SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
--
Pre-Effective Amendment No. / /
--
Post-Effective Amendment No. / /
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT /X/
OF 1940 --
Amendment No. ____ / /
--
(Check appropriate box or boxes.)
The BSG Funds - File Nos. 33- and 811-
6230 Busch Blvd., Suite 201, Columbus, Ohio 43229
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (614) 848-3400
CPM Statutory Agent Corporation, 366 East Broad Street, Columbus, Ohio
43215
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202
Release Date: ____________, 1997
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on December 31, 1996 pursuant to paragraph (b)
/X/ 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.
Pursuant to Rule 24f-2, the Registrant hereby declares that an indefinite number
and amount of its securities are being registered by this Registration
Statement.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective such date as the Commission, acting pursuant to said Section 8(a) may
determine.
<PAGE>
The BSG Funds
CROSS REFERENCE SHEET
FORM N-1A
FOR FIRST AMERICAN BANCSHARES FUND
ITEM SECTION IN EACH PROSPECTUS
1.............................. Cover Page
2.............................. Summary of Fund Expenses
3.............................. None
4.............................. The Fund, Investment Objective and
Strategies and Risk Considerations,
Investment Policies and Techniques,
Operation of the Fund, General
Information
5.............................. Operation of the Fund
5A............................. None
6.............................. Cover Page, Dividends and
Distributions, Taxes, General
Information, How to Redeem Shares
7.............................. Cover Page, How to Invest in the
Fund, Share Price Calculation,
Operation of the Fund, How to Redeem
Shares
8.............................. How to Redeem Shares
9.............................. None
13.............................. General Information
15.............................. General Information
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10.............................. Cover Page
11.............................. Table of Contents
12.............................. None
13.............................. Additional Information About Fund
Investments and Risk Considerations
Investment Limitations
14.............................. Trustees and Officers
15.............................. None
16.............................. The Investment Adviser, Custodian,
Transfer Agent, Accountants,
Trustees and Officers
17.............................. Portfolio Transactions and Brokerage
18.............................. Description of the Trust
19.............................. Determination of Share Price
20.............................. None
21.............................. Distributor
22.............................. Investment Performance
23.............................. None
<PAGE>
FIRST AMERICAN BANCSHARES FUND
PROSPECTUS __________, 1997
6230 Busch Blvd., Suite 201
Columbus, Ohio 43229
For Information, Shareholder Services and Requests:
(800) ___-____
First American Bancshares Fund (the "Fund") is a diversified, open-end
mutual fund whose investment objective is to provide long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of community banks, lending institutions and financial
services companies believed by the Fund's adviser, Heartland Advisory Group,
Inc. to offer superior prospects for long term growth.
This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information has been filed with the Securities and
Exchange Commission (the "SEC") dated _____, 1997, which is incorporated herein
by reference and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
Shares of the Fund are not deposits or obligations of any bank, are not
endorsed or guaranteed by any bank, and are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other government
agency, entity, or person. The purchase of Fund shares involves investment
risks, including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.
Shareholders should be aware that the Fund, unlike most other mutual
funds, does not pay directly for transfer agency, pricing, custodial, auditing
or legal services, nor does it pay directly any general administrative or other
significant operating expenses. The Adviser pays all of the expenses of the Fund
except brokerage, taxes, interest, fees and expenses of non-interested person
trustees and extraordinary expenses.
<TABLE>
<S> <C> <C>
Shareholder Transaction Expenses
Maximum Total Sales Load................................................5.00%
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................2.00%
Sales Load Imposed on Reinvested Dividends...........NONE
Maximum Contingent Deferred Sales Load1..............3.00%
Redemption Fee..........................................................NONE
Exchange Fees...........................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees......................................2.50%
12b-1 Charges........................................NONE
Other Expenses2......................................0.00%
Total Fund Operating Expenses3..........................................2.50%
<FN>
1 The maximum contingent deferred sales charge ("CDSC") as set forth in the
table applies to redemptions of shares within one year of purchase. The CDSC
decreases over time to zero.
2 The Fund estimates that other expenses (fees and expenses of the trustees who
are not "interested persons" as defined in the Investment Company Act) will be
less than 0.01% of average net assets for the first fiscal year.
3 The Fund's total operating expenses are equal to the management fee paid to
the Adviser because the Adviser pays all operating expenses (except as described
in footnote 2).
</FN>
</TABLE>
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Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) deduction at the time of purchase of the maximum 2.0%
sales load.
<TABLE>
<S> <C> <C>
1 Year 3 Years
------ -------
Assuming no redemption $____ $____
at end of period
Assuming complete $____ $____
redemption at end of period
</TABLE>
THE FUND
First American Bancshares Fund (the "Fund") was organized as a series
of The BSG Funds, an Ohio business trust (the "Trust") on January 14, 1997, and
commenced operations on ___________, 1997. This prospectus offers shares of the
Fund and each share represents an undivided, proportionate interest in the Fund.
The investment adviser to the Fund is Heartland Advisory Group, Inc. (the
"Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide shareholders with
long term capital appreciation. The Fund seeks to achieve its objective by
investing primarily in equity securities of community banks, lending
institutions, and financial services companies believed by the Adviser to offer
superior prospects for long term growth. The Adviser expects to select stocks of
banks with low price to earnings ratios, minimal loan losses and long histories
of profitability located in stable communities with growth potential. Community
banks generally are banks having a county, rural or suburban area focus, rather
than a regional or wider focus.
Under normal circumstances, the Fund will invest at least 65% of its
total assets in equity securities (common stock, preferred stock and securities
convertible into common stock) of banks and other lending institutions,
including community, regional and money center banks, bank holding companies,
savings and loan associations, savings banks and commercial and industrial
banks. The Fund may invest in banks that are not members of the Federal Reserve
System or whose deposits are not insured by the Federal Deposit Insurance
Corporation. Although the Adviser primarily seeks opportunities for capital
appreciation, some of the banks in which the Fund may invest pay regular
dividends. Accordingly, the Fund expects to receive moderate income in the form
of cash or stock dividends.
Although the Fund will invest primarily in equity securities of banks
and other lending institutions, the Fund may invest in equity securities of
companies outside the banking industry and, for temporary defensive purposes
under abnormal market or economic conditions, may hold all or a portion of its
assets in money market instruments (high quality income securities with
maturities of less than one year), securities of money market funds or U.S.
government repurchase agreements. The Fund may also invest in such investments
at any time to maintain liquidity or
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pending selection of investments in accordance with its policies. If the Fund
acquires securities of money market funds, the shareholders of the Fund will be
subject to duplicative management fees.
The concentration of the Fund's investments in the banking industry
will subject the Fund to risks in addition to those that apply to the general
equity market. Economic, legislative or regulatory developments may occur which
significantly affect the entire banking industry and thus may subject the Fund
to greater market fluctuations than a fund that does not concentrate in a
particular industry. Banks and other lending institutions are subject to
extensive governmental regulation which may limit both the amounts and types of
loans and other financial commitments they can make, and the interest rates and
fees they can charge. Profitability is largely dependent on the availability and
cost of capital funds, and can fluctuate significantly when interest rates
change. Credit losses resulting from financial difficulties of borrowers can
negatively impact the industry. Thus, a number of factors, in addition to
general economic conditions, can adversely affect the financial performance and
condition of the institutions in which the Fund invests.
In addition, as many community banks and other lending institutions
are smaller capitalization companies, the Fund may be subject to the risks
associated with such companies. The trading volume of securities of smaller
capitalization companies is normally less than that of larger capitalization
companies and, therefore, may disproportionately affect their market price,
tending to make them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger capitalization
companies.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, you should be aware that the Fund has no
operating history and the Adviser has no prior experience in acting as an
investment adviser to a mutual fund. Rates of total return quoted by the Fund
may be higher or lower than past quotations, and there can be no assurance that
any rate of total return will be maintained. See "Investment Policies and
Techniques" for a more detailed discussion of the Fund's investment practices.
HOW TO INVEST IN THE FUND
Shares of the Fund are sold on a continuous basis, and you may invest
any amount you choose, as often as you wish, subject to a minimum initial
investment of $2,500 and minimum subsequent investments of $500. There are no
minimums for qualified retirement accounts and medical savings accounts. For
shareholders participating in the Fund's continuing automatic transfer ("CAT")
program, which is described below, the minimum initial investment is $1,000 and
the minimum subsequent investment is $100.
You may open an account and make an initial investment through
securities dealers having a sales agreement with Banc Stock Financial Services,
Inc., the Fund's distributor (the "Distributor"). You may also make a direct
initial investment by completing and signing the investment application form
which accompanies this Prospectus and mailing it, in proper form, together with
a check made payable to First American Bancshares Fund to the P.O. Box listed
below. If you prefer overnight delivery, use the overnight address listed below.
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U.S. mail:
- ---------
First American Bancshares Fund
P.O. Box ______________
Cincinnati, Ohio 45264
Overnight:
- ---------
First American Bancshares Fund
c/o Star Bank, N.A.
Mutual Fund Custody Dept.
425 Walnut St. M.L. 6118
Cincinnati, Ohio 45202
Shares of the Fund are purchased at the public offering price. The
public offering price is the next determined net asset value per share plus a
sales load as shown in the following table.
<TABLE>
<S> <C> <C> <C>
Sales Load as of % of:
Public Net
Offering Amount Dealer Reallowance as % of
Amount of Investment Price Invested Public Offering Price
Less than $500,000 2.00% 2.04% 1.75%
$500,000 but less than $1,000,000 1.00 1.01% .75
$1,000,000 or more None None None
</TABLE>
Under certain circumstances, the Distributor may change the reallowance to
dealers and may also compensate dealers out of its own assets. Dealers engaged
in the sale of shares of the Fund may be deemed to be underwriters under the
Securities Act of 1933. The Distributor retains the entire sales load on all
direct initial investments in the Fund and on all investments in accounts with
no designated dealer of record.
For purposes of determining the applicable sales load, a purchaser
includes an individual, his spouse and their children under the age of 21,
purchasing shares for his or their own account; or a trustee or other fiduciary
purchasing shares for a single fiduciary account although more than one
beneficiary may be involved; or employees of a common employer, provided that
economies of scale are realized through remittances from a single source and
quarterly confirmation of such purchases; or an organized group, provided that
the purchases are made through a central administration, or a single dealer, or
by other means which result in economy of sales effort or expense.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Trust.
Purchase orders received by dealers prior to 4:00 p.m., Eastern time, on any
business day and transmitted to the Distributor by 5:00 p.m., Eastern time, that
day are confirmed at the public offering price determined as of the close of the
regular session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by the Distributor by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct investments received after 4:00 p.m. and others received from dealers
after 5:00 p.m. are confirmed at the public offering price next determined on
the following business day.
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<PAGE>
CAT Program
When making your initial investment, you may choose to participate in
the Fund's continuing automatic transfer ("CAT") program by completing the
appropriate part of the investment application form. The CAT Program offers
reduced investment minimums and helps investors make additional purchases of the
Fund over a period of years. Purchase amounts are automatically debited each
month from the shareholder's bank account through ACH (automated clearing
house).
