SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
---
Pre-Effective Amendment No. 1 / X /
Post-Effective Amendment No. _______ / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
---
Amendment No. 1 / X /
(Check appropriate box or boxes.)
The BSG Funds - File Nos. 333-22075 and 811-8061
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: May 7, 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)
/ / 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 ADDITIONAL
ITEM 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................................... Financial Statements
<PAGE>
FIRST AMERICAN BANCSHARES FUND
PROSPECTUS MAY ____, 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>
<CAPTION>
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
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 Load(2)...............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 Expenses(3).......................................0.00%
Total Fund Operating Expenses(4)........................................2.50%
<FN>
1 Processing organizations may impose transactional fees on shareholders.
2 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.
3 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.
4 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>
- 2 -
<PAGE>
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 $45 $96
at end of period
Assuming complete $75 $106
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
is expected to commence operations on July 3, 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
- 3 -
<PAGE>
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.
- 4 -
<PAGE>
<TABLE>
<S> <C>
U.S. mail: First American Bancshares Fund Overnight: First American Bancshares Fund
- --------- P.O. Box ______________ --------- c/o Star Bank, N.A
Cincinnati, Ohio 45264 Mutual Fund Custody Dept. .
425 Walnut St. M.L. 6118
Cincinnati, Ohio 45202
</TABLE>
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.
- 5 -
<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 #__________________________
Attn: First American Bancshares Fund
D.D.A. # ______________________
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.
- 6 -
<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
- 7 -
<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.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
<S> <C>
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
</TABLE>
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
- 8 -
<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
- 9 -
<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
- 10 -
<PAGE>
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's clients come from all walks
of life. Professionals such as CPA's, physicians, attorneys, pharmacists, and
academics are one group of investors. Significant numbers of investors also come
from the world of entrepreneurs: people who own funeral homes, machine shops,
lumber yards, quarry miners, and the like as well as members of the agricultural
grain and livestock community.
The Adviser typically follows from 150 to 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
- 11 -
<PAGE>
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
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 Fund also retains American Data Services, Inc., (the "Transfer Agent") to
serve as transfer agent, dividend paying agent and shareholder service agent.
For its services as Administrator and Transfer Agent, American Data Services,
Inc. receives a monthly fee from the Adviser equal to an annual average rate of
0.25% of the Fund's average daily net assets.
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 Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, dealers and other industry
professionals) a "servicing fee" for performing certain administrative functions
for the Fund shareholders to the extent these institutions are allowed to do so
by applicable statute, rule or regulation. 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
- 12 -
<PAGE>
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.
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. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. The Fund will not purchase any securities while borrowings
representing more than 5% of its total assets are outstanding.
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
- 13 -
<PAGE>
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.
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 the NASDAQ Combined Bank Index (the "Bank Index"), and the
performance of the Bank Index as well as the Fund may be compared to other
well-known indices of market performance including the Standard & Poor's (S&P)
500 Index or the Dow Jones Industrial Average. With respect to the Bank Index,
shareholders should be aware that the Fund invests in banks and other securities
that are not included in the Bank Index. The performance of the Bank Index
should not be considered indicative of future performance of the Fund.
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 AUDITORS
SUBSEQUENT PURCHASES) McCurdy & Associates CPA's, Inc.
Star Bank, N.A. 27955 Clemens Road
P.O. Box 641083 Westlake, Ohio 44145
Cincinnati, Ohio 45264
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,
- 14 -
<PAGE>
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.
- 15 -
<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
SUPPLEMENT DATED MAY ____, 1997
TO PROSPECTUS DATED MAY ____, 1997
SPECIAL OFFERING PERIOD: Investors may purchase shares of the First
American Bancshares Fund (the "Fund") without incurring any initial sales load
by subscribing for the purchase on or before July 3, 1997. To arrange for the
subscription and purchase, contact the Fund's distributor, Banc Stock Financial
Services, Inc. at 1-800-____-_______. All subscriptions for shares of the Fund
will be deposited in an interest-bearing escrow account. On July 3, 1997 each
subscriber's subscription amount, plus the pro rata share of the interest earned
in the escrow account, will be used to purchase full or fractional shares of the
Fund. The escrow account will be maintained with Star Bank, N.A., the Fund's
custodian. Shares purchased by subscription will be subject to the Fund's
minimum initial investment requirement, any applicable contingent deferred sales
load and will carry the same rights and privileges as shares purchased
subsequent to the special offering period.
This Supplement and the Prospectus dated May ____, 1997 provide 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 May ____,
1997, which is incorporated herein by reference and can be obtained without
charge by calling the distributor at the phone number listed above.
<PAGE>
FIRST AMERICAN BANCSHARES FUND
STATEMENT OF ADDITIONAL INFORMATION
May ____, 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 May ____, 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............................................. 6
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................. 7
DETERMINATION OF SHARE PRICE...................................... 9
INVESTMENT PERFORMANCE............................................ 9
CUSTODIAN.........................................................10
TRANSFER AGENT....................................................10
ACCOUNTANTS.......................................................10
DISTRIBUTOR.......................................................10
FINANCIAL STATEMENTS..............................................10
- i -
<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 securities sold
- 1 -
<PAGE>
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 negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities
- 2 -
<PAGE>
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 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).
- 3 -
<PAGE>
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
- 4 -
<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.
5. Loans. The Fund will not loan its portfolio securities.
6. Reverse Purchase Agreements. The Fund will not enter into reverse
repurchase agreements.
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 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.
- 5 -
<PAGE>
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.
<TABLE>
<S> <C> <C>
Name, Age Position Principal Occupations
and Address During Past 5 Years
- ----------- -------- ---------------------
Michael E. Guirlinger * Trustee, President and Director, president and treasurer of Heartland Advisory
Age: 49 Treasurer Group, Inc.; director, president and treasurer of The
6230 Busch Blvd., Suite 201 Banc Stock Group; director, vice president and treasurer
Columbus, Ohio 43229 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, Inc.**
Age: 43 Prior to 1995, compliance administrator of VESTAX
6230 Busch Blvd., Suite 201 Securities Corp, 1932 Georgetown Rd., Hudson, Ohio
Columbus, Ohio 43229 44256.
