 6 Trustee fees 5 Other 3 ---- Total Expenses 915 ------- NET INVESTMENT LOSS BEFORE EXPENSE REIMBURSEMENT (597) Expense reimbursement 39 ------- NET INVESTMENT LOSS (558) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from investment transactions 2,932 Net realized loss from covered call options written (979) ------- Total net realized gain 1,953 Increase in unrealized appreciation of investments 21,769 ------- Net realized and unrealized gain on investments 23,722 ------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $23,164 ======= </TABLE> STATEMENT OF CHANGES IN NET ASSETS Six months ended June 30, 1995 and the year ended December 31, 1994 (in thousands) <TABLE> <CAPTION> JUNE 30, DECEMBER 31, 1995 1994 -------- ------------ <S> <C> <C> FROM OPERATIONS: Net investment loss $ (558) $ (979) Net realized gain (loss) from investment transactions 1,953 (17) Increase (decrease) in unrealized appreciation of investments 21,769 (3,046) -------- -------- Net increase (decrease) in net assets resulting from operations 23,164 (4,042) -------- -------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 24,701 26,882 Redemption of shares (20,955) (37,150) -------- -------- Net increase (decrease) from capital share transactions 3,746 (10,268) -------- -------- Total increase (decrease) in net assets 26,910 (14,310) NET ASSETS: Beginning of year 90,014 104,324 -------- -------- End of year $116,924 $ 90,014 ======== ======== </TABLE> See accompanying notes to financial statements. 7 <PAGE> NOTES TO FINANCIAL STATEMENTS June 30, 1995 1. SIGNIFICANT ACCOUNTING POLICIES Description of Business. Oberweis Emerging Growth Fund (the "Fund") is registered under the Investment Company Act of 1940 as a diversified open-end management investment company. The Fund is authorized to operate numerous portfolios under various trading strategies. The Fund commenced operations of one portfolio on January 7, 1987. Investment valuation. Investments are stated at value. Each listed and unlisted security for which last sale information is regularly reported is valued at the last reported sales price on that day. If there has been no sale on such day, then such security is valued at the current day's bid price. Any unlisted security for which last sale information is not regularly reported and any listed debt security which has an inactive listed market for which over-the- counter market quotations are readily available is valued at the highest closing bid price determined on the basis of reasonable inquiry. Restricted securities and any other securities or other assets for which market quotations are not readily available are valued by appraisal at their fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Board of Trustees. Short-term debt obligations, commercial paper and repurchase agreements are valued on the basis of quoted yields for securities of comparable maturity, quality and type or on the basis of amortized costs. Fund share valuation. Fund shares are sold and redeemed on a continuous basis at net asset value. On each day the New York Stock Exchange is open for trading, the net asset value per share is determined as of the later of the close of the New York Stock Exchange or the Chicago Board Options Exchange by dividing the total value of the Fund's investments and other assets, less liabilities, by the number of Fund shares outstanding. Investment transactions and investment income. Investment transactions are accounted for on the trade date (date the order to buy or sell is executed). Dividend income is recorded on the ex-dividend date, and interest income is recorded on the accrual basis and includes amortization of money market instrument premium and discount. Realized gains and losses from investment transactions are reported on an identified cost basis. Gains and losses on premiums from expired options are recognized on date of expiration. Repurchase agreements. Repurchase agreements are fully collateralized by U.S. Treasury and Government agency securities. All collateral is held through the Fund's custodian bank and is monitored daily by the Fund so that its market value exceeds the carrying value of the repurchase agreement. Federal income taxes and dividends to shareholders. The Fund has complied with the special provisions of the Internal Revenue Code available to investment companies and therefore no federal income tax provision is required. Dividends payable to its shareholders are recorded by the Fund on the ex-dividend date. The accumulated net realized loss from investment transactions for federal income tax purposes at December 31, 1994, amounting to approximately $17,000, is available to offset future taxable gains. If not applied, the loss carryforward expires during the year in 2002. 