Subsequent Purchases
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) through your securities dealer, or directly
from the Fund by mail or wire. If your securities dealer received concessions
for selling shares of the Fund to you, such securities dealer will receive the
concessions described above with respect to additional investments. Each
additional mail purchase request must contain the name of your account and your
account number. Checks should be made payable to First American Bancshares Fund
and should be sent to the Custodian, as instructed above. To purchase shares of
the Fund by wire, call the Transfer Agent at (800) _____-_______ for
instructions. Then, you should provide your bank with the following information
for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3 [confirm with Star]
Attn: First American Bancshares Fund
D.D.A. # [Star]
Account Name _________________ (write in shareholder
name) For Account # ______________ (write in account
number)
Wire orders will be accepted only on a day on which the Fund and the
Custodian and Transfer Agent are open for business. A wire purchase will not be
considered made until the wired money is received and the purchase is accepted
by the Fund. Any delays which may occur in wiring money, including delays which
may occur in processing by the banks, are not the responsibility of the Fund or
the Transfer Agent. There is presently no fee for the receipt of wired funds,
but the right to charge shareholders for this service is reserved by the Fund.
Purchases at Net Asset Value
Community banks and savings and loan associations (defined for this
purpose as those banks and savings and loan associations with assets of less
than $25 billion), in their fiduciary capacity or for their own accounts, may
purchase and redeem shares of the Fund without paying a sales charge. To the
extent permitted by regulatory authorities, a bank trust department may charge
fees to clients for whose account it purchases shares at net asset value.
Employees, officers and directors of these financial institutions may also
purchase and redeem shares without paying a sales charge.
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<PAGE>
Trustees, directors, officers and employees of the Trust, the Adviser,
service providers of the Trust or broker dealers with selling agreements with
the Distributor, including members of the immediate family of such individuals
and employee benefit plans established by such entities, may also purchase and
redeem shares of the Fund without paying a sales charge. In addition, shares of
the Fund may be purchased at net asset value through processing organizations
(broker-dealers, banks or other financial institutions) that have a sales
agreement with the Distributor, but these shares will be subject to a contingent
deferred sales charge if redeemed within three years. When shares are purchased
this way, the processing organization, rather than its customer, may be the
shareholder of record of the shares. The minimum initial and subsequent
investments in the Fund for shareholders who invest through a processing
organization generally will be set by the processing organization. Processing
organizations may also impose other charges and restrictions in addition to or
different from those applicable to investors who remain the shareholder of
record of their shares. Thus, an investor contemplating investing with the Fund
through a processing organization should read materials provided by the
processing organization in conjunction with this Prospectus.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. You should contact American Data Services, Inc. the Fund's
transfer agent ( the "Transfer Agent") at 800-____-____ for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax adviser regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent.
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund
does not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Depending on how long you own your Fund investment, you may have to pay a sales
charge when you sell your Fund shares. The sales charge is called a "contingent
deferred sales charge" or ("CDSC"). The amount of the
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<PAGE>
charge depends on how long you own the shares. The sales charge is calculated by
multiplying the net asset value of the shares at the time of sale or purchase,
whichever is less, by the percentage shown on the following table.
There is no CDSC on shares acquired through reinvestment of dividends.
The CDSC is paid to the [Distributor to reimburse the Distributor], in part, for
distribution expenses incurred on behalf of the Fund. Investors who own shares
for more than three years do not have to pay a sales charge when selling their
shares; nor do investors who purchased shares at net asset value directly from
the Fund. To keep your CDSC as low as possible, each time you place a request to
sell shares, we will first sell any shares in your account that carry no CDSC.
If there are not enough of these to meet your request, we will sell those shares
that have the lowest CDSC.
Contingent Deferred Sales Charge
Redemption from date of purchase CDSC on shares being sold
Redemption within one year 3.00%
Over one year, but less than two years 2.00%
Over two years, but less than three years 1.00%
Over three years NONE
Shareholders may receive redemption payments in the form of a check or
federal wire transfer. The proceeds of the redemption may be more or less than
the purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption and the amount of any CDSC imposed on
the redemption. A broker may charge a transaction fee for the redemption.
Presently, there is no charge for wire redemptions; however, the Fund reserves
the right to charge for this service. Any charges for wire redemptions will be
deducted from the shareholder's Fund account by redemption of shares.
By Mail - You may redeem any part of your account in the Fund by mail.
Your request should be addressed to:
First American Bancshares Fund
c/o American Data Services, Inc.
24 W. Carver Street
Huntington, New York 11743
"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by an "eligible guarantor institution."
An eligible guarantor institution is defined as an institution that is a member
of a Medallion Program, located in or having a correspondent in New York City.
Such institutions generally include national or state banks, savings
associations, savings and loan associations, trust companies, savings banks,
credit unions and members of a recognized stock exchange. Signature guarantees
are for the protection of shareholders. At the discretion of the Fund or the
Transfer
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<PAGE>
Agent, a shareholder, prior to redemption, may be required to furnish additional
legal documents to insure proper authorization.
By Telephone - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) _____-_______. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.
The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving or in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.
Additional Information - If you are not certain of the requirements
for a redemption please call the Transfer Agent at (800) ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Fund may suspend redemptions or
postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,500 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax adviser concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE PRICE CALCULATION
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock
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<PAGE>
Exchange (4:00 p.m., Eastern time) on each day that the exchange is open for
business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Adviser determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, subject to review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.
Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to
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federal income taxes to the extent that it distributes substantially all of its
net investment income and any realized capital gains.
For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
capital gains to individuals are taxed at the same rate as ordinary income. All
distributions of net capital gains to corporations are taxed at regular
corporate rates. Any distributions designated as being made from net realized
long term capital gains are taxable to shareholders as long term capital gains
regardless of the holding period of the shareholder.
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request
the shareholder's certified taxpayer identification number (social security
number for individuals) and a certification that the shareholder is not subject
to backup withholding. Unless the shareholder provides this information, the
Fund will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of The BSG Funds, an open-end
management investment company organized as an Ohio business trust on January 14,
1997. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services.
The Fund retains Heartland Advisory Group, Inc., 6230 Busch Blvd.,
Suite 201, Columbus, Ohio 43229 (the "Adviser") to manage the Fund's
investments. The Adviser has been engaged in the business of researching,
buying, holding, and selling the shares of community and regional banks for
almost two decades. Since 1990, it has recommended more than 200 community banks
to its clients for their portfolios.
The Adviser typically follows 150-400 banks at any one time as
candidates for investment. The Adviser researches these equity securities on the
basis of the fundamentals of return on equity, return on assets, low loan loss
experience, prosperous market conditions, special niche services,
consumer-oriented staff, and experienced and seasoned management. The Adviser
also gives consideration to the portion of insider ownership as it believes this
is a potential indicator of the care and concern a bank's management and board
of directors bring to the institution and it
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<PAGE>
shareholders. The investment decisions of the Fund are made by a committee of
the Adviser, which is primarily responsible for the day-to-day management of the
Fund's portfolio.
The Fund is authorized to pay the Adviser a fee equal to an annual
average rate of 2.50% of its average daily net assets. The Adviser pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses on non-interested person trustees and extraordinary expenses. It should
be noted that most investment companies pay their own operating expenses
directly, while the Fund's expenses, except those specified above, are paid by
the Adviser.
The Fund retains American Data Services, Inc., 24 West Carver Street,
Huntington, New York 11743 (the "Administrator") to manage the Fund's business
affairs and provide the Fund with administrative services, including all
regulatory reporting and necessary office equipment, personnel and facilities.
The Administrator receives a monthly fee from the Adviser equal to an annual
average rate of ____% of the Fund's average daily net assets. The Fund also
retains American Data Services, Inc., (the "Transfer Agent") to serve as
transfer agent, dividend paying agent and shareholder service agent.
The Fund retains Banc Stock Financial Services, Inc., 6230 Busch
Blvd., Suite 201, Columbus, Ohio 43229 (the "Distributor") to act as the
principal distributor of the Fund's shares. The services of the Administrator,
Transfer Agent and Distributor are operating expenses paid by the Adviser.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Distributor is a registered broker-dealer and it is
anticipated that it will receive brokerage commissions from the Fund. Both the
Adviser and the Distributor are wholly owned by Heartland Group of Companies,
Inc. (d/b/a The Banc Stock Group)(the "Banc Stock Group"), a corporation which
invests in financial services companies.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities
The Fund may invest in common stock, preferred stock and common stock
equivalents (such as convertible preferred stock and convertible debentures).
Convertible preferred stock is preferred stock that can be converted into common
stock pursuant to its terms. Convertible debentures are debt instruments that
can be converted into common stock pursuant to their terms. The Adviser intends
to invest only in convertible debentures rated A or higher by Standard & Poor's
Corporation ("S&P") or by Moody's Investors Services, Inc. ("Moody's"). The Fund
may hold warrants and rights issued in conjunction with common stock, but in
general will sell any such warrants or rights as soon as practicable after they
are received. Warrants are options to purchase equity securities at a specified
price valid for a specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer to its
shareholders.
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<PAGE>
General
The Fund may utilize the following investment techniques, provided the
Fund's investment in each does not exceed 5% of its net assets: engaging in
short sales; purchasing call options; purchasing put options; writing (selling)
covered call options; and, if the Fund is selling an equivalent amount of the
same security short, writing (selling) put options. See "Additional Information
About Fund Investments and Risk Considerations" in the Statement of Additional
Information. Up to 15% of the Fund's portfolio may consist of illiquid
securities.
GENERAL INFORMATION
Fundamental Policies. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.
Portfolio Turnover. The Fund does not intend to purchase or sell
securities for short term trading purposes. The Fund will, however, sell any
portfolio security (without regard to the length of time it has been held) when
the Adviser believes that market conditions, creditworthiness factors or general
economic conditions warrant such action. It is anticipated that the Fund will
have a portfolio turnover rate of less than 100%.
Shareholder Rights. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and liquidation
rights. Prior to the offering made by this Prospectus, the Adviser purchased for
investment all of the outstanding shares of the Fund. As a result, the Adviser
and the Banc Stock Group (an Ohio corporation and the controlling shareholder
of the Adviser) may be deemed to control the Fund.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
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<PAGE>
The Fund may also include in advertisements data comparing
performance with other mutual funds as reported in non-related investment media,
published editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Investment Adviser Transfer Agent and Administrator
Heartland Advisory Group, Inc. (all redemption requests)
6230 Busch Blvd., Suite 201 American Data Services, Inc.
Columbus, Ohio 43229 24 West Carver Street
Huntington, New York 11743
Custodian (all initial and subsequent Auditors
purchases)
Star Bank, N.A. McCurdy & Associates CPA's, Inc.
P.O. Box 641083 27955 Clemens Road
Cincinnati, Ohio 45264 Westlake, Ohio 44145
Distributor
Banc Stock Financial Services, Inc.