Robert W. Klockars Trustee President and CEO of The Vasa Group, Inc., a bank
Age: 50 consulting organization, 6364 Briarcliff Lane, Middleton,
6364 Briarcliff Lane Wisconsin, from 1990 to the present. From 1989 to
Middleton, Wisconsin 53562 1997, Vice president and director of Graduate School of
Banking, 5315 Wall St., Madison, Wisconsin.
Virginia H. Rader Trustee Retired.
Age: 50
600 Fairway Blvd.
Columbus, Ohio 43215
Gary A. Radville Trustee Chief Financial Officer of Peer Foods, Inc., 4631 S.
Age: 39 McDowell St., Chicago, Illinois. Prior to 1996,
4631 S. McDowell St. Partner, Price Waterhouse, 200 E. Randolph St.,
Chicago, Illinois 60609 Chicago, Illinois.
</TABLE>
Trustee fees are Trust expenses. The following table estimates the
Trustees' compensation for the first full year of the Trust ending February 28,
1998.
<TABLE>
<S> <C>
Total Compensation
from Trust (the Trust is
Name not in a Fund Complex)
---- ------------------------
Michael E. Guirlinger 0
Lisa R. Hunter 0
Robert W. Klockars $4,000
Virginia H. Rader $4,000
Gary A. Radville $4,000
<FN>
** Banc Stock Financial Services, Inc. is the Trust's principal underwriter
(the "Distributor"). The Adviser and The Banc Stock Group are affiliates of the
Distributor.
</FN>
</TABLE>
- 6 -
<PAGE>
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 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
- 7 -
<PAGE>
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 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
- 8 -
<PAGE>
(including the Fund) may also be blocked with those of the Adviser, the
Distributor or any of their affiliates. The Adviser, the Distributor and their
affiliates 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 charges 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:
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.
- 9 -
<PAGE>
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 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 February 28, 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.
FINANCIAL STATEMENTS
- 10 -
<PAGE>
To The Shareholders and Trustees
The BSG Funds
We have audited the accompanying statement of assets and liabili ties of The BSG
Funds (comprising, respectively, the First American Bancshares Fund), as of
April 22, 1997. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of April 22, 1997, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the First
American Bancshares Fund constituting The BSG Funds as of April 22, 1997, in
conformity with generally accepted accounting principles.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
April 22, 1997
<PAGE>
<TABLE>
<CAPTION>
THE BSG FUNDS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 22, 1997
<S> <C>
First American
Bancshares Fund
---------------
ASSETS: $100,000
--------
Cash in Bank
Total Assets $100,000
--------
NET ASSETS $100,000
--------
NET ASSETS CONSIST OF:
Capital Paid In $100,000
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value 10,000
NET ASSET VALUE PER SHARE $10
OFFERING PRICE PER SHARE $10
</TABLE>
See Accountants' Audit Report
<PAGE>
THE BSG FUNDS
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The BSG Funds 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 permits the Trustees to issue an unlimited number of shares
of beneficial interest of separate series without par value. Shares of one
series have been authorized, which shares constitute the interests in First
American Bancshares Fund.
The Fund uses an independent administrator, transfer agent, custodian, and
dividend paying agent. No transactions other than those relating to
organizational matters and the sale of 10,000 shares of First American
Bancshares Fund have taken place to date.
2. RELATED PARTY TRANSACTIONS
The initial purchase of registrant's shares was made by Heartland Advisory
Group, Inc., the Fund's adviser (the "Adviser"). As a result of this
purchase, the registrant may be controlled by the Adviser, and the
registrant and the Adviser may be deemed to be under the common control of
Heartland Group of Companies, Inc.
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.
3. CAPITAL STOCK AND DISTRIBUTION
At April 22, 1997, an unlimited number of shares were authorized and paid in
capital amounted to $100,000 for First American Bancshares Fund.
Transactions in capital stock were as follows:
<TABLE>
<S> <C>
First American
Bancshares Fund
---------------
Shares Sold 10,000
Shares Redeemed 0
Net Increase 10,000
Share Outstanding:
Beginning of Period 0
End of Period 10,000
</TABLE>
<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:
Statement of Assets and Liabilities as of April 22,
1997 and Report of Independent Public Accountants for the
First American Bancshares Fund.
(b) Exhibits
(1) (i) Copy of Registrant's Declaration of Trust, which was
filed as an Exhibit to Registrant's Registration
Statement, is hereby incorporated by reference.
(ii) Copy of Amendment No. 1 to Registrant's Declaration
of Trust is filed herewith.
(2) Copy of Registrant's By-Laws, which was filed as
an Exhibit to Registrant's Registration Statement, is
hereby incorporated by reference.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificates - None.
(5) Copy of Registrant's Management Agreement with its
Adviser, Heartland Advisory Group, Inc. is filed herewith.
(6) Copy of Registrant's Underwriting Agreement with Banc
Stock Financial Services, Inc. is filed herewith.
(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, Star
Bank, N.A., is filed herewith.
(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 is filed
herewith.
-1-
<PAGE>
(12) Financial Statements Omitted from Item 23 - None.
(13) Copy of Letter of Initial Stockholder is filed
herewith.
(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) Powers of Attorney for Trustee and Registrant and
Certificate with respect thereto, which was filed as an
Exhibit to Registrant's Registration Statement, is
hereby incorporated by reference.
(ii) Powers of Attorney for Trustees and Officers are filed
herewith.
Item 25. Persons Controlled by or Under Common Control with the Registrant
The initial purchase of the Registrant's shares was made by the
Registrant's adviser, Heartland Advisory Group, Inc. ("HAG"). As a
result, the Registrant may be controlled by or under common control
with HAG and Banc Stock Financial Services, Inc., the Registrant's
underwriter (both of which are Ohio corporations and wholly owned
subsidiaries of the Heartland Group of Companies, Inc.)