8 <PAGE> 2. TRANSACTIONS WITH AFFILIATES The Fund has written agreements with Oberweis Asset Management, Inc. ("OAM") as the Fund's investment adviser, manager and primary shareholder service agent; and The Chicago Corporation ("TCC") as the Fund's principal distributor. Advisory agreement. During the six months ended June 30, 1995, the Fund paid monthly investment advisory fees at an annual rate equal to .45% of the first $50,000,000 of average daily net assets and .40% of average daily net assets in excess of $50,000,000. For the six months ended June 30, 1995, the Fund incurred an advisory fee totalling $212,000. Management agreement. During the six months ended June 30, 1995, for management services and facilities furnished, the Fund paid a monthly fee at an annual rate equal to .40% of average daily net assets. For the six months ended June 30, 1995, the Fund incurred a management fee totalling $200,000. Expense Reimbursement. The manager and investment adviser are obligated to reduce their investment advisory and management fees or reimburse the Fund to the extent that total ordinary operating expense, as defined, exceed in any one year the following amounts expressed as a percentage of the Fund's average daily net assets: 2% of the first $25,000,000; plus 1.8% of the next $25,000,000; plus 1.6% of average daily net assets in excess of $50,000,000; or such lower percentage as may be required by any state where the Fund's shares are registered. For the six months ended June 30, 1995, OAM reimbursed the Fund $38,510. Officers and trustees. Certain officers or trustees of the Fund are also officers or directors of OAM. During the six months ended June 30, 1995, the fund made no direct payments to its officers and paid $4,818 to its unaffiliated trustees. James D. Oberweis, the Fund's portfolio manager, is employed by OAM and TCC. Distribution and shareholder service expense. The Fund has a distribution agreement with The Chicago Corporation (TCC). For services under the distribution agreement, the Fund pays TCC a fee at the annual rate of .35% of the average daily net assets and reimbursement for certain out-of-pocket expenses. For the six months ended June 30, 1995, the Fund incurred a distribution fee totalling $175,000. The Fund has a shareholder service agreement with OAM. For services under the shareholder service agreement, the Fund pays OAM a fee at the annual fate of .15% of the average daily net assets and reimbursement for certain out-of-pocket expenses. For the six months ended June 30, 1995, the Fund incurred a shareholder service fee totalling $75,000. Commissions. The Fund pays TCC for executing some of the Fund's agency security transactions at competitive rates, typically $.03 to $.05 per share. For the six months ended June 30, 1995, the Fund paid commissions of $13,000 to TCC. 9 <PAGE> 3. INVESTMENT TRANSACTIONS The cost of securities purchased and proceeds from securities sold during the six months ended June 30, 1995, other than options written and money market investments, aggregated $37,653,902 and $37,802,561, respectively. Transactions in options written for the six months ended June 30, 1995, were as follows: <TABLE> <CAPTION> NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- ---------- <S> <C> <C> Options outstanding at beginning of period 245 $ 53,000 Options written 12,604 1,752,000 Options expired (4,495) (482,000) Options closed (2,065) (253,000) Options assigned (1,530) (171,000) ------ ---------- Options outstanding at end of period 4,759 $ 899,000 </TABLE> The premiums received provide a partial hedge (protection) against declining prices and enables the Fund to generate a higher return during periods when OAM does not expect the underlying security to make any major price moves in the near future but still deems the underlying security to be, over the long term, an attractive investment for the Fund. 4. CAPITAL SHARE TRANSACTIONS The following table summarizes the activity in capital shares of the Fund: <TABLE> <CAPTION> SIX MONTHS ENDED JUNE YEAR ENDED DECEMBER 31, 30, 1995 1994 ---------------------- ------------------------ SHARES AMOUNT SHARES AMOUNT --------- ----------- ---------- ------------ <S> <C> <C> <C> <C> Shares sold 1,031,000 $24,701,000 1,272,000 $26,882,000 Less shares redeemed (884,000) (20,955,000) (1,771,000) (37,150,000) --------- ----------- ---------- ------------ Net increase (decrease) from capital share transactions 147,000 $3,746,000 (499,000) $(10,268,000) </TABLE> 10 <PAGE> FINANCIAL HIGHLIGHTS Per share income and capital changes for a share outstanding throughout the period is as follows (c): <TABLE> <CAPTION> SIX MONTHS YEARS ENDED DECEMBER 31, ENDED --------------------------------------- JUNE 