6230 Busch Blvd., Suite 201
Columbus, Ohio 43229
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
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<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY OF FUND EXPENSES.............................................. 2
Shareholder Transaction Expenses............................ 2
Annual Fund Operating Expenses.............................. 2
THE FUND ............................................................ 3
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS........... 3
HOW TO INVEST IN THE FUND............................................. 4
CAT Program................................................. 6
Subsequent Purchases........................................ 6
Purchases at Net Asset Value ............................... 6
Tax Sheltered Retirement Plans.............................. 7
Other Purchase Information.................................. 7
HOW TO REDEEM SHARES.................................................. 7
By Mail ................................................... 8
By Telephone................................................ 9
Additional Information...................................... 9
SHARE PRICE CALCULATION............................................... 9
DIVIDENDS AND DISTRIBUTIONS........................................... 10
TAXES ............................................................ 10
OPERATION OF THE FUND................................................. 11
INVESTMENT POLICIES AND TECHNIQUES ................................... 12
Equity Securities........................................... 12
General ................................................... 13
GENERAL INFORMATION................................................... 13
Fundamental Policies........................................ 13
Portfolio Turnover.......................................... 13
Shareholder Rights.......................................... 13
PERFORMANCE INFORMATION............................................... 13
<PAGE>
FIRST AMERICAN BANCSHARES FUND
STATEMENT OF ADDITIONAL INFORMATION
_________________, 1997
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectus of First American Bancshares
Fund dated ____________________, 1997. A copy of the Prospectus can be obtained
by writing the Transfer Agent at 24 W. Carver Street, Huntington, New York
11743, or by calling 1-800-_______________.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST................................................ 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
AND RISK CONSIDERATIONS................................................. 1
INVESTMENT LIMITATIONS.................................................. 3
THE INVESTMENT ADVISER.................................................. 5
TRUSTEES AND OFFICERS................................................... 5
PORTFOLIO TRANSACTIONS AND BROKERAGE.................................... 6
DETERMINATION OF SHARE PRICE............................................ 8
INVESTMENT PERFORMANCE.................................................. 8
CUSTODIAN .............................................................. 9
TRANSFER AGENT.......................................................... 9
ACCOUNTANTS............................................................. 10
DISTRIBUTOR............................................................. 10
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<PAGE>
DESCRIPTION OF THE TRUST
First American Bancshares Fund (the "Fund") was organized as a series
of The BSG Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated January 14, 1997 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is the only series currently
authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
Upon sixty days prior written notice to shareholders, the Fund may
make redemption payments in whole or in part in securities or other property if
the Trustees determine that existing conditions make cash payments undesirable.
For other information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objective and Strategies and Risk
Considerations" and "Investment Policies and Techniques").
A. Short Sales. The Fund may sell a security short in anticipation of
a decline in the market value of the security. When the Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.
In connection with its short sales, the Fund will be required to
maintain a segregated account with its Custodian of cash or high grade liquid
assets equal to the market value of the
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<PAGE>
securities sold less any collateral deposited with its broker. The Fund will
limit its short sales so that no more than 5% of its net assets (less all its
liabilities other than obligations under the short sales) will be deposited as
collateral and allocated to the segregated account. However, the segregated
account and deposits will not necessarily limit the Fund's potential loss on a
short sale, which is unlimited.
B. Option Transactions. The Fund may engage in option transactions
involving individual securities and market indexes. An option involves either
(a) the right or the obligation to buy or sell a specific instrument at a
specific price until the expiration date of the option, or (b) the right to
receive payments or the obligation to make payments representing the difference
between the closing price of a market index and the exercise price of the option
expressed in dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indexes. The
purchaser of an option on a security pays the seller (the writer) a premium for
the right granted but is not obligated to buy or sell the underlying security.
The purchaser of an option on a market index pays the seller a premium for the
right granted, and in return the seller of such an option is obligated to make
the payment. A writer of an option may terminate the obligation prior to
expiration of the option by making an offsetting purchase of an identical
option. Options are traded on organized exchanges and in the over-the-counter
market. Call options on securities which the Fund sells (writes) will be covered
or secured, which means that it will own the underlying security in the case of
a call option. The Fund will sell (write) put options only if the Fund is
selling an equivalent amount of the same security short. When the Fund writes
options, it may be required to maintain a margin account, to pledge the
underlying securities or U.S. government obligations or to deposit assets in
escrow with the Custodian.
The purchase and writing of options involves certain risks. The
purchase of options limits the Fund's potential loss to the amount of the
premium paid and can afford the Fund the opportunity to profit from favorable
movements in the price of an underlying security to a greater extent than if
transactions were effected in the security directly. However, the purchase of an
option could result in the Fund losing a greater percentage of its investment
than if the transaction were effected directly. When the Fund writes a covered
call option, it will receive a premium, but it will give up the opportunity to
profit from a price increase in the underlying security above the exercise price
as long as its obligation as a writer continues, and it will retain the risk of
loss should the price of the security decline. When the Fund writes a put
option, it will assume the risk that the price of the underlying security or
instrument will fall below the exercise price, in which case the Fund may be
required to purchase the security or instrument at a higher price than the
market price of the security or instrument. In addition, there can be no
assurance that the Fund can effect a closing transaction on a particular option
it has written. Further, the total premium paid for any option may be lost if
the Fund does not exercise the option or, in the case of over-the-counter
options, the writer does not perform its obligations.
C. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. Restricted
securities are securities the resale of which is subject to legal or
contractual restrictions. Restricted securities may be sold only in privately
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<PAGE>
negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 or Rule 144A promulgated under such Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration
expense, and a considerable period may elapse between the time of the decision
to sell and the time such security may be sold under an effective registration
statement. If during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than the price it could have
obtained when it decided to sell. The Fund will not invest more than 15% of its
net assets in illiquid securities.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from
a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of the Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are
in an amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and this
Statement of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain
federal securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related
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<PAGE>
securities or investing in companies engaged in the real estate business or that
have a significant portion of their assets in real estate (including real estate
investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a)
by loaning portfolio securities, (b) by engaging in repurchase agreements, or
(c) by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total
assets in any particular industry other than the banking and financial
institutions industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while
borrowings (including reverse repurchase agreements) representing more than 5%
of its total assets are outstanding.
3. Margin Purchases. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to
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<PAGE>
transactions involving options, futures contracts, short sales and other
permitted investments and techniques.
4. Options. The Fund will not purchase or sell puts, calls, options
or straddles, except as described in the Prospectus and this Statement of
Additional Information.
THE INVESTMENT ADVISER
The Fund's investment adviser is Heartland Advisory Group, Inc.,
6230 Busch Blvd., Suite 201, Columbus, Ohio 43229 (the "Adviser"). The
Adviser is a wholly owned subsidiary of Heartland Group of Companies, Inc. (
d/b/a The Banc Stock Group).
Under the terms of the management agreement (the "Agreement"), the
Adviser manages the Fund's investments subject to approval of the Board of
Trustees and pays all of the expenses of the Fund except brokerage, taxes,
interest, fees and expenses of the non-interested person trustees and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 2.50% of
the average daily net assets of the Fund. The Adviser may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Adviser to waive any fees in the future.
The Adviser retains the right to use the names "BSG" and "First
American Bancshares" in connection with another investment company or business
enterprise with which the Adviser is or may become associated. The Trust's right
to use the names "BSG" and "First American Bancshares" automatically ceases
ninety days after termination of the Agreement and may be withdrawn by the
Adviser on ninety days written notice.
The Adviser [Distributor] may make payments to banks or other
financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits 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 clearly
defined by the courts or appropriate regulatory agencies, management of the Fund
believes that the Glass- Steagall Act should not preclude a bank from providing
such services. However, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Fund believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are
shown below. Each Trustee who is an "interested person" of the Trust, as defined
in the Investment Company Act of 1940, is indicated by an asterisk.
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<PAGE>
Name, Age Position Principal Occupations
and Address During Past 5 Years
Michael E. Guirlinger * Trustee, President and Director, president and
Age: 49 Treasurer treasurer of Heartland
6230 Busch Blvd., Suite 201 Advisory Group, Inc.;
Columbus, Ohio 43229 director, president and
treasurer of The Banc
Stock Group; director,
vice president and
treasurer of Banc Stock
Financial Services, Inc.**;
president and treasurer of
Buckeye Banc Stocks, Inc.,
an intra-state broker-
dealer, 6230 Busch Blvd.,
Suite 201, Columbus, Ohio.
Lisa R. Hunter * Secretary Vice president of Banc
Stock Financial Services,
Age: 43 Inc.** Prior to 1995,
6230 Busch Blvd., Suite 201 compliance administrator of
Columbus, Ohio 43229 VESTAX Securities Corp.
Trustee fees are Trust expenses. The following table estimates the
Trustees' compensation for the first full year of the Trust ending
________________, 1997.
Total Compensation
from Trust (the Trust is
Name not in a Fund Complex)
________________ ______________________
________________ ______________________
________________ ______________________
** Banc Stock Financial Services, Inc. is the Trust's principal underwriter.
The Adviser and The Banc Stock Group are affiliated with the distributor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers
who also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of
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<PAGE>
the commission another broker or dealer would charge if the Adviser determines
in good faith that the commission is reasonable in relation to the value of the
brokerage and research services provided. The determination may be viewed in
terms of a particular transaction or the Adviser's overall responsibilities
with respect to the Trust and to other accounts over which it exercises
investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Agreement.
While the Fund does not deem it practicable and in its best interests
to solicit competitive bids for commission rates on each transaction,
consideration is regularly given to posted commission rates as well as other
information concerning the level of commissions charged on comparable
transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that Banc Stock
Financial Services, Inc. ("BSFS"), in its capacity as a registered
broker-dealer, will effect substantially all securities transactions which are
executed on a national securities exchange and over-the-counter transactions
conducted on an agency basis. Such transactions will be executed at competitive
commission rates through Mesirow Financial, Inc.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Adviser (such as BSFS) may be prohibited from dealing with the
Fund as a principal in the purchase and sale of securities. Therefore, BSFS will
not serve as the Fund's dealer in connection with over-the-counter transactions.
However, BSFS may serve as the Fund's broker in over-the-counter transactions
conducted on an agency basis and will receive brokerage commissions in
connection with such transactions. Such agency transactions will be executed
through Mesirow Financial, Inc.
The Fund will not effect any brokerage transactions in its portfolio
securities with BSFS if such transactions would be unfair or unreasonable to
Fund shareholders, and the commissions will be paid solely for the execution of
trades and not for any other services. The Agreement provides that affiliates,
or any affiliates of affiliates, of the Adviser may receive brokerage
commissions in connection with effecting such transactions for the Fund. In
determining the commissions to be paid
- 7 -
<PAGE>
to BSFS, it is the policy of the Fund that such commissions will, in the
judgment of the Trust's Board of Trustees, be (a) at least as favorable to the
Fund as those which would be charged by other qualified brokers having
comparable execution capability and (b) at least as favorable to the Fund as
commissions contemporaneously charged by BSFS on comparable transactions for
its most favored unaffiliated customers, except for customers of BSFS
considered by a majority of the Trust's disinterested Trustees not to be
comparable to the Fund. The disinterested Trustees from time to time review,
among other things, information relating to the commissions charged by BSFS to
the Fund and its other customers, and rates and other information
concerning the commissions charged by other qualified brokers.
The Agreement does not provide for a reduction of the Adviser's fee by
the amount of any profits earned by BSFS from brokerage commissions generated
from portfolio transactions of the Fund.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. BSFS will not receive reciprocal brokerage business as a result of the
brokerage business placed by the Fund with others.