Item 26. Number of Holders of Securities (as of April 22, 1997)
Title of Class Number of Record Holders
-------------- ------------------------
First American Bancshares Fund 1
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 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
-2-
<PAGE>
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.
(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.
-3-
<PAGE>
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; director, president and
treasurer of The Banc Stock Exchange of America,
Inc. ("BSE") [a bank stock information service],
6230 Busch Blvd., Suite 201, Columbus, Ohio;
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 43229 and/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.
-4-
<PAGE>
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 5th day of May,
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, Treasurer and Trustee By: /s/ Donald S. Mendelsohn
Donald S. Mendelsohn,
Lisa R. Hunter, Trustee Attorney-in-Fact
Robert W. Klockars, Trustee May 5, 1997
Virginia H. Rader, Trustee
Gary A. Radville, Trustee
-6-
<PAGE>
EXHIBIT INDEX
-------------
PAGE
----
1. Amendment No. 1 to Declaration of Trust.......................EX-99.B1
2. Management Agreement..........................................EX-99.B5
3. Underwriting Agreement........................................EX-99.B6
4. Custody Agreement.............................................EX-99.B8
5. Opinion of Brown, Cummins & Brown Co., L.P.A..................EX-99.B10
6. Consent of McCurdy & Associates...............................EX-99.B11
7. Letter of Initial Stockholder.................................EX-99.B13
8. Powers of Attorney............................................EX-99.POA
-7-
Amendment No. 1
DECLARATION OF TRUST
OF
THE BSG FUNDS
1. Pursuant to Sections 4.2 and 7.3 of the Declaration of Trust of The
BSG Funds and effective upon execution of this document, the undersigned, being
the sole Trustee of the Trust, hereby consents to the name change of the "Select
American Bancshares Fund" to the "First American Bancshares Fund".
2. This document shall have the status of an Amendment to said
Declaration of Trust.
/s/ Michael B. Guirlinger, Trustee
Michael B. Guirlinger, Trustee
Dated: March 18, 1997
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
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.
<PAGE>
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
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
- 2 -
<PAGE>
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.
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
- 3 -
<PAGE>
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.
9. NON-EXCLUSIVITY
Nothing in this Agreement shall prevent you or any of your affiliated persons
(as defined in the Investment Company Act of 1940) from providing advisory
services to any other person, firm or entity (including other investment
companies); provided, however, that you expressly represent that you will
undertake no activities which, in your reasonable judgment, will adversely
affect the performance of your obligations under this agreement.
- 4 -
<PAGE>
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
- 5 -
<PAGE>
15. 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.
16. 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, President
/s/ Lisa R. Hunter, Secretary Michael Guirlinger, President
Name/Title: Lisa R. Hunter, Secretary Dated: May 1, 1997
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATTEST: HEARTLAND ADVISORY GROUP, INC.
By /s/ Michael Guirlinger, President
/s/ Sandra L. Quinn, Secretary Michael Guirlinger, President
Name/Title: Sandra L. Quinn, Secretary Dated: May 1, 1997
- 6 -
UNDERWRITING AGREEMENT
THIS AGREEMENT is made as of May 1, 1997, by and between The BSG
Funds, an Ohio business trust (the "Trust"), and Banc Stock Financial Services,
Inc., an Ohio corporation ("Underwriter").
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of the First American Bancshares Fund series of shares
of the Trust (the "Series").
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment. The Trust hereby appoints Underwriter as its exclusive
agent for the distribution of the Shares, and Underwriter hereby accepts such
appointment under the terms of this Agreement. While this Agreement is in force,
the Trust shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of any Series whenever, in its sole
discretion, it deems such action to be desirable.
<PAGE>
2. Sale and Repurchase of Shares.
(a) Underwriter will have the right, as agent for the Trust,
to enter into dealer agreements with registered and qualified dealers, and to
sell Shares to such dealers against orders therefor at the public offering price
(as defined in subparagraph 2(e) hereof) less a discount determined by
Underwriter, which discount shall not exceed the amount of the sales charge
stated in the Trust's effective Registration Statement on Form N-1A under the
Securities Act of 1933, as amended, including the then current prospectus and
statement of additional information (the "Registration Statement"). Upon receipt
of an order to purchase Shares from a dealer with whom Underwriter has a dealer
agreement, Underwriter will promptly cause such order to be filled by the Trust.
(b) Underwriter will have the right, as agent for the Trust,
to sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right, as agent for the
Trust, to sell Shares at their net asset value to such persons as may be
approved by the Trustees of the Trust, all such sales to comply with the
provisions of the Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
(d) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
(e) The public offering price for the Shares of each Series
(and, with respect to each Series offering multiple classes of Shares, the
Shares of each Class of such Series) shall be the respective net asset value of
the Shares of that Series (or Class of that Series) then in effect, plus any
applicable sales charge determined in the manner set forth in the Registration
Statement or as permitted by the Act and the rules and regulations of the
Securities and Exchange Commission
- 2 -
<PAGE>
promulgated thereunder. In no event shall any applicable sales charge
exceed the maximum sales charge permitted by the Rules of Fair Practice of the
NASD.
(f) The net asset value of the Shares of each Series (or Class
of a Series) shall be determined in the manner provided in the Registration
Statement, and when determined shall be applicable to transactions as provided
for in the Registration Statement. The net asset value of the Shares of each
Series (or each Class of a Series) shall be calculated by the Trust or by
another entity on behalf of the Trust. Underwriter shall have no duty to inquire
into or liability for the accuracy of the net asset value per share as
calculated.
(g) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the third
business day following the date on which Underwriter shall have received an
order for the purchase of the Shares. Underwriter shall have the right to retain
the sales charge less any applicable dealer discount.