30, 1995 1994 1993 1992 1991 ------------- -------- --------- --------- ------- <S> <C> <C> <C> <C> <C> Net asset value at beginning of period $ 21.41 $ 22.19 $ 20.90 $ 18.39 $ 12.11 Income from investment operations: Net investment loss (.13) (.22) (.22) (.21) (.09) Net realized and unrealized gain (loss) on investments 5.59 (.56) 2.25 2.72 10.64 ----------- -------- --------- --------- ------- Total from investment operations 5.46 (.78) 2.03 2.51 10.55 Less Distributions: Distribution from net realized gains on investments -- -- (.74) -- (4.27) ----------- -------- --------- --------- ------- Net asset value at end of period $ 26.87 $ 21.41 $ 22.19 $ 20.90 $ 18.39 =========== ======== ========= ========= ======= Total Return(%)(b) 25.5 (3.5) 9.7 13.7 87.1 Ratio/Supplemental Data Net Assets at end of period (in thousands) $116,924 $ 90,014 $104,324 $54,063 $19,730 Ratio of expenses to average daily net assets(%) 1.75(a,d) 1.78 1.80(a) 1.99(a) 2.13(a) Ratio of net investment loss to average net assets(%) (1.26)(a,d) (1.06) (1.04)(a) (1.14)(a) (1.27) Portfolio turnover rate(%) 75 66 70 63 114 </TABLE> - -------- Notes: (a) Net of expense reimbursement from related parties. Expense ratios would have been 1.83%, 1.82%, 2.41%, and 3.01% for 1995, 1993, 1992 and 1991, respectively before expense reimbursement. (b) A sales load of 4% was charged until December 31, 1991 and is not reflected in the total return figures above. (c) The per share data was determined using average shares outstanding during the year. (d) Annualized. 11 <PAGE> [LOGO] Oberweis Emerging Growth Fund - -------------------------------------------------------------------------------- James D. Oberweis Peter H. Wendell Trustee and President Trustee Douglas P. Hoffmeyer Thomas J. Burke Trustee Trustee Patrick B. Joyce Edward F. Streit Executive Vice President Trustee Treasurer Martin L. Yokosawa James M. Roberts Vice President Vice President Anita I. Mraz Mary Jane Murphy Secretary Assistant Secretary MANAGER AND INVESTMENT ADVISOR Oberweis Asset Management, Inc. One Constitution Drive, Aurora, Illinois 60506 DISTRIBUTOR The Chicago Corporation 208 South LaSalle, Chicago, Illinois 60604 CUSTODIAN AND TRANSFER AGENT Investors Fiduciary Trust Company P.O. Box 419042, Kansas City, Missouri 64141 COUNSEL Vedder, Price, Kaufman & Kammholz 222 North LaSalle Street, Chicago, Illinois 60601 [LOGO] Oberweis Emerging Growth Fund One Constitution Drive Aurora, IL 60506 (800) 323-6166 SEMI-ANNUAL REPORT --------------------------------------- UNAUDITED JUNE 30, 1995 <PAGE> PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS. (A) FINANCIAL STATEMENTS-INCLUDED IN STATEMENT OF ADDITIONAL INFORMATION (PART B). Oberweis Emerging Growth Fund Financial Statements and Independent Auditors' Report thereon (a) Portfolio of Investments as of December 31, 1994. (b) Statement of Assets and Liabilities as of December 31, 1994. (c) Statement of Operations for the Year Ended December 31, 1994. (d) Statement of Changes in Net Assets for the Years Ended December 31, 1994 and 1993. Oberweis Emerging Growth Fund Financial Statements (a) Portfolio of Investments as of June 30, 1995 (Unaudited). (b) Statement of Assets and Liabilities as of June 30, 1995 (Unaudited). (c) Statement of Operations for the Six Months Ended June 30, 1995 (Unaudited). (d) Statement of Changes in Net Assets for the Six Months Ended June 30, 1995 (Unaudited) and the year ended December 31, 1994. Oberweis Micro-Cap Portfolio (a) Statements of Assets and Liabilities as of October 2, 1995 (b) Notes to Financial Statements Schedules II, III, IV, V, VI and VII are omitted and the required information is not presented. Schedule I has been omitted and the required information is presented in the portfolio of investments. (B) EXHIBITS. 1. Agreement and Declaration of Trust dated July 7, 1986/11/ 1.1 First Amendment to Agreement and Declaration of Trust, dated November 17, 1986/11/ 2. By-Laws/11/ 3. None 4. Form of Specimen Certificates of Shares of Beneficial Interest/11/ 4.1 Specimen Certificates of Shares of Beneficial Interest/2/ 5.1 Management Agreement/5/ 5.1.1 Amendment to Management Agreement as of February 16, 1994/9/ 5.1.2 Management Agreement dated October 1, 1994/11/ 5.2 Investment Advisory Agreement/5/ 5.2.1 Investment Advisory Agreement dated October 1, 1994/11/ 5.2.2 Transfer and Guaranty Agreement/7/ *5.2.3 Written Notification required under Investment Advisory Agreement dated October 1, 1994 regarding the rendering of advisory services to the Micro-Cap Portfolio. C-1 <PAGE> 6. None 7. None 8. Custodian Agreement/1/ 8.1 Letter Agreements renewing Custodian Agreement dated February 24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/ February 15, 