When the Fund and another of the Adviser's clients seek to purchase or
sell the same security at or about the same time, the Adviser may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. Transactions of advisory clients (including the Fund) may also be blocked
with those of the Adviser, the Distributor or any of their affiliates. These
parties will be permitted to participate in the blocked transaction only after
all orders of advisory clients (including the Fund) are filled.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of 4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. For a description of the methods used to determine
the net asset value (share price), see "Share Price Calculation" in the
Prospectus.
The Fund's Prospectus, in the section "How To Invest in the Fund,"
describes certain types of investors for whom sales changes will be waived. The
Trustees have determined that the Fund incurs no appreciable distribution
expenses in connection with sales to these investors and that it is therefore
appropriate to waive sales charges for these investors.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial public
offering through the end of the Fund's most recent fiscal year) that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
- 8 -
<PAGE>
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or to prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
TRANSFER AGENT
American Data Services, Inc., 24 W. Carver Street, Huntington, New
York 11743, acts as the Fund's transfer agent and, in such capacity, maintains
the records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
accounting and shareholder service functions. In addition, American Data
Services, Inc., in its capacity as
- 9 -
<PAGE>
Fund Administrator, provides the Fund with certain monthly reports,
record-keeping and other management-related services. For a description of the
fees paid by the Adviser on behalf of the Fund for these administrative
services, see "Operation of the Fund" in the Fund's Prospectus.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending ______________________, 1998. McCurdy & Associates
performs an annual audit of the Fund's financial statements and provides
financial, tax and accounting consulting services as requested.
DISTRIBUTOR
Banc Stock Financial Services, Inc., 6230 Busch Blvd., Suite 201,
Columbus, Ohio 43229, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell shares of the Fund on a best efforts
basis only against purchase orders for the shares. Shares of the Fund are
offered to the public on a continuous basis.
- 10 -
<PAGE>
The BSG Funds
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A: None
Included in Part B: None
(b) Exhibits
(1) Copy of Registrant's Declaration of Trust
is filed herewith.
(2) Copy of Registrant's By-Laws is filed
herewith.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificates - None.
(5) Copy of Registrant's proposed Management
Agreement with its Adviser, Heartland
Advisory Group, Inc. is filed herewith.
(6) Underwriting or Distribution Contracts and
Agreements with Principal Underwriters and
Dealers (to be supplied).
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Agreement with the
Custodian (to be supplied).
(9) Other Material Contracts - None.
(10) Opinion and Consent of Brown, Cummins &
Brown Co., L.P.A. is filed herewith.
(11) Consent of independent public accountants
- None.
(12) Financial Statements Omitted from Item 23
- None.
(13) Copy of Letter of Initial Stockholders (to
be supplied).
- 1 -
<PAGE>
(14) Model Plan used in Establishment of any
Retirement Plan - None.
(15) 12b-1 Distribution Expense Plan - None.
(16) Schedule for Computation of Each
Performance Quotation - None.
(17) Financial Data Schedule - None.
(18) Rule 18f-3 Plan - None.
(19) (i) Power of Attorney for Registrant and
Certificate with respect thereto are
filed herewith.
(ii) Powers of Attorney for Trustees and
Officers are filed herewith.
Item 25. Persons Controlled by or Under Common Control
with the Registrant
None.
Item 26. Number of Holders of Securities (as of February 1, 1997)
- -------- --------------------------------------------------------
Title of Class Number of Record Holders
First American Bancshares Fund 0
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:
Section 6.4 Indemnification of
Trustees, Officers, etc. Subject to and
except as otherwise provided in the
Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of
its Trustees and officers (including persons
who serve at the Trust's request as
directors, officers or trustees of another
organization in which the Trust has any
interest as a shareholder, creditor or
otherwise (hereinafter referred to as a
"Covered Person") against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or
as fines and penalties, and expenses,
including reasonable accountants' and
counsel fees, incurred by any Covered Person
in connection with the defense or
disposition of any action, suit or other
proceeding, whether civil or criminal,
before any
- 2 -
<PAGE>
court or administrative or legislative body,
in which such Covered Person may be or may
have been involved as a party or otherwise
or with which such person may be or may have
been threatened, while in office or
thereafter, by reason of being or
having been such a Trustee or
officer, director or trustee, and except
that no Covered Person shall be indemnified
against any liability to the Trust or its
Shareholders to which such Covered Person
would otherwise be subject by reason of
willful misfeasance, bad faith, gross
negligence or reckless disregard of the
duties involved in the conduct of such
Covered Person's office.
Section 6.5 Advances of Expenses.
The Trust shall advance attorneys' fees or
other expenses incurred by a Covered Person
in defending a proceeding to the full extent
permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code
Chapter 1707, as amended. In the event any
of these laws conflict with Ohio Revised
Code Section 1701.13(E), as amended, these
laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 Indemnification Not
Exclusive, etc. The right of indemnification
provided by this Article VI shall not be
exclusive of or affect any other rights to
which any such Covered Person may be
entitled. As used in this Article VI,
"Covered Person" shall include such person's
heirs, executors and administrators. Nothing
contained in this article shall affect any
rights to indemnification to which personnel
of the Trust, other than Trustees and
officers, and other persons may be entitled
by contract or otherwise under law, nor the
power of the Trust to purchase and maintain
liability insurance on behalf of any such
person.
The Registrant may not pay for insurance which
protects the Trustees and officers against
liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of
their offices.
(b) The Registrant may maintain a standard mutual fund
and investment advisory professional and directors
and officers liability policy. The policy, if
maintained, would provide coverage to the Registrant,
its Trustees and officers, and could cover its
Advisers, among others. Coverage under the policy
would include losses by reason of any act, error,
omission, misstatement, misleading statement,
neglect or breach of duty.
- 3 -
<PAGE>
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and
the Agreement and Declaration of the Registrant or
the By-Laws of the Registrant, 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 Trust 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, 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 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 Connections of Investment Adviser
A. Heartland Advisory Group, Inc., 6230 Busch Blvd.,
Suite 201, Columbus, Ohio 43229 ("HAG"), adviser to
The BSG Funds, is a registered investment adviser.
(1) HAG has engaged in no other business during
the past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
directors and officers of HAG during the
past two years.
(a) Mark A. Davis: vice president of HAG;
vice president of research, Heartland
Group of Companies, Inc. (d/b/a The
Banc Stock Group), the parent company
of HAG, 6230 Busch Blvd., Suite 201,
Columbus, Ohio; registered principal,
Banc Stock Financial Services, Inc.
("BSFS"), a broker-dealer, 6230 Busch
Blvd., Suite 201, Columbus, Ohio.
(b) Michael E. Guirlinger: director,
president and treasurer of HAG;
director, president and treasurer of
The Banc Stock Group; director, vice
president and treasurer of BSFS;
- 4 -
<PAGE>
president and treasurer of
Buckeye Banc Stocks, Inc., ("BBS")
an intra-state broker-dealer,
6230 Busch Blvd., Suite 201,
Columbus, Ohio.
(c) Sandra L. Quinn, secretary of HAG,
BBS and BSFS; director and
secretary of The Banc Stock Group
and BSE.
Item 29. Principal Underwriters
(a) None.
(b) Banc Stock Financial Services, Inc. ("BSFS"), 6230
Busch Blvd., Suite 201, Columbus, Ohio is the
Registrant's principal underwriter. Anthony J.Reilly
is the President, Michael E. Guirlinger is the
Treasurer and Sandra L. Quinn is the Secretary of the
underwriter. Michael E. Guirlinger is the President
and a Trustee of the Registrant.
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and
the Rules promulgated thereunder will be maintained by the
Registrant at 6230 Busch Blvd., Suite 201, Columbus, Ohio
43229and/or by the Registrant's Custodian, Star Bank, N.A.,
425 Walnut Street, Cincinnati, Ohio 45202, and/or transfer
and shareholder service agent, American Data Services, Inc.,
24 West Carver Street, Huntington, New York 11743.
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
(b) 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) The Registrant hereby undertakes to file a Post-
Effective Amendment, using financial statements which
need not be certified, within four to six months from
the effective date of this registration.
- 5 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on the 19th day of
February, 1997.
The BSG Funds
By:/s/ Donald S. Mendelsohn
Donald S. Mendelsohn,
Attorney-in-Fact
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.