(h) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
(i) As additional compensation for its activities under this
Agreement, the Underwriter shall receive all contingent deferred sales charges
imposed on redemptions, if any. Whether and at what rate a contingent deferred
sales charge will be imposed with respect to a redemption shall be determined in
accordance with, and in the manner set forth in, the Registration Statement.
(j) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided,
- 3 -
<PAGE>
however, that Underwriter expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the performance of its
obligations to the Trust under this Agreement.
(k) Underwriter, as agent of and for the account of the Trust,
may repurchase the Shares at such prices and upon such terms and conditions as
shall be specified in the Registration Statement. Such price shall reflect the
subtraction of the contingent deferred sales charge, if any, computed in
accordance with and in the manner set forth in the Registration Statement. At
the end of each business day, the Underwriter shall notify the Trust and the
Trust's transfer agent of the number of shares redeemed, and the identity of the
shareholders or dealers offering Shares for repurchase. Upon such notice, the
Trust shall pay the Underwriter the net asset value of the redeemed shares in
cash or in the form of a credit against monies due the Trust from the
Underwriter as proceeds from the sale of Shares. The Trust reserves the right to
suspend such repurchase right upon written notice to the Underwriter. The
Underwriter further agrees to act as agent for the Trust to receive and transmit
promptly to the Trust's transfer agent, shareholder and dealer requests for
redemption of Shares.
3. Sales of Shares by the Trust. The Trust reserves the right to issue
any Shares at any time directly to the holders of Shares ("Shareholders"), to
sell Shares to its Shareholders or to other persons approved by Underwriter at
not less than net asset value and to issue Shares in exchange for substantially
all the assets of any corporation or trust or for the shares of any corporation
or trust.
4. Basis of Sale of Shares. Underwriter does not agree to sell any
specific number of Shares. Underwriter, as agent for the Trust, undertakes to
sell Shares on a best efforts basis only against orders therefor.
5. Compliance with NASD and Government Rules.
(a) Underwriter will conform to the Rules of Fair Practice of
the NASD and the securities laws of any jurisdiction in which it sells, directly
or indirectly, any Shares.
- 4 -
<PAGE>
(b) Underwriter, at its own expense, will pay the costs
incurred in establishing and maintaining its relationship with the dealers
selling the Shares. Underwriter will require each dealer with whom Underwriter
has a dealer agreement to conform to the applicable provisions hereof and the
Registration Statement, and neither Underwriter nor any such dealers shall
withhold the placing of purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable State or federal laws required in
order that Shares may be sold in such States as may be mutually agreed upon by
the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and statement of additional information covering
the Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Trust. The Trust shall furnish to
Underwriter copies of all information, financial statements and other papers
which Underwriter may reasonably request for use in connection with the
distribution of the Shares, and this shall include, but shall not be limited to,
one certified copy, upon request by Underwriter, of all financial statements
prepared for the Trust by independent public accountants.
- 5 -
<PAGE>
7. Expenses to be Borne by Trust. The Trust will bear the following
expenses:
(a) preparation, setting in type, printing of sufficient
copies of the prospectus and statement of additional information for
distribution to shareholders, and the distribution to shareholders of the
prospectus and statement of additional information;
(b) preparation, printing and distribution of reports and
other communications to shareholders;
(c) registration of the Shares under the federal securities
law;
(d) qualification of the Shares for sale in the
jurisdictions designated byU nderwriter;
(e) qualification of the Trust as a dealer or broker under
the laws of jurisdictions designated by Underwriter as well as qualification of
the Trust to do business in any jurisdiction, if Underwriter determines that
such qualification is necessary or desirable for the purpose of facilitating
sales of the Shares;
(f) maintaining facilities for the issue and transfer of the
Shares;
(g) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and
(h) any original issue taxes or transfer taxes applicable to
the sale or delivery of the Shares of certificates therefor.
8. Services to and Actions for Trust, Not Underwriter. Any person,
even though also a director, officer, employee, shareholder or agent of
Underwriter, who may be or become an officer, 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
Underwriter's duties hereunder), to be rendering such services to or acting
solely for the Trust and not as a
- 6 -
<PAGE>
director, officer, employee, shareholder or agent, or one under the control or
direction of Underwriter, even though paid by it.
9. Indemnification.
(a) The Trust agrees to indemnify, defend and hold the
Underwriter, its officers, directors, employees, shareholders and agents, and
any person who controls the Underwriter within the meaning of Section 15 of the
1933 Act (hereinafter referred to as "Covered Person"), free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which a Covered Person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any untrue statement of a material fact or alleged untrue statement of a
material fact contained in the Registration Statement or arising out of or based
upon any omission or alleged omission to state a material fact required to be
stated in the Registration Statement or necessary to make the statements therein
not misleading, except insofar as such claims, demands, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing by the Underwriter to the Trust for use in the
Registration Statement; provided, however, that this indemnity agreement shall
not inure to the benefit of any person who is also an officer or trustee of the
Trust or who controls the Trust within the meaning of Section 15 of the 1933
Act, unless a court of competent jurisdiction shall determine, or it shall have
been determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act; and further provided, that in no
event shall anything contained herein be so construed as to protect the
Underwriter against any liability to the Trust or to the shareholders of any
Series to which the Underwriter would otherwise be subject by reason of willful
misfeasance,
- 7 -
<PAGE>
bad faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations under this Agreement.
(b) The Underwriter agrees to indemnify, defend, and hold the
Trust, its officers, trustees, employees, shareholders and agents, and any
person who controls the Trust within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending against such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Trust, its trustees, officers, employees, shareholders and agents, or
any such controlling person may incur under the 1933 Act or under common law or
otherwise arising out of or based upon any untrue statement of a material fact
or alleged untrue statement of a material fact contained in information
furnished in writing by the Underwriter to the Trust for use in the Registration
Statement, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement necessary to make such information not misleading.