1991,/6/ and February 13, 1992,/7/ respectively 8.2 Letter Agreement dated January 27, 1993, renewing Custodian Agreement/8/ 8.3 Custodian Agreement dated August 3, 1993/11/ 9. Transfer Agency Agreement/1/ 9.1 Letter Agreements renewing Transfer Agency Agreement dated February 24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/ February 15, 1991,/6/ and February 13, 1992,/7/ respectively 9.2 Letter Agreement dated January 27, 1993, renewing Transfer Agency Agreement/8/ 9.3 Transfer Agent Agreement dated August 3, 1993/11/ 10.1 Form of Opinion and Consent of Lawrence, Kamin, Saunders & Uhlenhop/1A/ *10.1.1 Consent and Opinion of Vedder, Price, Kaufman & Kammholz 10.2 Form of Opinion of Ropes & Gray/1A/ *10.2.1 Opinion and Consent of Ropes & Gray *11.1 Consent of Ernst & Young LLP *11.2 Consent of Checkers, Simon & Rosner LLP 12. Not applicable 13. Form of Contribution Agreement with Initial Shareholders/1/ 13.1 Contribution Agreement dated December 8, 1986, from James D. Oberweis with respect to the purchase of an aggregate of 5,500 shares as custodian for two minor children for $10.00 each (a total of $55,000)/2/ 13.2 Contribution Agreement dated December 8, 1986, from Lora J. Oberweis with respect to the purchase of 2,000 shares for $10.00 each (a total of $20,000)/2/ 13.3 Contribution Agreement dated December 8, 1986, from Helen Cisek with respect to the purchase of 1,500 shares for $10.00 each (a total of $15,000)/2/ 13.4 Contribution Agreement dated December 8, 1986, from Tedd Determan with respect to the purchase of an aggregate of 1,000 shares for $10.00 each (a total of $10,000)/2/ *14.1 Individual Retirement Custodial Account Agreement, Disclosure Statement, Form of Account Application, and Transfer Request Form/11/ 15.1 Plan of Distribution pursuant to Rule 12b-1/4/ 15.2 Distribution and Shareholder Service Agreement/5/ 15.3 Amendment to Plan of Distribution pursuant to Rule 12b-1 and Distribution and Shareholder Service Agreement/8/ *15.4 Plan of Distribution pursuant to Rule 12b-1 as amended October 1, 1994/11/ C-2 <PAGE> 15.4.1 Form of Plan of Distribution pursuant to Rule 12b-1 as amended January 1, 1996/11/ 15.5 Distribution Agreement dated October 1, 1994/11/ 15.5.1 Form of Distribution and Shareholder Service Agreement dated January 1, 1996/11/ 15.6 Shareholder Service Agreement dated October 1, 1994/11/ 16. Calculation of Performance Data/11/ - ------- /*/ Filed herewith. /1/ Previously filed with the Registration Statement and incorporated herein by reference. /1A/ Previously filed with the Registration Statement. /2/ Previously filed with Pre-Effective Amendment No. 2 (Amendment No. 2) dated January 14, 1987 and incorporated herein by reference. /2A/ Previously filed with Pre-Effective Amendment No. 2. /3/ Previously filed with Post-Effective Amendment No. 2 (Amendment No. 4) dated February 28, 1988. /4/ Previously filed with Post-Effective Amendment No. 3 (Amendment No. 5) dated March 2, 1989 and incorporated herein by reference. /5/ Previously filed with Post-Effective Amendment No. 4 (Amendment No. 6) dated February 28, 1990 and incorporated herein by reference. /6/ Previously filed with Post-Effective Amendment No. 5 (Amendment No. 7) dated March 1, 1991 and incorporated herein by reference. /7/ Previously filed with Post-Effective Amendment No. 6 (Amendment No. 8) dated March 2, 1992 and incorporated herein by reference. /8/ Previously filed with Post-Effective Amendment No. 7 (Amendment No. 9) dated March 1, 1993 and incorporated herein by reference. /9/ Previously filed with Post-Effective Amendment No. 8 (Amendment No. 10) dated April 29, 1994 and incorporated herein by reference. /10/ Previously filed with Post-Effective Amendment No. 9 (Amendment No. 11) dated February 28, 1995 and incorporated herein by reference. /11/ Previously filed via EDGAR with Post-Effective Amendment No. 10 (Amendment No. 12) dated October 18, 1995 and incorporated herein by reference. ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT. Inapplicable. ITEM 26. NUMBER OF HOLDERS OF SECURITIES Seven thousand six hundred seventy (7,670) as of November 30, 1995. ITEM 27. INDEMNIFICATION A response has been previously filed with Pre-Effective Amendment No. 2 (Amendment No. 2) dated January 14, 1987 and is incorporated herein by reference. The Fund has also purchased a liability policy which indemnifies the Fund's officers and trustees against loss arising from claims by reason of their legal liability for acts as officers and trustees, subject to limitations and conditions as set forth in such policy. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, and the Commission remains of the same opinion, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 28. BUSINESS AND OTHER CONNECTION OF INVESTMENT ADVISER. (a) Oberweis Asset Management, Inc. Oberweis Asset Management, Inc. ("OAM") was organized in 1989. Its activities are limited to acting as an investment adviser and shareholder servicing agent. C-3 <PAGE> (b) Set forth below are the names of the directors and officers of OAM (other than those officers who are also officers of the Registrant) and any other business, profession, vocation or employment of a substantial nature in which such directors and officers have been involved an any time during the past two fiscal years. <TABLE> <CAPTION> NAME AND POSITIONS WITH OAM NAME OF COMPANY POSITION - -------------------- ----------------------- --------- <S> <C> <C> Elaine M. Oberweis Oberweis Dairy, Inc. President Director 945 North Lake Street Aurora, Illinois 60506 </TABLE> ITEM 29. PRINCIPAL UNDERWRITERS (a) None. (b) Set forth below are the names of the directors and officers of The Chicago Corporation. <TABLE> <CAPTION> John A. Wing, Wilbert A. Thiel, Chairman of the Board of Directors Director, President, Treasurer and and Chief Executive Officer Chief Operating Officer <S> <C> Robert T. Brehm, Faris F. Chesley, Director, Executive Vice Vice Chairman of the Board of President, President-Asset Directors, Executive Vice President Management Group Richard W. Durkes, Jon T. Ender, Director, Executive Vice President Director, Executive Vice President John C. Harris, Timothy O'Gorman, Director, Executive Vice President Director, Executive Vice President Paul W. Oliver, Jr., Perry L. Taylor, Jr., Director, Executive Vice President Director, Executive Vice President, General Counsel, Secretary Peter H. Wendell, David K. Beecken, Director, Executive Vice President Director, Senior Vice President Patrick K. Blackburn, Jack W. Blumenstein, Director, Senior Vice President Director, Executive Vice President Jay K. Buck, John T. Coyne, Director, Senior Vice President Director, Senior Vice President Victor Elting III, Walter W. Filkin, Director, Senior Vice President Director, Senior Vice President Walter D. Fitzgerald, Frederic D. Floberg, Director, Senior Vice President Director, Senior Vice President James M. Florsheim Brian F. Foley, Director, Senior Vice President Director, Senior Vice President Thomas G. Hallal, Lawrence J. Hanson, Director, Senior Vice President Director, Senior Vice President </TABLE> C-4 <PAGE> <TABLE> <CAPTION> <S> <C> Jeffrey M. Herr, Jack W. Kindegran Director, Senior Vice President Director, Senior Vice President Charles R. Klimkowski, Barbara L. Lamb Director, Senior Vice President Director, Senior Vice President Edward J. Laux Thomas J. McCausland, Director, Senior Vice President Director James D. McDonald Kenneth H. McLellan, Jr., Director, Senior Vice President Director, Senior Vice President Charles J. Moore, Thomas A. Mueller, Director, Senior Vice President Director, Senior Vice President Leonard O'Driscoll Joseph A. Oliva, Director, Senior Vice President Director, Senior Vice President Willard J. Peterson, Robert R. Rudolph, Director, Senior Vice President Director Richard M. Schaeffer, Ronald M. Schutz, Director, Senior Vice President Director, Senior Vice President William C. Steinmetz, Gordon L. Teach Director, Senior Vice President Director, Senior Adviser to the Chairman William A. Trader, Ralph Collins Walter III, Director, Senior Vice President Director, Senior Vice President, Chief Administrative Officer W. Peter Williams, Edward Stuart Winter, Director, Senior Vice President Director, Senior Vice President Ben A. Witt, Michael Woodhead Director, Senior Vice President Director, Senior Vice President </TABLE> The principal business address of all such persons is 208 South LaSalle Street, Chicago, Illinois 60604. Other than Mr. Wendell, a Trustee of the Fund, no listed person holds a position or office with the Registrant. (c) None. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and rules promulgated thereunder are in the possession of Oberweis Asset Management, Inc. at its offices at One Constitution Drive, Aurora, Illinois 60506, except those books, records and other documents maintained by the custodian, transfer agent and registrar, Investors Fiduciary Trust Company, which are located at its offices at 127 West 10th Street, 16th Floor, Kansas City, Missouri 64105. ITEM 31. MANAGEMENT SERVICES Not applicable. C-5 <PAGE> ITEM 32. UNDERTAKINGS (a) Not applicable. (b) Registrant hereby undertakes to file a Post-Effective Amendment to this Registration Statement, containing reasonably current financial statements for the Micro-Cap Portfolio that need not be certified, within four to six months after the effective date of this registration statement. (c) The Registrant hereby undertakes to furnish each