Michael E. Guirlinger,
President and Trustee By:/s/ Donald S. Mendelsohn
Donald S. Mendelsohn,
Attorney-in-Fact
February 19, 1997
- 6 -
<PAGE>
EXHIBIT INDEX
PAGE
----
1. Declaration of Trust ......................................EX-99.B1
2. By-Laws....................................................EX-99.B2
3. Proposed Management Agreement..............................EX-99.B5
4. Opinion of Brown, Cummins & Brown Co., L.P.A. .............EX-99.B10
5. Power of Attorney..........................................EX-99.POA
- 7 -
<PAGE>
THE BSG FUNDS
AGREEMENT AND DECLARATION OF TRUST
January 14, 1997
<PAGE>
THE BSG FUNDS
AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
ARTICLE I - NAME AND DEFINITIONS........................................ 1
Section 1.1 Name............................................... 1
Section 1.2 Definitions........................................ 1
(a) The "Trust"......................................... 1
(b) "Trustees".......................................... 1
(c) "Shares"............................................ 1
(d) "Series"............................................ 1
(e) "Class"............................................. 2
(f) "Shareholder"....................................... 2
(g) The "1940 Act"...................................... 2
(h) "Commission"........................................ 2
(i) "Declaration of Trust".............................. 2
(j) "By-Laws"........................................... 2
ARTICLE II - PURPOSE OF TRUST........................................... 2
ARTICLE III - THE TRUSTEES.............................................. 2
Section 3.1 Number, Designation, Election, Term, etc........... 2
(a) Initial Trustees.................................... 2
(b) Number.............................................. 2
(c) Term................................................ 2
(d) Resignation and Retirement.......................... 3
(e) Removal............................................. 3
(f) Vacancies........................................... 3
(g) Effect of Death, Resignation, etc................... 3
(h) No Accounting....................................... 3
Section 3.2 Powers of Trustees................................. 4
(a) Investments......................................... 4
(b) Disposition of Assets............................... 4
(c) Ownership Powers.................................... 4
(d) Subscription........................................ 5
(e) Form of Holding..................................... 5
(f) Reorganization, etc................................. 5
(g) Voting Trusts, etc.................................. 5
(h) Compromise.......................................... 5
<PAGE>
(i) Partnerships, etc................................... 5
(j) Borrowing and Security.............................. 5
(k) Guarantees, etc..................................... 5
(l) Insurance........................................... 5
(m) Pensions, etc....................................... 6
Section 3.3 Certain Contracts................................... 6
(a) Advisory............................................ 6
(b) Administration...................................... 7
(c) Distribution........................................ 7
(d) Custodian and Depository............................ 7
(e) Transfer and Dividend Disbursing Agency............. 7
(f) Shareholder Servicing............................... 7
(g) Accounting.......................................... 7
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees................................ 8
Section 3.5 Ownership of Assets of the Trust.................... 8
ARTICLE IV - SHARES..................................................... 8
Section 4.1 Description of Shares............................... 8
Section 4.2 Establishment and Designation of Series............. 10
(a) Assets Belonging to Series.......................... 10
(b) Liabilities Belonging to Series..................... 10
(c) Dividends........................................... 11
(d) Liquidation......................................... 12
(e) Voting.............................................. 12
(f) Redemption by Shareholder........................... 12
(g) Redemption by Trust................................. 12
(h) Net Asset Value..................................... 13
(i) Transfer............................................ 13
(j) Equality............................................ 13
(k) Fractions........................................... 14
(l) Conversion Rights................................... 14
Section 4.3 Ownership of Shares................................. 14
Section 4.4 Investments in the Trust............................ 14
Section 4.5 No Preemptive Rights................................ 14
Section 4.6 Status of Shares and Limitation of Personal
Liability........................................... 14
- ii -
<PAGE>
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS.................... 15
Section 5.1 Voting Powers....................................... 15
Section 5.2 Meetings............................................ 15
Section 5.3 Record Dates........................................ 15
Section 5.4 Quorum and Required Vote............................ 16
Section 5.5 Action by Written Consent........................... 16
Section 5.6 Inspection of Records............................... 16
Section 5.7 Additional Provisions............................... 16
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION................... 16
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice...................................... 16
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety................................... 17
Section 6.3 Indemnification of Shareholders..................... 17
Section 6.4 Indemnification of Trustees, Officers, etc.......... 18
Section 6.5 Advances of Expenses................................ 18
Section 6.6 Indemnification Not Exclusive, etc.................. 18
Section 6.7 Liability of Third Persons Dealing with
Trustees............................................ 18
ARTICLE VII - MISCELLANEOUS............................................. 18
Section 7.1 Duration and Termination of Trust.................. 18
Section 7.2 Reorganization..................................... 19
Section 7.3 Amendments......................................... 19
Section 7.4 Filing of Copies; References; Headings............. 20
Section 7.5 Applicable Law..................................... 20
ARTICLE I - NAME AND DEFINITIONS........................................ 1
Section 1.1 Name............................................... 1
Section 1.2 Definitions........................................ 1
(a) The "Trust"......................................... 1
(b) "Trustees".......................................... 1
(c) "Shares"............................................ 1
(d) "Series"............................................ 1
(e) "Shareholder"....................................... 2
(f) The "1940 Act"...................................... 2
(g) "Commission"........................................ 2
(h) "Declaration of Trust".............................. 2
(i) "By-Laws"........................................... 2
ARTICLE II - PURPOSE OF TRUST........................................... 2
- iii -
<PAGE>
ARTICLE III - THE TRUSTEES.............................................. 2
Section 3.1 Number, Designation, Election, Term, etc............ 2
(a) Initial Trustees.................................... 2
(b) Number.............................................. 2
(c) Term................................................ 2
(d) Resignation and Retirement.......................... 3
(e) Removal............................................. 3
(f) Vacancies........................................... 3
(g) Effect of Death, Resignation, etc................... 3
(h) No Accounting....................................... 3
Section 3.2 Powers of Trustees.................................. 4
(a) Investments......................................... 4
(b) Disposition of Assets............................... 4
(c) Ownership Powers.................................... 4
(d) Subscription........................................ 5
(e) Form of Holding..................................... 5
(f) Reorganization, etc................................. 5
(g) Voting Trusts, etc.................................. 5
(h) Compromise.......................................... 5
(i) Partnerships, etc................................... 5
(j) Borrowing and Security.............................. 5
(k) Guarantees, etc..................................... 5
(l) Insurance........................................... 5
(m) Pensions, etc....................................... 6
Section 3.3 Certain Contracts................................... 6
(a) Advisory............................................ 6
(b) Administration...................................... 7
(c) Distribution........................................ 7
(d) Custodian and Depository............................ 7
(e) Transfer and Dividend Disbursing Agency............. 7
(f) Shareholder Servicing............................... 7
(g) Accounting.......................................... 7
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees......................................... 8
Section 3.5 Ownership of Assets of the Trust.................... 8
- iv -
<PAGE>
ARTICLE IV - SHARES
Section 4.1 Description of Shares.............................. 8
Section 4.2 Establishment and Designation of Series............ 10
(a) Assets Belonging to Series......................... 10
(b) Liabilities Belonging to Series.................... 11
(c) Dividends.......................................... 11
(d) Liquidation........................................ 12
(e) Voting............................................. 12
(f) Redemption by Shareholder.......................... 12
(g) Redemption by Trust................................ 13
(h) Net Asset Value.................................... 13
(i) Transfer........................................... 13
(j) Equality........................................... 13
(k) Fractions.......................................... 14
(l) Conversion Rights.................................. 14
Section 4.3 Ownership of Shares................................ 14
Section 4.4 Investments in the Trust........................... 14
Section 4.5 No Preemptive Rights............................... 14
Section 4.6 Status of Shares and Limitation of Personal
Liability.......................................... 14
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS................... 15
Section 5.1 Voting Powers...................................... 15
Section 5.2 Meetings........................................... 15
Section 5.3 Record Dates....................................... 16
Section 5.4 Quorum and Required Vote........................... 16
Section 5.5 Action by Written Consent.......................... 16
Section 5.6 Inspection of Records.............................. 16
Section 5.7 Additional Provisions.............................. 16
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION.................. 17
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice..................................... 17
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety.................................. 17
Section 6.3 Indemnification of Shareholders.................... 18
Section 6.4 Indemnification of Trustees, Officers, etc......... 18
Section 6.5 Advances of Expenses............................... 18
Section 6.6 Indemnification Not Exclusive, etc................. 18
Section 6.7 Liability of Third Persons Dealing with
Trustees........................................... 18
- v -
<PAGE>
ARTICLE VII - MISCELLANEOUS............................................ 19
Section 7.1 Duration and Termination of Trust.................. 19
Section 7.2 Reorganization..................................... 19
Section 7.3 Amendments......................................... 19
Section 7.4 Filing of Copies; References; Headings............. 20
Section 7.5 Applicable Law..................................... 20
- vi -
<PAGE>
THE BSG FUNDS
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made at Columbus, Ohio this 14th
day of January, 1997, by the Trustee hereunder, and by the holders of Shares of
beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business of
an investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of an Ohio business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "The BSG Funds" and the
Trustees shall conduct the business of the Trust under that name or any other
name as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established
by this Agreement and Declaration of Trust, as amended from
time to time;
(b) "Trustee" refers to the Trustees of the Trust named herein
or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust, shall be divided
from time to time, including the shares of any and all Series
or Classes which may be established by the Trustees, and
includes fractions of Shares as well as whole Shares;
(d) "Series" refers to Series of Shares established and
designated under or in accordance with the provisions of
Article IV;
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(e) "Class" refers to a class or sub-series of any Series of
Shares established and designated under and in accordance
with the provisions of Article IV;
(f) "Shareholder" means a record owner of Shares;
(g) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended
from time to time;
(h) "Commission" shall have the meaning given it in the 1940
Act;
(i) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to
time; and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company, to
offer Shareholders one or more investment programs primarily in securities and
debt instruments and to engage in any and all lawful acts or activities for
which business trusts may be formed under Chapter 1746 of the Ohio Revised Code.
ARTICLE III
THE TRUSTEE
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustee. Upon his execution of this Declaration of
Trust or a counterpart hereof or some other writing in which
he accepts such Trusteeship and agrees to the provisions
hereof, Michael Guirlinger shall become Trustee hereof.
(b) Number. The Trustees serving as such, whether named above
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or hereafter becoming a Trustee, may increase or decrease
the number of Trustees to a number other than the number
theretofore determined. No decrease in the number of
Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term, but the number
of Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to subsection (e) of this
Section 3.1.
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as
hereinafter provided or until such Trustee sooner dies,
resigns, retires or is removed. The Trustees may elect
their own successors and may, pursuant to Section 3.1(f)
hereof, appoint Trustees to fill vacancies; provided that,
immediately after filling a vacancy, at least two-thirds of
the Trustees then holding office shall have been elected to
such office by the Shareholders at an annual or special
meeting. If at any time less than a majority of the Trustees
then holding office were so elected, the Trustees shall
forthwith cause to be held as
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promptly as possible, and in any event within 60 days,
a meeting of Shareholders for the purpose of electing
Trustees to fill any existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee,by written instrument signed by him
and delivered to the other Trustees or to any officer of the
Trust, and such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in
such instrument.
(e) Removal. Any Trustee may be removed with or without cause
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at any time: (i) by written instrument, signed by at least
two-thirds of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become
effective, (ii) by vote of the Shareholders holding not
less than two-thirds of the Shares then outstanding, cast
in person or by proxy at any meeting called for the
purpose, or (iii)by a declaration in writing signed by
Shareholders holding not less than two-thirds of the Shares
then outstanding and filed with the Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
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from any reason, including without limitation the death,
resignation, retirement, removal or incapacity of any of
the Trustees, or resulting from an increase in the number
of Trustees by the Trustees may (but so long as there are
at least three remaining Trustees, need not unless required
by the 1940 Act) be filled either by a majority of the
remaining Trustees through the appointment in writing of
such other person as such remaining Trustees in their
discretion shall determine (unless a shareholder election
is required by the 1940 Act) or by the election by the
Shareholders, at a meeting called for the purpose, of a
person to fill such vacancy, and such appointment or
election shall be effective upon the written acceptance of
the person named therein to serve as a Trustee and
agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such appointment
or election in anticipation of a vacancy to occur by reason
of retirement, resignation, or increase in number of
Trustees to be effective at a later date shall become
effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees.
As soon as any Trustee so appointed or elected shall have
accepted such appointment or election and shall have agreed
in writing to be bound by this Declaration of Trust and the
appointment or election is effective, the Trust estate shall
vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any
one of them, shall not operate to annul or terminate the
Trust or to revoke or terminate any existing agency or
contract created or entered into pursuant to the terms of
this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for
cause, no person ceasing to be a Trustee as a result of his
death, resignation, retirement, removal or incapacity (nor
the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon
such cessation.