(c) A party seeking indemnification hereunder (the
"Indemnitee") shall give prompt written notice to the party from whom
indemnification is sought ("Indemnitor") of a written assertion or claim of any
threatened or pending legal proceeding which may be subject to indemnity under
this Section; provided, however, that failure to notify the Indemnitor of such
written assertion or claim shall not relieve the Indemnitor of any liability
arising from this Section. The Indemnitor shall be entitled, if it so elects, to
assume the defense of any suit brought to enforce a claim subject to this
Agreement and such defense shall be conducted by counsel chosen by the
Indemnitor and satisfactory to the Indemnitee; provided, however, that if the
defendants include both the Indemnitee and the Indemnitor, and the Indemnitee
shall have reasonably concluded that there
- 8 -
<PAGE>
may be one or more legal defenses available to it which are different from or
additional to those available to the Indemnitor ("conflict of interest"), the
Indemnitor shall not have the right to elect to defend such claim on behalf of
the Indemnitee, and the Indemnitee shall have the right to select separate
counsel to defend such claim on behalf of the Indemnitee. In the event that the
Indemnitor elects to assume the defense of any suit pursuant to the preceding
sentence and retains counsel satisfactory to the Indemnitee, the Indemnitee
shall bear the fees and expenses of additional counsel retained by it except for
reasonable investigation costs which shall be borne by the Indemnitor. If the
Indemnitor (i) does not elect to assume the defense of a claim, (ii) elects to
assume the defense of a claim but chooses counsel that is not satisfactory to
the Indemnitee or (iii) has no right to assume the defense of a claim because of
a conflict of interest, the Indemnitor shall advance or reimburse the
Indemnitee, at the election of the Indemnitee, reasonable fees and disbursements
of any counsel retained by Indemnitee, including reasonable investigation costs.
10. Advances of Expenses. The Trust shall advance attorneys' fees or
other expenses incurred by a Covered Person in defending a proceeding only to
the extent permitted by the 1933 Act and the Act.
11. Termination and Amendment of this Agreement. This Agreement shall
automatically terminate, without the payment of any penalty, in the event of its
assignment. This Agreement may be amended only if such amendment is approved (i)
by Underwriter, (ii) either by action of the Board of Trustees of the Trust or
at a meeting of the Shareholders of the Trust by the affirmative vote of a
majority of the outstanding Shares, and (iii) by a majority of the Trustees of
the Trust who are not interested persons of the Trust or of Underwriter, by vote
cast in person at a meeting called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this Agreement on
sixty (60) days' written notice delivered or mailed by registered mail, postage
prepaid, to the other party.
- 9 -
<PAGE>
12. Effective Period of this Agreement. This Agreement shall take
effect upon its execution and shall remain in full force and effect for a period
of two years from the date of its execution (unless terminated automatically as
set forth in Paragraph 11, and from year to year thereafter), subject to annual
approval (i) by Underwriter, (ii) by the Board of Trustees of the Trust or a
vote of a majority of the outstanding Shares, and (iii) by a majority of the
Trustees of the Trust who are not interested persons of the Trust or of
Underwriter, by vote cast in person at a meeting called for the purpose of
voting on such approval.
13. Limitation of Trust's Liability. 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 the 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 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 State of Ohio.
14. New Series. The terms and provisions of this Agreement shall
become automatically applicable to any additional series of the Trust
established during the initial or renewal term of this Agreement.
15. Successor Investment Company. Unless this Agreement has been
terminated in accordance with Paragraph 11, the terms and provisions of this
Agreement shall become
- 10 -
<PAGE>
automatically applicable to any investment company which is a successor to the
Trust as a result of a reorganization, recapitalization or change of domicile.
16. 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.
17. 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 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.
18. 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 for this purpose the
address of the Trust shall be 6230 Busch Boulevard, Suite 201, Columbus, Ohio
43229 and of the Underwriter shall be 6230 Busch Boulevard, Suite 201, Columbus,
Ohio 43229.
19. Counterparts. This Agreement may be 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.
- 11 -
<PAGE>
20. 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.
21. Force Majeure. If Underwriter shall be delayed in its performance
of services or prevented entirely or in part from performing services due to
causes or events beyond its control, including and without limitation, acts of
God, interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
- 12 -
<PAGE>
IN WITNESS WHEREOF, the Trust and Underwriter have each caused this
Agreement to be signed on its behalf, all as of the day and year first above
written.
ATTEST: The BSG Funds
/s/ Lisa R. Hunter, Secretary By: /s/ Michael E. Guirlinger
Lisa R. Hunter, Secretary President
Michael E. Guirlinger, President
ATTEST: BANC STOCK FINANCIAL SERVICES, INC.
/s/ Sandra L. Quinn, Secretary By: /s/ Michael E. Guirlinger,
Sandra L. Quinn, Secretary Vice President
Michael E. Guirlinger,
Vice President
- 13 -
CUSTODY AGREEMENT
BETWEEN
STAR BANK, N.A.