person to whom a Prospectus is delivered with a copy of the Registrant's latest Annual Report to Shareholders upon request and without charge. C-6 <PAGE> SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Aurora, State of Illinois, on the 18th day of December, 1995. OBERWEIS EMERGING GROWTH FUND By:/s/James D. Oberweis -------------------- James D. Oberweis, President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. <TABLE> <CAPTION> <S> <C> <C> /s/ James D. Oberweis President (Principal Executive December 18, 1995 - ----------------------- Officer) and Trustee James D. Oberweis /s/Thomas J. Burke Trustee December 18, 1995 - ----------------------- Thomas J. Burke Trustee , 1995 - ----------------------- ----------- Douglas P. Hoffmeyer /s/Edward F. Streit Trustee December 18, 1995 - ----------------------- Edward F. Streit /s/Peter H. Wendell Trustee December 18, 1995 - ----------------------- Peter H. Wendell /s/Patrick B. Joyce Executive Vice President and December 18, 1995 - ----------------------- Treasurer (Principal Financial Patrick B. Joyce and Accounting Officer) </TABLE> C-7 <PAGE> EXHIBIT INDEX <TABLE> <CAPTION> EXHIBIT DESCRIPTION - ------- ---------------------------------------------------------------------- <S> <C> 1. Agreement and Declaration of Trust dated July 7, 1986/11/ 1.1 First Amendment to Agreement and Declaration of Trust, dated November 17, 1986/11/ 2. By-Laws/11/ 3. None 4. Form of Specimen Certificates of Shares of Beneficial Interest/11/ 4.1 Specimen Certificates of Shares of Beneficial Interest/2/ 5.1 Management Agreement/5/ 5.1.1 Amendment to Management Agreement as of February 16, 1994/9/ 5.1.2 Management Agreement dated October 1, 1994/11/ 5.2 Investment Advisory Agreement/5/ 5.2.1 Investment Advisory Agreement dated October 1, 1994/11/ 5.2.2 Transfer and Guaranty Agreement/7/ *5.2.3 Written Notification required under Investment Advisory Agreement dated October 1, 1994 regarding the rendering of advisory services to the Micro-Cap Portfolio 6. None 7. None 8. Custodian Agreement/1/ 8.1 Letter Agreements renewing Custodian Agreement dated February 24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/ February 15, 1991,/6/, and February 13, 1992,/7/ respectively 8.2 Letter Agreement dated January 27, 1993, renewing Custodian Agreement/8/ 8.3 Custodian Agreement dated August 3, 1993/11/ 9. Transfer Agency Agreement/1/ 9.1 Letter Agreements renewing Transfer Agency Agreement dated February 24, 1988,/3/ February 21, 1989,/4/ February 7, 1990,/5/ February 15, 1991,/6/ and February 13, 1992,/7/ respectively 9.2 Letter Agreement dated January 27, 1993, renewing Transfer Agency Agreement/8/ 9.3 Transfer Agent Agreement dated August 3, 1993/11/ 10.1 Form of Opinion and Consent of Lawrence, Kamin, Saunders & Uhlenhop/1A/ *10.1.1 Consent and Opinion of Vedder, Price, Kaufman & Kammholz 10.2 Form of Opinion of Ropes & Gray/1A/ *10.2.1 Opinion and Consent of Ropes & Gray *11.1 Consent of Ernst & Young LLP *11.2 Consent of Checkers, Simon & Rosner LLP </TABLE> C-8 <PAGE> <TABLE> <CAPTION> <C> <S> 12. Not applicable 13. Form of Contribution Agreement with Initial Shareholders/1/ 13.1 Contribution Agreement dated December 8, 1986, from James D. Oberweis with respect to the purchase of an aggregate of 5,500 shares as custodian for two minor children for $10.00 each (a total of $55,000)/2/ 13.2 Contribution Agreement dated December 8, 1986, from Lora J. Oberweis with respect to the purchase of 2,000 shares for $10.00 each (a total of $20,000)/2/ 13.3 Contribution Agreement dated December 8, 1986, from Helen Cisek with respect to the purchase of 1,500 shares for $10.00 each (a total of $15,000)/2/ 13.4 Contribution Agreement dated December 8, 1986, from Tedd Determan with respect to the purchase of an aggregate of 1,000 shares for $10.00 each (a total of $10,000)/2/ 14.1 Individual Retirement Custodial Account Agreement, Disclosure Statement, Form of Account Application, and Transfer Request Form/11/ 15.1 Plan of Distribution pursuant to Rule 12b-1/4/ 15.2 Distribution and Shareholder Service Agreement/5/ 15.3 Amendment to Plan of Distribution pursuant to Rule 12b-1 and Distribution and Shareholder Service Agreement/8/ 15.4 Plan of Distribution pursuant to Rule 12b-1 as amended October 1, 1994./11/ 15.4.1 Form of Plan of Distribution pursuant to Rule 12b-1 as amended January 1, 1996./11/ 15.5 Distribution Agreement dated October 1, 1994./11/ 15.5.1 Form of Distribution and Shareholder Service Agreement dated January 1, 1996./11/ 15.6 Shareholder Service Agreement dated October 1, 1994./11/ 16. Calculation of Performance Data/11/ </TABLE> --------- /*/ Filed herewith. /1/ Previously filed with the Registration Statement and incorporated herein by reference. /1A/ Previously filed with the Registration Statement. /2/ Previously filed with Pre-Effective Amendment No. 2 (Amendment No. 2) dated January 14, 1987 and incorporated herein by reference. /2A/ Previously filed with Pre-Effective Amendment No. 2. /3/ Previously filed with Post-Effective Amendment No. 2 (Amendment No. 4) dated February 28, 1988. /4/ Previously filed with Post-Effective Amendment No. 3 (Amendment No. 5) dated March 2, 1989 and incorporated herein by reference. /5/ Previously filed with Post-Effective Amendment No. 4 (Amendment No. 6) dated February 28, 1990 and incorporated herein by reference. /6/ Previously filed with Post-Effective Amendment No. 5 (Amendment No. 7) dated March 1, 1991 and incorporated herein by reference. /7/ Previously filed with Post-Effective Amendment No. 6 (Amendment No. 8) dated March 2, 1992 and incorporated herein by reference. /8/ Previously filed with Post-Effective Amendment No. 7 (Amendment No. 9) dated March 1, 1993 and incorporated herein by reference. /9/ Previously filed with Post-Effective Amendment No. 8 (Amendment No. 10) dated April 29, 1994 and incorporated herein by reference. /10/ Previously filed with Post-Effective Amendment No. 9 (Amendment No. 11) dated February 28, 1995 and incorporated herein by reference. /11/ Previously filed via EDGAR with Post-Effective Amendment No. 10 (Amendment No. 12) dated October 18, 1995 and incorporated herein by reference. C-9 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.5.2.3 <SEQUENCE>2 <DESCRIPTION>INV ADVISORY AGREE DTD 10/1/94 <TEXT> <PAGE> EXHIBIT 5.2.3 November 21, 1995 Oberweis Asset Management, Inc. One Constitution Drive Aurora, Illinois 60506 Ladies and Gentlemen: The Oberweis Emerging Growth Fund (the "Fund") intends to establish an additional portfolio, the Oberweis Micro-Cap Portfolio (the "Micro-Cap Portfolio"). This letter serves to notify Oberweis Asset Management, Inc. ("OAM") that the Fund desires to retain OAM to render investment advisory services for the Micro-Cap Portfolio, effective as of January 1, 1996, pursuant to the Investment Advisory Agreement dated October 1, 1994 between the Fund and OAM (the "Agreement"). For the services provided to the Micro-Cap Portfolio pursuant to the Agreement, the Fund will pay OAM on a monthly basis, an investment advisory fee at the annual rate of .60% of the average daily net assets of the Micro-Cap Portfolio. Oberweis Emerging Growth Fund /s/Patrick B. Joyce ------------------------------------------- Patrick B. Joyce, Executive Vice President Accepted and Agreed this 21st day of November, 1995. Oberweis Asset Management, Inc. /s/James D. Oberweis - ---------------------------------- By: James D. Oberweis Its President </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.10.1.1 <SEQUENCE>3 <DESCRIPTION>CONSENT AND OPINION OF VEDDER PRICE <TEXT> <PAGE> EXHIBIT 10.1.1 [LETTERHEAD OF VEDDER, PRICE, KAUFMAN & KAMMHOLZ] December 12, 1995 Oberweis Emerging Growth Fund One Constitution Drive Aurora, Illinois 60506 Ladies and Gentlemen: Reference is made to Post-Effective Amendment No. 11 to the Registration Statement on Form N-1A under the Securities Act of 1933 being filed by Oberweis Emerging Growth Fund (the "Fund") in connection with the proposed registration of units of beneficial interest, no par value ("Shares"), in the Oberweis Micro- Cap Portfolio (the "Portfolio"). We are counsel to the Fund and in such capacity are familiar with the Fund's organization and have counseled the Fund regarding various legal matters. We have examined such Fund records and other documents and certificates as we have considered necessary or appropriate for the purpose of this opinion. As to various questions of fact material to our opinion, we have relied upon statements and certificates of officers and representatives of the Fund. In our examination of such materials, we have assumed the genuineness of all signatures and the conformity to original documents of all copies submitted to us. Based upon the foregoing and upon the opinion dated December 7, 1995 by Ropes & Gray of Boston, Massachusetts, we advise you and opine that (a) the Fund is a duly authorized and validly existing voluntary association with transferrable shares under the laws of the Commonwealth of Massachusetts and is authorized to issue an unlimited number of Shares in the Portfolio; and (b) upon the issuance of the Shares in accordance with the Fund's Agreement and Declaration of Trust and the receipt by the Fund of a purchase price not less than the net asset value per Share, the Shares will be legally issued and outstanding, fully paid and non-assessable (although shareholders of the Fund may be subject to liability under certain circumstances as described