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Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the Trustee,
and he shall have all powers necessary or convenient to carry out that
responsibility and the purpose of the Trust. Without limiting the foregoing, the
Trustee may adopt By-Laws not inconsistent with this Declaration of Trust
providing for the conduct of the business and affairs of the Trust and may amend
and repeal them to the extent that such By-Laws do not reserve that right to the
Shareholders; they may as they consider appropriate elect and remove officers
and appoint and terminate agents and consultants and hire and terminate
employees, any one or more of the foregoing of whom may be a Trustee, and may
provide for the compensation of all of the foregoing; he may appoint from his
own number, and terminate, any one or more committees consisting of two or more
Trustees, including without implied limitation an executive committee, which
may, when the Trustee is not in session and subject to the 1940 Act, exercise
some or all of the power and authority of the Trustees as the Trustees may
determine; in accordance with Section 3.3 they may employ one or more Advisers,
Administrators, Depositories and Custodians and may authorize any Depository or
Custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of securities and
debt instruments, retain transfer, dividend, accounting or Shareholder servicing
agents or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more distributors, principal underwriters or otherwise, set
record dates or times for the determination of Shareholders or number of them
with respect to various matters; he may compensate or provide for the
compensation of the Trustees, officers, advisers, administrators, custodians,
other agents, consultants and employees of the Trust or the Trustees on such
terms as they deem appropriate; and in general he may delegate to any officer of
the Trust, to any committee of the Trustees and to any employee, adviser,
administrator, distributor, principal underwriter, depository, custodian,
transfer and dividend disbursing agent, or any other agent or consultant of the
Trust such authority, powers, functions and duties as he considers desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustee shall have power and
authority:
(a) Investments. To invest and reinvest cash and other
property, and to hold cash or other property uninvested
without in any event being bound or limited by any present
or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or
all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
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rights of ownership, with respect to stock or other
securities, debt instruments or property; and to execute
and deliver proxies or powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation
to securities, debt instruments or property as the Trustees
shall deem proper;
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(d) Subscription. To exercise powers and rights of
subscription or otherwise which in any manner arise out of
ownership of securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in
bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a
custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any
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plan for the reorganization, consolidation or merger of any
corporation or issuer, any security or debt instrument of
which is or was held in the Trust; to consent to any
contract, lease, mortgage, purchase or sale of property by
such corporation or issuer, and to pay calls or
subscriptions with respect to any security or debt
instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee,
depository, voting trustee or otherwise, and in that
connection to deposit any security or debt instrument with,
or transfer any security or debt instrument to, any
such committee, depository or trustee, and to delegate to
them such power and authority with relation to any security
or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and
compensation of such committee, depository or trustee as the
Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general
or limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage
and pledge the assets of the Trust or any part thereof to
secure obligations arising in connection with such
borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts
of guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such
obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
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property such insurance as they may deem necessary or
appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring
the Shareholders, Trustees, officers, employees, agents,
consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected
therewith), of the Trust individually against all claims
and liabilities of every nature arising by reason
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of holding, being or having held any such office or position,
or by reason of any action alleged to have been taken or
omitted by any such person in any such capacity, including
any action taken or omitted that may be determined to
constitute negligence; provided, however, that insurance
which protects the Trustees and officers against
liabilities rising from action involving willful
misfeasance, bad faith,gross negligence or reckless
disregard of the duties involved in the conduct of their
offices may not be purchased; and
(m) Pensions, etc. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish
and carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means
of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the
Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustee
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustee may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustee, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustee may determine appropriate:
(a) Advisory. Subject to the general supervision of the
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Trustee and in conformity with the stated policy of the
Trustee with respect to the investments of the Trust or of
the assets belonging to any Series of Shares of the Trust
(as that phrase is defined in subsection (a) of Section
4.2), to manage such investments and assets, make
investment decisions with respect thereto, and to place
purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
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Trustee and in conformity with any policies of the Trustee
with respect to the operations of the Trust, to supervise
all or any part of the operations of the Trust, and to
provide all or any part
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of the administrative and clerical personnel, office space
and office equipment and services appropriate for the
efficient administration and operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as
agent of the Trust in the sale of Shares and the acceptance
or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and
accounting records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain
records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof, and to
disburse any dividends declared by the Trustee and in
accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest any
such dividends;
(f) Shareholder Servicing. To provide service with respect to
the relationship of the Trust and its Shareholders, records
with respect to Shareholders and their Shares, and similar
matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into subcontractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or
for any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited partnerships
or other organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or
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accountability to the Trust or its Shareholders, provided that in the case
of any relationship or interest referred to in the preceding clause (i) on the
part of any Trustee or officer of the Trust either (l) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract
involved is approved in good faith reasonably justified by such facts by a
majority of such Trustees not having any such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of all
of the Trustees), (2) the material facts as to such relationship or interest
and as to the contract have been disclosed to or are known by the Shareholders
not having such relationship or interest and who are entitled to vote thereon
and the contract involved is specifically approved in good faith by majority
vote of such Shareholders, or (3) the specific contract involved is fair to the
Trust as of the time it is authorized, approved or ratified by the Trustees or
by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out of income, and
to charge or allocate the same to, between or among such one or more of the
Series and Class that may be established and designated pursuant to Article IV,
as the Trustees deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants, and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without limiting
the generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all without par value. The Trustees shall
have the authority from time to time to issue or reissue Shares in one or more
Series of Shares (including without limitation the Series specifically
established and designated in Section 4.2), as they deem necessary or
desirable, to establish and designate such Series, and to fix and determine the
relative rights and preferences as between the different Series of Shares as to
right of redemption and the price, terms and manner of redemption, special and
relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Series shall have separate voting rights or no voting rights.
The Shares of each Series may be issued or reissued from time to time
in one or more Classes, as determined by the Board of Trustees pursuant to
resolution. Each Class shall be appropriately designated, prior to the issuance
of any shares thereof, by some distinguishing letter,
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number or title. All Shares within a Class shall be alike in every particular.
All Shares of each Series shall be of equal rank and have the same powers,
preferences and rights, and shall be subject to the same qualifications,
limitations and restrictions without distinction between the shares of
different Classes thereof, except with respect to such differences among such
Classes, as the Board of Trustees shall from time to time determine to be
necessary or desirable, including differences in the rate or rates of dividends
or distributions. The Board of Trustees may from time to time increase the
number of Shares allocated to any Class already created by providing that any
unissued Shares of the applicable Series shall constitute part of such Class,
or may decrease the number of Shares allocated to any Class already created by
providing that any unissued Shares previously assigned to such Class shall no
longer constitute part thereof. The Board of Trustees is hereby empowered to
classify or reclassify from time to time any unissued Shares of each Series by
fixing or altering the terms thereof and by assigning such unissued shares to
an existing or newly created Class. Notwithstanding anything to the contrary in
this paragraph the Board of Trustees is hereby empowered (i) to redesignate any
issued Shares of any Series by assigning a distinguishing letter, number or
title to such shares and (ii) to reclassify all or any part of the issued
Shares of any Series to make them part of an existing or newly created Class.
The number of authorized Shares and the number of Shares of each
Series and Class that may be issued is unlimited, and the Trustees may issue
Shares of any Series or Class for such consideration and on such terms as they
may determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully paid and
non-assessable (but may be subject to mandatory contribution back to the Trust
as provided in subsection (h) of Section 4.2). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series or Class into one or more Series or Classes that may be established
and designated from time to time. The Trustees may hold as treasury Shares (of
the same or some other Series), reissue for such consideration and on such terms
as they may determine, or cancel, at their discretion from time to time, any
Shares of any Series or Class reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series of Shares in addition
to those established and designated in Section 4.2, or of any Class of Shares,
shall be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such Series or Class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated the Trustees may by an
instrument executed by a majority of their number abolish that Series or Class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration of
Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares to the same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be issued and
sold and may purchase Shares from any such person or any such
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series of Shares in addition
to those established and designated in Section 4.2, or of any Class of Shares,
shall be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such Series or Class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated the Trustees may by an
instrument executed by a majority of their number abolish that Series or Class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration of
Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares to the same extent as if such person were not a Trustee, officer or other
agent of the Trust; and the Trust may issue and sell or cause to be issued and
sold and may purchase Shares from any such person or any such
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organization subject only to the general limitations, restrictions or other
provisions applicable to the sale or purchase of Shares generally.
Section 4.2 Establishment and Designation of Series. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate one
Series of Shares: "Select American Bancshares Fund." The Shares of this Series
and any Shares of any further Series or Class that may from time to time be
established and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Series or Class at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration received by
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the Trust for the issuance or sale of Shares of a
particular Series or Class, together with all assets in
which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may
be, shall irrevocably belong to that Series or Class for
all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same
may be, together with any General Items allocated to that
Series or Class as provided in the following sentence, are
herein referred to as "assets belonging to" that Series or
Class. In the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any
particular Series or Class (collectively "General Items"),
the Trustees shall allocate such General Items to and among
any one or more of the Series or Classes established and
designated from time to time in such manner and on such basis
as they, in their sole discretion, deem fair and equitable;
and any General Items so allocated to a particular Series or
Class shall belong to that Series or Class. Each such
allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series and Classes for all
purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items
shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to
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each particular Series and Class thereof shall be charged
with the liabilities of the Trust in respect of that Series
or Class and all expenses, costs, charges and reserves
attributable to that Series or Class, and any general
liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to
any particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series and
Classes established and designated from time to time in
such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable.
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The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Series or Class are
herein referred to as "liabilities belonging to" that
Series or Class. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall
be conclusive and binding upon the Shareholders of all
Series for all purposes.
(c) Dividends. Dividends and distributions on Shares of a
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particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Series, from
such of the estimated income and capital gains, accrued or
realized, from the assets belonging to that Series, as the
Trustees may determine, after providing for actual and
accrued liabilities belonging to that Series. All
dividends and distributions on Shares of a particular
Series shall be distributed pro rata to the holders of that
Series in proportion to the number of Shares of that Series
held by such holders at the date and time of record
established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine
that no dividend or distribution shall be payable on Shares
as to which the Shareholder's purchase order and/or payment
have not been received by the time or times established by
the Trustees under such program or procedure, and except that
if Classes have been established for any Series, the rate of
dividends or distributions may vary among such Class pursuant
to resolution, which may be a standing resolution, of the
Board of Trustees. Such dividends and distributions may be
made in cash or Shares or a combination thereof as determined
by the Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or
distribution paid in Shares will be paid at the net asset
value thereof as determined in accordance with subsection (h)
of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1954,
as amended, or any successor or comparable statute thereto,
and regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books
of the Trust, the Board of Trustees shall have the power, in
its sole discretion, to distribute in any fiscal year as
dividends, including dividends designated in whole or in part
as capital gains distributions, amounts sufficient, in the
opinion of the Board of Trustees, to enable each Series to
qualify as a regulated investment company and to avoid
liability of the Series for federal income tax in respect of
that year. However, nothing in the foregoing shall limit the
authority of the Board of Trustees to make distributions
greater than or less than the amount necessary to qualify as
a regulated investment company and to avoid liability of each
Series for such tax.
(d) Liquidation. In event of the liquidation or dissolution of
-----------
the Trust, the Shareholders of each Series or Class that
has been established and designated shall be entitled to
receive, as a Series or Class, when and as declared by the
Trustees, the excess of the assets belonging to that Series
or Class over the liabilities belonging to that Series or
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Class. The assets so distributable to the Shareholders of
any particular Series or Class shall be distributed among
such Shareholders in proportion to the number of Shares of
that Series or Class held by them and recorded on the books
of the Trust. The liquidation of any particular Series or
Class may be authorized by vote of a majority of the
Trustees then in office subject to the approval of a majority
of the outstanding voting Shares of that Series or Class, as
defined in the 1940 Act.