AND
The BSG Funds
<PAGE>
TABLE OF CONTENTS
Definitions............................................................. 1
ARTICLE II - Appointment; Acceptence; and Furnishing of Documents
II. A. Appointment of Custodian......................................... 5
II. B. Acceptance of Custodian.......................................... 5
II. C. Documents to be Furnished........................................ 5
II. D. Notice of Appointment of Dividend and Transfer Agent............. 5
ARTICLE III - Receipt of Trust Assets
III. A. Delivery of Moneys.............................................. 6
III. B. Delivery of Securities.......................................... 6
III. C. Payments for Shares............................................. 6
III. D. Duties Upon Receipt............................................. 6
ARTICLE IV - Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust................................ 7
IV. B. Segregation of Redemption Proceeds............................... 7
IV. C. Disbursements of Custodian....................................... 8
IV. D. Payment of Custodian Fees........................................ 8
ARTICLE V - Custody of Trust Assets
V. A. Separate Accounts for Each Fund................................... 8
V. B. Segregation of Non-Cash Assets.................................... 9
V. C. Securities in Bearer and Registered Form.......................... 9
V. D. Duties of Custodian as to Securities.............................. 9
V. E. Certain Actions Upon Written Instructions......................... 10
V. F. Custodian to Deliver Proxy Materials.............................. 11
V. G. Custodian to Deliver Tender Offer Information..................... 11
V. H. Custodian to Deliver Security and Transaction Information......... 11
ARTICLE VI - Purchase and Sale of Securities
VI. A. Purchase of Securities........................................... 12
VI. B. Sale of Securities............................................... 13
VI. C. Delivery Versus Payment for Purchases and Sales.................. 14
VI. D. Payment on Settlement Date....................................... 14
VI. E. Segregated Accounts.............................................. 15
VI. F. Advances for Settlement.......................................... 16
ARTICLE VII - Trust Indebtedness
VII. A. Borrowings...................................................... 17
VII. B. Advances........................................................ 18
- - i -
<PAGE>
ARTICLE VIII - Concerning the Custodian
VIII. A. Limitations on Liability of Custodian.......................... 18
VIII. B. Actions not Required by Custodian.............................. 20
VIII. C. No Duty to Collect Amounts Due From Dividend
and Transfer Agent.......................................... 21
VIII. D. No Enforcement Actions......................................... 21
VIII. E. Authority to Use Agents and Sub-Custodians..................... 21
VIII. F. No Duty to Supervise Investments............................... 22
VIII. G. All Records Confidential....................................... 22
VIII. H. Compensation of Custodian...................................... 22
VIII. I. Reliance Upon Instructions..................................... 23
VIII. J. Books and Records.............................................. 23
VIII. K. Internal Accounting Control Systems............................ 24
VIII. L. No Management of Assets by Custodian........................... 24
VIII. M. Assistance to Trust............................................ 24
ARTICLE IX - Termination
IX. A. Termination...................................................... 26
IX. B. Failure to Designate Successor Trustee........................... 27
ARTICLE X - Force Majeure
ARTICLE XI - Miscellaneous
XI. A. Designation of Authorized Persons................................ 28
XI. B. Limitation of Personal Liability................................. 28
XI. C. Authorization By Board........................................... 28
XI. D. Custodian's Consent to Use of Its Name........................... 29
XI. E. Notices to Custodian............................................. 29
XI. F. Notices to Trust................................................. 29
XI. G. Amendments In Writing............................................ 29
XI. H. Successors and Assigns........................................... 30
XI. I. Governing Law.................................................... 30
XI. J. Jurisdiction..................................................... 30
XI. K. Counterparts..................................................... 30
XI. L. Headings............................................................ 30
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the 5th day of
May, 1997, by and between the BSG Funds, an Ohio business trust (the "Trust")
and Star Bank, National Association, (the "Custodian"), a national banking
association having its principal office at 425 Walnut Street, Cincinnati, Ohio,
45202.
WHEREAS, the Trust and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Trust
as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
Definitions
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended.
1934 Act - the Securities and Exchange Act of 1934, as amended.
Authorized Person - any person, whether or not any such person is an
officer or employee of the Trust, who is duly authorized by the Board of
Trustees of the Trust to give Oral Instructions and Written Instructions on
behalf of the Trust or any Fund, and named in Appendix A attached hereto and as
amended from time to time by resolution of the Board of Trustees, certified by
an Officer, and received by the Custodian.
- 1 -
<PAGE>
Board of Trustees - the Trustees from time to time serving under the
Trust's Agreement and Declaration of Trust, as from time to time amended.
Book-Entry System - a federal book-entry system as provided in Subpart
O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or
in such book-entry regulations of federal agencies as are substantially in the
form of Subpart O.
Business Day - any day recognized as a settlement day by The New York
Stock Exchange, Inc. and any other day for which the Trust computes the net
asset value of Shares of any fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s). Depository shall include any
other clearing agency registered with the SEC under Section 17A of the 1934 Act
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities provided that the Custodian
shall have received a copy of a resolution of the Board of Trustees, certified
by an Officer, specifically approving the use of such clearing agency as a
depository for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Trust.
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or
- 2 -
<PAGE>
agency thereof, or by any entity organized under the laws of the United
States or of any state thereof, which have been issued and sold primarily
outside of the United States.
Fund - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
Oral Instructions - instructions orally transmitted to and received by
the Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
- 3 -
<PAGE>
Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the Trust's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets, including
securities of any registered investment company, that the Custodian has the
facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the units of beneficial interest
issued by the Trust on account of such Fund.
Trust - the business trust organized under the laws of Ohio which is an
open-end diversified management investment company registered under the Act.
Written Instructions - communications in writing actually received by
the Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Board of Trustees and the resolution is certified by an Officer
- 4 -
<PAGE>
and delivered to the Custodian). All written communications shall be directed
to the Custodian, attention: Mutual Fund Custody Department.
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
II. A. Appointment of Custodian. The Trust hereby constitutes and
appoints the Custodian as custodian of all Securities and cash owned by the
Trust at any time during the term of this Agreement.
II. B. Acceptance of Custodian. The Custodian hereby accepts
appointment as such custodian and agrees to perform the duties thereof as
hereinafter set forth.
II. C. Documents to be Furnished. The following documents, including
any amendments thereto, will be provided contemporaneously with the execution of
the Agreement, to the Custodian by the Trust:
1. A copy of the Declaration of Trust of the Trust certified
by the Secretary.
2. A copy of the By-Laws of the Trust certified by the
Secretary.
3. A copy of the resolution of the Board of Trustees of the
Trust appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Trust
setting forth the names and signatures of all Authorized
Persons.
II. D. Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent.
- 5 -
<PAGE>
ARTICLE III
Receipt of Trust Assets
III. A. Delivery of Moneys. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all moneys to be
held by the Custodian for the account of any Fund. The Custodian shall be
entitled to reverse any deposits made on any Fund's behalf where such deposits
have been entered and moneys are not finally collected within 30 days of the
making of such entry.