in the opinion from Ropes & Gray). We hereby consent to the use of this opinion and to the use of our name as referenced under Additional Information in connection with said Post-Effective Amendment. Very truly yours, /s/VEDDER, PRICE, KAUFMAN & KAMMHOLZ VEDDER, PRICE, KAUFMAN & KAMMHOLZ COK:dfd </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.10.2.1 <SEQUENCE>4 <DESCRIPTION>OPINION AND CONSENT OF ROPES & GRAY <TEXT> <PAGE> EXHIBIT 10.2.1 [LETTERHEAD OF ROPES & GRAY] December 7, 1995 Vedder, Price, Kaufman & Kammholz 222 North LaSalle Street Chicago, IL 60601 Ladies and Gentlemen: We are furnishing this opinion in connection with the proposed offer and sale from time to time by the Oberweis Micro-Cap Portfolio, a series (the "Series") of The Oberweis Emerging Growth Fund (the "Trust"), of an indefinite number of shares of beneficial interest, without par value (the "Shares"), pursuant to the Trust's Registration Statement on Form N-1A under the Securities Act of 1933, as amended. We are familiar with the action taken by the Trustees of the Trust to authorize the issuance of the Shares. We have examined the Trust's records of Trustee action, its By-Laws and its Agreement and Declaration of Trust, as amended to date. We have examined such other documents as we deem necessary for the purposes of this opinion. We assume that, upon sale of the Shares, the Trust will receive the net asset value thereof and that appropriate action has been or will be taken to register or qualify the sale of the Shares under any applicable state and federal laws regulating sales and offerings of securities. Based upon the foregoing, we are of the opinion that: 1. The Trust is a legally organized and validly existing unincorporated voluntary association under the laws of The Commonwealth of Massachusetts which, unless terminated as provided in its Agreement and Declaration of Trust, shall continue in existence without limitation of time. <PAGE> ROPES & GRAY Vedder, Price, Kaufman & Kammholz -2- December 7, 1995 2. The Trust is authorized to issue an unlimited number of Shares, and that, when the Shares are issued and sold after the Registration Statement has been declared effective and the authorized consideration therefor is received by the Trust, they will be validly issued, fully paid and nonassessable by the Trust. The Trust is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Trust or any series of the Trust (a "Series"). However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Trust or any Series and requires that notice of such disclaimer be given in every note, bond, contract, instrument, certificate or other undertaking issued by or on behalf of the Trust. The Agreement and Declaration of Trust provides for indemnification out of property of the Trust or a particular Series for all loss and expense of any shareholder held personally liable for the obligations of the Trust or that particular Series. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Trust or the particular Series itself would be unable to meet its obligations. We consent to the filing of this opinion as an exhibit to the aforesaid Registration Statement. Very truly yours, /s/ Ropes & Gray Ropes & Gray </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.11.1 <SEQUENCE>5 <DESCRIPTION>CONSENT OF ERNST & YOUNG <TEXT> <PAGE> EXHIBIT 11.1 CONSENT OF INDEPENDENT AUDITORS We consent to the use of our reports dated January 27, 1995 and October 2, 1995 for the Oberweis Emerging Growth Portfolio and the Oberweis Micro-Cap Portfolio, respectively, in the Registration Statement (Form N-1A) and related Prospectus of the Oberweis Emerging Growth Fund (to be renamed The Oberweis Funds), filed with the Securities and Exchange Commission in this Post-Effective Amendment No. 11 to the Registration Statement under the Securities Act of 1933 (Registration No. 33-9093) and in this Amendment No. 13 to the Registration Statement under the Investment Company Act of 1940 (Registration No. 811-4854). /s/ ERNST & YOUNG LLP ERNST & YOUNG LLP Chicago, Illinois December 11, 1995 </TEXT> </DOCUMENT> <DOCUMENT> <TYPE>EX-99.11.2 <SEQUENCE>6 <DESCRIPTION>CONSENT OF CHECKERS, SIMON & ROSNER <TEXT> <PAGE> EXHIBIT 11.2 [LETTERHEAD OF CHECKERS SIMON & ROSNER] Consent of Checkers, Simon & Rosner We have issued our report dated February 6, 1994, accompanying the financial statements of Oberweis Emerging Growth Fund, contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus and to the use of our name as referenced under Additional Information. /s/ CHECKERS, SIMON & ROSNER LLP CHECKERS, SIMON & ROSNER LLP Chicago, Illinois December 18, 1995 [LETTERHEAD OF CHECKERS SIMON & ROSNER] </TEXT> </DOCUMENT> </SEC-DOCUMENT> -----END PRIVACY-ENHANCED MESSAGE-----