(e) Voting. All Shares shall have "equal voting rights" as
------
such term is defined in the Investment Company Act of 1940
and except as otherwise provided by that Act or rules,
regulations or orders promulgated thereunder. On each
matter submitted to a vote of the Shareholders, each Series
shall vote as a separate series except (i) as to any matter
with respect to which a vote of all Series voting as a
single series is required by the 1940 Act or rules and
regulations promulgated thereunder, or would be required
under the Ohio General Corporation Law if the Trust were an
Ohio corporation; and (ii) to any matter which the Trustees
have determined affects only the interests of one or more
Series or Class, only the holders of Shares of the one or
more affected Series or Classes shall be entitled to vote
thereon.
(f) Redemption by Shareholder. Each holder of Shares of a
-------------------------
particular Series or Class shall have the right at such
times as may be permitted by the Trust, but no less
frequently than once each week, to require the Trust to
redeem all or any part of his Shares of that Series or
Class at a redemption price equal to the net asset value
per Share of that Series or Class next determined in
accordance with subsection (h) of this Section 4.2 after
the Shares are properly tendered for redemption. Payment
of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which
determination shall be conclusive, that conditions exist
which make payment wholly in cash unwise or undesirable,
the Trust may make payment wholly or partly in securities
or other assets belonging to the Series or Class of which
the Shares being redeemed are part at the value of such
securities or assets used in such determination of net
asset value.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the
holders of Shares of any Series to require the Trust to
redeem Shares of that Series during any period or at any time
when and to the extent permissible under the 1940 Act, and
such redemption is conditioned upon the Trust having funds or
property legally available therefor.
(g) Redemption by Trust. Each Share of each Series or Class that
has been established and designated is subject to redemption
by the Trust at the redemption price which would be
applicable if such Share was then being redeemed by the
Shareholder pursuant to subsection (f) of this Section
4.2:(a) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have
materially adverse consequences to all or any of the holders
of the Shares, or any Series or Class thereof, of the Trust,
or (b) upon such other conditions as may from time to time be
determined by the Trustees and set forth in the then current
Prospectus of the Trust with respect to maintenance of
Shareholder accounts of a minimum amount. Upon such
redemption the holders of the Shares so redeemed shall have
no
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further right with respect thereto other than to receive
payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any
---------------
Series or Class shall be the quotient obtained by dividing
the value of the net assets of that Series or Class (being
the value of the assets belonging to that Series or Class
less the liabilities belonging to that Series or Class) by
the total number of Shares of that Series or Class
outstanding, all determined in accordance with the methods
and procedures, including without limitation those with
respect to rounding, established by the Trustees from time
to time, and net asset value shall be determined separately
for each Class of a Series.
The Trustees may determine to maintain the net asset value
per Share of any Series or Class at a designated constant
dollar amount and in connection therewith may adopt
procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Series
or Class as dividends payable in additional Shares of that
Series or Class at the designated constant dollar amount and
for the handling of any losses attributable to that Series or
Class . Such procedures may provide that in the event of any
loss each Shareholder shall be deemed to have contributed to
the capital of the Trust attributable to that Series or Class
his pro rata portion of the total number of Shares required
to be canceled in order to permit the net asset value per
Share of that Series or Class to be maintained, after
reflecting such loss, at the designated constant dollar
amount. Each Shareholder of the Trust shall be deemed to have
agreed, by his investment in any Series with respect to which
the Trustees shall have adopted any such procedure, to make
the contribution referred to in the preceding sentence in the
event of any such loss.
(i) Transfer. All Shares of each particular Series or Class
--------
shall be transferable, but transfers of Shares of a
particular Series or Class will be recorded on the Share
transfer records of the Trust applicable to that Series or
Class only at such times as Shareholders shall have the
right to require the Trust to redeem Shares of that Series
or Class and at such other times as may be permitted by the
Trustees.
(j) Equality. All Shares of each particular Series shall
--------
represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities
belonging to that Series), and each Share of any particular
Series shall be equal to each other Share of that Series;
but the provisions of this sentence shall not restrict any
distinctions permissible under this Section 4.2 that may
exist with respect to a Class of the same Series. The
Trustees may from time to time divide or combine the Shares
of any particular Series or Class into a greater or lesser
number of Shares of that Series or Class without thereby
changing the proportionate beneficial interest in the
assets belonging to that Series or Class or in any way
affecting the rights of Shares of any other Series or
Class.
(k) Fractions. Any fractional Share of any Series or Class, if
any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole
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Share of that Series or Class, including with respect to
voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the
authority to provide that holders of Shares of any Series or
Class shall have the right to convert said Shares into Shares
of one or more other Series or Classes in accordance with
such requirements and procedures as may be established by the
Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
and Class that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Series and Class held from time to time by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
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ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust or any Series to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Section
7.3, (v) to the same extent as the stockholders of an Ohio business corporation
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 Trust
or the Shareholders, and (vi) with respect to such additional matters relating
to the Trust as may be required by the 1940 Act, this Declaration of Trust, the
By-Laws or any registration of the Trust with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
There shall be no cumulative voting in the election of any Trustee or Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares held
in the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. Meetings (including meetings involving only the
holders of Shares of one or more but less than all Series or Classes) of
Shareholders may be called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Written notice of any meeting of Shareholders
shall be given or caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating the time, place
and purpose of the meeting, to each Shareholder at the Shareholder's address as
it appears on the records of the Trust. If the Trustees shall fail to call or
give notice of any meeting of Shareholders (including a meeting involving only
the holders of Shares of one or more but less than all Series or Classes) for a
period of 30 days after written application by Shareholders holding at least 25%
of the Shares then outstanding requesting a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least 25% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of
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<PAGE>
Shareholders entitled to vote at such meeting or any adjournment thereof or to
be treated as Shareholders of record for purposes of such other action, and any
Shareholder who was a Shareholder at the date and time so fixed shall be
entitled to vote at such meeting or any adjournment thereof or (subject to any
provisions permissible under subsection (c) of Section 4.2 with respect to
dividends or distributions on Shares that have not been ordered and/or paid for
by the time or times established by the Trustees under the applicable dividend
or distribution program or procedure then in effect) to be treated as a
Shareholder of record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for
purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares of each
Series, or of all Series if voting as a single series is required, which are
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting without the necessity of
further notice. A majority of the Shares voted, at a meeting of which a quorum
is present, shall decide any questions and a plurality shall elect a Trustee,
except when a different vote is required or permitted by any provision of the
1940 Act or other applicable law or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such other proportion thereof as shall be required by the 1940 Act or
by any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation under the Ohio General Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include
further provisions for Shareholders' votes and meetings and related
matters not inconsistent with the provisions hereof.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any claim
against any Series of the Trust (or the Trust on behalf of any Series) shall
look only to the assets of that Series for payment under such credit, contract
or claim; and neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every note, bond, contract, instrument, certificate
or undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only by or for the
Trust or the Trustees and not personally. Nothing in this Declaration of Trust
shall protect
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<PAGE>
any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee or of such
officer.
Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give notice
that this Declaration of Trust is on file with the Secretary of the State of
Ohio and shall recite to the effect that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or officer
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties. Nothing stated herein is intended to detract from
the protection accorded to Trustees by Ohio Revised Code Sections 1746.08 and
1701.59, as amended from time to time.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
or former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability; provided that, in the event
the Trust shall consist of more than one Series, Shareholders of a particular
Series who are faced with claims or liabilities solely by reason of their status
as Shareholders of that Series shall be limited to the assets of that Series for
recovery of such loss and related expenses. The rights accruing to a
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Shareholder under this Section 6.3 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 6.4 Indemnification of Trustees, Officers, etc. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person") against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding to
the full extent permitted by the Securities Act of 1933, as amended, the 1940
Act, and Ohio Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws,
and not Ohio Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a
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majority of the Trustees then in office subject to a favorable vote of a
majority of the outstanding voting Shares, as defined in the 1940 Act, of each
Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that if shareholder
approval is required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Series. Following such transfer, the Trustees shall distribute
such cash, shares or other securities (giving due effect to the assets and
liabilities belonging to and any other differences among the various Series the
assets belonging to which have so been transferred) among the Shareholders of
the Series the assets belonging to which have been so transferred; and if all of
the assets of the Trust have been so transferred, the Trust shall be terminated.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when authorized so to do
by the vote in accordance with subsection (e) of Section 4.2 of Shareholders
holding a majority of the Shares entitled to vote, except that amendments either
(a) establishing and designating any new Series of Shares not established and
designated in Section 4.2, or any Class or (b) having the purpose of changing
the name of the Trust or the name of any Shares theretofore established and
designated or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any provision hereof which is internally
inconsistent with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code and applicable regulations for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies, shall not
require authorization by Shareholder vote. If Shares have been issued in Series
or Classes and such amendment would not affect Shares of all Series or Classes
equally, no such amendment may be made except with the vote or consent of the
holders of a majority of the Shares of each Series or Class affected by
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such amendment. Subject to the foregoing, any such amendment shall be effective
as provided in the instrument containing the terms of such amendment or, if
there is no provision therein with respect to effectiveness, upon the execution
of such instrument and of a certificate (which may be a part of such instrument)
executed by a Trustee or officer of the Trust to the effect that such amendment
has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the State of Ohio, as well as any other governmental office where
such filing may from time to time be required, but the failure to make any such
filing shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. The masculine
gender shall include the feminine and neuter genders. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
Section 7.5 Applicable Law. This Declaration of Trust is made in the
State of Ohio, and it is created under and is to be governed by and construed
and administered according to the laws of said State, including the Ohio General
Corporation Law as the same may be amended from time to time, but the reference
to said Corporation Law is not intended to give the Trust, the Trustees, the
Shareholders or any other person any right, power, authority or responsibility
available only to or in connection with an entity organized in corporate form.
The Trust shall be of the type referred to in Section 1746.01 of the Ohio
Revised Code, and without limiting the provisions hereof, the Trust may exercise
all powers which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand in
Columbus, Ohio for himself and his assigns, as of the day and year first above
written.
/s/ Michael Guirlinger
MICHAEL GUIRLINGER
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public in and for said county and state,
personally appeared the above named MICHAEL GUIRLINGER, who acknowledged that he
did sign the foregoing instrument and that the same is his free act and deed.
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IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal on this 14th day of January, 1997.
/s/ Lisa R. Hunter
Notary Public
My Commission Expires: 6-13-99
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By-Laws
of
The BSG Funds
ARTICLE 1
Agreement and Declaration of Trust and Offices
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of The BSG Funds, the Ohio business trust established
by the Declaration of Trust (the "Trust").
1.2 Offices. The Trust may maintain one or more other offices,
including its principal office, in or outside of Ohio, in such cities as the
Trustees may determine from time to time. Unless the Trustees otherwise
determine, the principal office of the Trust shall be located in Columbus, Ohio.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
.2 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
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2.4 Quorum. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 Participation by Telephone. One or more of the Trustees or of
any committee of the Trustees may participate in a meeting thereof by means of
a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting
except as otherwise provided by the Investment Company Act of 1940.
2.6 Action by Consent. Any action required or permitted to be taken at
any meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent of such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
Officers
3.1 Enumeration and Qualification. The officers of the Trust shall be
a President, a Treasurer, a Secretary and such other officers, including Vice
Presidents, if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from time to time may
in their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time. Vacancies in any office may be filled at
any time.