III. B. Delivery of Securities. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all Securities to
be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian. The Custodian is hereby authorized by the
Trust, acting on behalf of the Fund, to actually deposit any assets of the Fund
in the Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Trust for the assets of the Fund so
deposited. Assets deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
III. C. Payments for Shares. As and when received, the Custodian shall
deposit to the account(s) of a Fund any and all payments for Shares of that Fund
issued or sold from time to time as they are received from the Trust's
distributor or Dividend and Transfer Agent or from the Trust itself.
- 6 -
<PAGE>
III. D. Duties Upon Receipt. The Custodian shall not be responsible for
any Securities, moneys or other assets of any Fund until actually received.
ARTICLE IV
Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust. The Trust shall furnish to
the Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary, either (i) setting forth the date of the
declaration of any dividend or distribution in respect of Shares of any Fund of
the Trust, the date of payment thereof, the record date as of which the Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date, or (ii) authorizing
the declaration of dividends and distributions in respect of Shares of a Fund on
a daily basis and authorizing the Custodian to rely on Written Instructions
setting forth the date of the declaration of any such dividend or distribution,
the date of payment thereof, the record date as of which the Fund shareholders
entitled to payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date, and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
- 7 -
<PAGE>
IV. B. Segregation of Redemption Proceeds. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption proceeds to be made by the Dividend and Transfer
Agent from moneys held for the account of the Fund so that they are available
for such payment.
IV. C. Disbursements of Custodian. Upon receipt of a Certificate
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
IV. D. Payment of Custodian Fees. Upon receipt of Written Instructions
directing payment, the Custodian shall disburse moneys from the assets of the
Trust in payment of the Custodian's fees and expenses as provided in Article
VIII hereof.
ARTICLE V
Custody of Trust Assets
V. A. Separate Accounts for Each Fund. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian
- - 8 -
<PAGE>
on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
V. B. Segregation of Non-Cash Assets. All Securities and non-cash
property held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
V. C. Securities in Bearer and Registered Form. All Securities held
which are issued or issuable only in bearer form, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Custodian, any sub-custodian appointed in accordance with this
Agreement, or the nominee of any of them. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold, or deliver in
proper form for transfer, any Securities that it may hold for the account of any
Fund and which may, from time to time, be registered in the name of a Fund.
V. D. Duties of Custodian as to Securities. Unless otherwise instructed
by the Trust, with respect to all Securities held for the Trust, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix D):
1.) Collect all income due and payable with respect to such
Securities;
- 9 -
<PAGE>
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
3.) Surrender interim receipts or Securities in temporary form
for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws
or the laws or regulations of any other taxing authority,
including any foreign taxing authority, now or hereafter
in effect.
V. E. Certain Actions Upon Written Instructions. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be designated in
such Written Instructions proxies, consents, authorizations,
and any other instruments whereby the authority of the Trust
as beneficial owner of any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or
recapitalization of any corporation, or the exercise of any
conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with
the reorganization, refinancing, merger, consolidation,
recapitalization, or sale of assets of any
- 10 -
<PAGE>
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery;
4.) Make such transfers or exchanges of the assets of any Fund and
take such other steps as shall be stated in the Written
Instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Trust; and
5.) Deliver any Securities held for any Fund to the depository
agent for tender or other similar offers.
V. F. Custodian to Deliver Proxy Materials. The Custodian shall
promptly deliver to the Trust all notices, proxy material and executed but
unvoted proxies pertaining to shareholder meetings of Securities held by any
Fund. The Custodian shall not vote or authorize the voting of any Securities or
give any consent, waiver or approval with respect thereto unless so directed by
Written Instructions.
V. G. Custodian to Deliver Tender Offer Information. The Custodian
shall promptly deliver to the Trust all information received by the Custodian
and pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix D. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the
- 11 -
<PAGE>
Custodian all relevant information for any Security which has unique put/option
provisions at least five Business Days prior to the beginning date of the
tender period.
V. H. Custodian to Deliver Security and Transaction Information. On
each Business Day that the Federal Reserve Bank is open, the Custodian shall
furnish the Trust with a detailed statement of monies held for the Fund under
this Agreement and with confirmations and a summary of all transfers to or from
the account of the Fund. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the Securities held for the
Fund under this Agreement. Where Securities are transferred to the account of
the Fund without physical delivery, the Custodian shall also identify as
belonging to the Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
With respect to information provided by this section, it shall not be necessary
for the Custodian to provide notice as described by Article XI Section F.
Notices to Trust; it shall be sufficient to communicate by such means as shall
be mutually agreeable to the Trust and the Custodian.
ARTICLE VI
Purchase and Sale of Securities
VI. A. Purchase of Securities. Promptly after each purchase of
Securities by the Trust, the Trust shall deliver to the Custodian (i) with
respect to each purchase of Securities which are not Money Market Securities,
Written Instructions, and (ii) with respect to each purchase of Money Market
Securities, Proper Instructions, specifying with respect to each such purchase
the;
1.) name of the issuer and the title of the Securities,
- 12 -
<PAGE>
2.) the number of shares, principal amount purchased (and
accrued interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through which,
the purchase was made,
7.) the name of the person to whom such amount is payable, and
8.) the Fund for which the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for
the Trust, pay out of the moneys held for the account of such Fund the total
amount specified in the Written Instructions, or Oral Instructions, if
applicable, to the person named therein. The Custodian shall not be under any
obligation to pay out moneys to cover the cost of a purchase of Securities for a
Fund, if in the relevant Fund custody account there is insufficient cash
available to the Fund for which such purchase was made. With respect to any
repurchase agreement transaction for the Funds, the Custodian shall assure that
the collateral reflected on the transaction advice is received by the Custodian.
VI. B. Sale of Securities. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
- 13 -
<PAGE>
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through which,
the sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
specified in the Written Instructions, or Oral Instructions, if applicable.