3.3 Tenure. The President, the Treasurer and the Secretary shall hold
office for one year and until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and each agent shall
retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as an Ohio
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 President. Unless the Trustees otherwise provide, the President,
or in the absence of the President, any Trustee chosen by the Trustees, shall
preside at all meetings of the shareholders and of the Trustees. The President
shall be the chief executive officer.
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3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the
absence of the Secretary from any meeting of the shareholders or Trustees,
an assistant secretary, or if there be none or if he or she is absent, a
temporary secretary chosen at such meeting shall record the proceedings
thereof in the aforesaid books.
3.8 Resignations and Removals. Any Trustee or officer may resign at
any time by written instrument signed by him or her and delivered to the
President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render reports at the
time and in the manner required by the Declaration of Trust or any applicable
law. Officers and Committees shall render such additional reports as they may
deem desirable or as may from time to time be required by the Trustees.
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ARTICLE 6
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed by, and
shall be subject to change by, the Trustees.
ARTICLE 7
Seal
7.1 General. If required by applicable law, the seal of the Trust
shall consist of a flat-faced die with the word "Ohio", together with the name
of the Trust and the year of its organization cut or engraved thereon, but,
unless otherwise required by the Trustees, the seal shall not be necessary to
be placed on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
8.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust, but shall state the substance of or make reference to the
provisions of Section 7.1 of the Declaration of Trust.
ARTICLE 9
Issuance of Share Certificates
9.1 Share Certificates. In lieu of issuing certificates for shares,
the Trustees or the transfer agent may either issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or a Vice-President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a transfer agent,
or by a registrar, other than a Trustee, officer or employee of the Trust. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were such
officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction
or the mutilation of a share certificate, a duplicate certificate may be issued
in place thereof, upon such terms as the Trustees shall prescribe.
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9.3 Issuance of New Certificate to Pledgee. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at
any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of share certificates to the
Trust for cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
ARTICLE 10
Custodian
10.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Five Hundred
Thousand ($500,000) Dollars as Custodian of the capital assets of the Trust. The
Custodian shall be compensated for its services by the Trust and upon such basis
as shall be agreed upon from time to time between the Trust and the Custodian.
ARTICLE 11
Dealings with Trustees and Officers
11.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which he is interested.
ARTICLE 12
Shareholders
12.1 Meetings. A meeting of the shareholders of the Trust shall be
held whenever called by the Trustees, whenever election of a Trustee or Trustees
by shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940 for that purpose or whenever otherwise required pursuant to
the Declaration of Trust. Any meeting shall be held on such day and at such time
as the President or the Trustees may fix in the notice of the meeting.
12.2 Record Dates. For the purpose of determining the shareholders who
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case only shareholders
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of record on such record date shall have such right, notwithstanding any
transfer of shares on the books of the Trust after the record date; or without
fixing such record date the Trustees may for any such purposes close the
register or transfer books for all or any part of such period.
ARTICLE 13
Amendments to the By-Laws
13.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
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MANAGEMENT AGREEMENT
TO: Heartland Advisory Group, Inc.
6230 Busch Blvd., Suite 201
Columbus, Ohio 43229
Dear Sirs:
The BSG Funds (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an
investment company. The Trust currently offers one series of shares to
investors: First American Bancshares Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all organizational and operating expenses of the
Fund, including the compensation and expenses of any employees of the Fund and
of any other persons rendering any services to the Fund; clerical and
shareholder service staff salaries; office space and other office expenses; fees
and expenses incurred by the Fund in connection with membership in investment
company organizations; legal, auditing and accounting expenses; expenses of
registering shares under federal and state securities laws, including expenses
incurred by the Fund in connection with the organization and initial
registration of shares of the Fund; insurance expenses; fees and expenses of the
custodian, transfer agent, dividend disbursing agent, shareholder service agent,
plan agent, administrator, accounting and pricing services agent and underwriter
of the Fund; expenses, including clerical expenses, of issue, sale, redemption
or repurchase of shares of the Fund; the cost of preparing and distributing
reports and notices to shareholders, the cost of printing or preparing
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prospectuses and statements of additional information for delivery to the Fund's
current and prospective shareholders; the cost of printing or preparing stock
certificates or any other documents, statements or reports to shareholders;
expenses of shareholders' meetings and proxy solicitations; advertising,
promotion and other expenses incurred directly or indirectly in connection with
the sale or distribution of the Fund's shares; and all other organizational and
operating expenses not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including litigation to
which the Fund may be a party and indemnification of the Trust's trustees and
officers with respect thereto. You may obtain reimbursement from the Fund, at
such time or times as you may determine in your sole discretion, for any of the
expenses advanced by you, which the Fund is obligated to pay, and such
reimbursement shall not be considered to be part of your compensation pursuant
to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be
made as provided in this Agreement, as of the last business day of each month,
the Fund will pay you a fee at the annual rate of 2.50% of the average value of
its daily net assets.
The average value of the daily net assets of the Fund shall
be determined pursuant to the applicable provisions of the Declaration of Trust
of the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
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accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Fund and to accounts over which you
exercise investment discretion. The Fund and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Fund's portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your officers,
partners, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee or
agent of you, who may be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a partner, officer, employee or agent of
you, or one under your control or direction, even though paid by you.
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6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution
by you, and shall remain in force for a period of two (2) years from the date of
its execution, and from year to year thereafter, subject to annual approval by
(i) the Board or (ii) a vote of a majority (as defined in the Investment Company
Act of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the names
"BSG" and "First American Bancshares" belong to you, and that the Trust is being
granted a limited license to use such words in its Trust name, in the Fund name
or in any class name. In the event you cease to be the adviser to the Fund, the
Trust's right to the use of the names "BSG", "First American Bancshares" and any
derivation thereof shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the names may also be withdrawn by
you during the term of this Agreement upon ninety (90) days' written notice by
you to the Trust. Nothing contained herein shall impair or diminish in any
respect, your right to use the names "BSG", "First American Bancshares" or any
derivation thereof in the name of, or in connection with, any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use the names.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
current interpretations of the Act by the Securities and Exchange Commission) by
vote of the holders of a majority of the outstanding voting securities of the
series to which the amendment relates.
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9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "The BSG Funds" means and refers to the Trustees
from time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the
State of Ohio.
(b) Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
6230 Busch Blvd., Suite 201, Columbus, Ohio 43229, and your address for this
purpose shall be 6230 Busch Blvd., Suite 201, Columbus, Ohio 43229.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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14. BINDING EFFECT
Each of the undersigned expressly warrants and represents
that he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST: THE BSG FUNDS
By /s/ Michael Guirlinger
Michael Guirlinger, President
Name/Title:_______________________ Dated: _________________, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: HEARTLAND ADVISORY GROUP, INC.
By /s/ Michael Guirlinger
Michael Guirlinger, President
Name/Title:_______________________ Dated: _________________, 1997
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BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
441 VINE STREET
J.W. BROWN (1911-1995) CINCINNATI, OHIO 45202
JAMES R. CUMMINS TELEPHONE (513) 381-2121
ROBERT S BROWN TELECOPIER (513) 381-2125
DONALD S. MENDELSOHN OF COUNSEL
LYNNE SKILKEN GILBERT BETTMAN
AMY G. APPLEGATE
KATHRYN KNUE PRZYWARA
MELANIE S. CORWIN
JEFFREY R. TEETERS
JOANN M. STRASSER
-------
February 19, 1997
The BSG Funds
6230 Busch Blvd., Suite 201
Columbus, Ohio 43215
Gentlemen:
This letter is in response to your request for our opinion in
connection with the filing of the Registration Statement of The BSG Funds
("BSG").
We have examined a copy of the Trust's Agreement and Declaration of
Trust, the Trust's By-Laws, the Trust's record of the various actions by the
Trustees thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereinafter expressed. We have assumed the genuineness
of the signatures and the conformity to original documents of the copies of such
documents supplied to us as original or photostat copies.
Based upon the foregoing, we are of the opinion that, after
registration is effective for purposes of federal and applicable state
securities laws, the shares of each series of the Trust, if issued in accordance
with the then current Prospectus and Statement of Additional Information of the
Trust, will be legally issued, fully paid and non-assessable.
We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
BROWN, CUMMINS & BROWN CO., L.P.A.
BCB:tms
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POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS:
WHEREAS, The BSG Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended, its
Registration Statement, and periodically file amendments to its Registration
Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints JAMES R.
CUMMINS and DONALD S. MENDELSOHN, and each of them, its attorneys for it and in
its name, place and stead, to execute and file such Registration Statement and
any Amendment or Amendments to the Trust's Registration Statement, hereby giving
and granting to said attorneys full power and authority to do and perform all
and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as it might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the Trust has caused its name to be subscribed
hereto by the President this 4th day of February, 1997.
ATTEST: The BSG Funds
/s/ Elise R. Hunter By: /s/ Michael E. Guirlinger
ELISE R. HUNTER, Secretary MICHAEL E. GUIRLINGER, President
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared MICHAEL E. GUIRLINGER, President and ELISE R. HUNTER,
Secretary, who represented that they are duly authorized in the premises, and
who are known to me to be the persons described in and who executed the
foregoing instrument, and they duly acknowledged to me that they executed and
delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 4th day of February 1997.
/s/ Sandra L. Quinn
Notary Public
Commission Expires: 1/21/2002
<PAGE>
CERTIFICATE
The undersigned, Secretary of The BSG Funds, hereby certifies that the
following resolution was duly adopted by a majority of the Board of Trustees by
Action by Unanimous Consent of Trustees dated February 4th, 1997, and is in full
force and effect:
"WHEREAS, The BSG Funds, a business trust organized under the
laws of the State of Ohio (hereinafter referred to as the
"Trust"), proposes to file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933
and the Investment Company Act of 1940, as amended, its
Registration Statement, and periodically file amendments to
its Registration Statement;
NOW, THEREFORE, the Trust hereby constitutes and appoints
JAMES R. CUMMINS and DONALD S. MENDELSOHN, and each of them,
its attorneys for it and in its name, place and stead, to
execute and file such Registration Statement and any Amendment
or Amendments to the Trust's Registration Statement, hereby
giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises
as fully to all intents and purposes as it might or could do
if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully
do or cause to be done by virtue hereof."
Dated: February 4, 1997 /s/Elise R. Hunter
Elise R. Hunter, Secretary
The BSG Funds
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, The BSG Funds, a business trust organized under the laws of
the State of Ohio (hereinafter referred to as the "Trust"), proposes to file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, as amended, its
Registration Statement, and periodically file amendments to its Registration
Statement; and
WHEREAS, the undersigned is a Trustee and the President and
Treasurer of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his office and capacity in the Trust, to
execute and file such Registration Statement and any Amendment or Amendments to
the Trust's Registration Statement, hereby giving and granting to said attorneys
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 4th
day of February, 1997.
/s/ Michael E. Guirlinger
MICHAEL E. GUIRLINGER, Trustee, President
and Treasurer
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared MICHAEL E. GUIRLINGER, known to me to be the person
described in and who executed the foregoing instrument, and who acknowledged to
me that he executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 4th day of February, 1997.
/s/ Sandra L. Quinn
Notary Public
Commissions Expires: 1/21/2002