VI. C. Delivery Versus Payment for Purchases and Sales. Purchases and
sales of Securities effected by the Custodian will be made on a delivery versus
payment basis. The Custodian may, in its sole discretion, upon receipt of
Written Instructions, elect to settle a purchase or sale transaction in some
other manner, but only upon receipt of acceptable indemnification from the Fund.
VI. D. Payment on Settlement Date. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery.
VI. E. Segregated Accounts. The Custodian shall, upon receipt of Proper
Instructions so directing it, establish and maintain a segregated account or
accounts for and on behalf of a Fund.
- 14 -
<PAGE>
Cash and/or Securities may be transferred into such account or accounts for
specific purposes, to-wit:
1.) in accordance with the provision of any agreement among the Trust,
the Custodian, and a broker-dealer registered under the 1934 Act,
and also a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to
compliance with the rules of the Options Clearing Corporation and
of any registered national securities exchange, the Commodity
Futures Trading Commission, any registered contract market, or any
similar organization or organizations requiring escrow or other
similar arrangements in connection with transactions by the Fund;
2.) for purposes of segregating cash or Securities in connection with
options purchased, sold, or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the
Fund;
3.) for the purpose of compliance by the Fund with the procedures
required for reverse repurchase agreements, firm commitment
agreements, standby commitment agreements, short sales, or any
other securities by Act Release No. 10666, or any subsequent
release or releases or rule of the SEC relating to the maintenance
of segregated accounts by registered investment companies;
4.) for the purpose of segregating collateral for loans of Securities
made by the Fund; and
- 15 -
<PAGE>
5.) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a copy of a resolution of the
Board of Trustees, certified by an Officer, setting forth the
purposes of such segregated account.
Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
VI. F. Advances for Settlement. Except as otherwise may be agreed upon
by the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
- 16 -
<PAGE>
ARTICLE VII
Trust Indebtedness
VII. A. Borrowings. In connection with any borrowings by the Trust, the
Trust will cause to be delivered to the Custodian by a bank or broker requiring
Securities as collateral for such borrowings (including the Custodian if the
borrowing is from the Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of collateral. The
Trust shall promptly deliver to the Custodian Written Instructions specifying
with respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the Trust, or a loan
agreement, (c) the date, and time if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Trust on the borrowing date, and (f) the description of
the Securities securing the loan, including the name of the issuer, the title
and the number of shares or other units or the principal amount. The Custodian
shall deliver on the borrowing date specified in the Written Instructions the
required collateral against the lender's delivery of the total loan amount then
payable, provided that the same conforms to that which is described in the
Written Instructions. The Custodian shall deliver, in the manner directed by the
Trust, such Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
- 17 -
<PAGE>
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
VII. B. Advances. With respect to any advances of cash made by the
Custodian to or for the benefit of a Fund for any purpose which results in the
Fund incurring an overdraft at the end of any Business Day, such advance shall
be repayable immediately upon demand made by the Custodian at any time.
ARTICLE VIII
Concerning the Custodian
VIII. A. Limitations on Liability of Custodian. Except as otherwise
provided herein, the Custodian shall not be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its negligence or
willful misconduct. The Trust, on behalf of the Fund and only from assets of the
Fund (or insurance purchased by the Trust with respect to its liabilities on
behalf of the Fund hereunder), shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Trust's duties hereunder or any other
action or inaction of the Trust or its Trustees, officers, employees or agents,
except such as may arise from the negligent action, omission, willful misconduct
or breach of this Agreement by the Custodian, its directors, officers, employees
or agents. The Custodian shall defend,
- 18 -
<PAGE>
indemnify and hold harmless the Trust and its trustees, officers, employees or
agents with respect to any loss, claim, liability or cost (including reasonable
attorneys' fees) arising or alleged to arise from or relating to the Custodian's
duties as specifically set forth in this agreement with respect to the Fund
hereunder or any other action or inaction of the Custodian or its directors,
officers, employees, agents, nominees, or Sub-Custodians as to the Fund, except
such as may arise from the negligent action, omission or willful misconduct of
the Trust, its trustees, officers, employees, or agents. The Custodian may, with
respect to questions of law apply for and obtain the advice and opinion of
counsel to the Trust at the expense of the Fund, or of its own counsel at its
own expense, and shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with the advice or opinion of counsel
to the Trust, and shall be similarly protected with respect to anything done or
omitted by it in good faith in conformity with advice or opinion of its counsel,
unless counsel to the Fund shall, within a reasonable time after being notified
of legal advice received by the Custodian, have a differing interpretation of
such question of law. The Custodian shall be liable to the Trust for any
proximate loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance or misconduct on the
part of the Custodian or any of its employees, agents, nominees or
Sub-Custodians, but not for any special, incidental, consequential, or punitive
damages; provided, however, that nothing contained herein shall preclude
recovery by the Trust, on behalf of the Fund, of principal and of interest to
the date of recovery on Securities incorrectly omitted from the Fund's account
or penalties imposed on the Trust, in connection with the Fund, for any failures
to deliver Securities.
- 19 -
<PAGE>
In any case in which one party hereto may be asked to indemnify the other or
hold the other harmless, the party from whom indemnification is sought (the
"Indemnifying Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party against
any claim which may be the subject of the indemnification, and in the event the
Indemnifying Party so elects, such defense shall be conducted by counsel chosen
by the Indemnifying Party and satisfactory to the Indemnified Party and the
Indemnifying Party will so notify the Indemnified Party and thereupon such
Indemnifying Party shall take over the complete defense of the claim and the
Indemnifying Party shall sustain no further legal or other expenses in such
situation for which indemnification has been sought under this paragraph, except
the expenses of any additional counsel retained by the Indemnified Party. In no
case shall any party claiming the right to indemnification confess any claim or
make any compromise in any case in which the other party has been asked to
indemnify such party (unless such confession or compromise is made with such
other party's prior written consent. The provisions of this section VIII. A.
shall survive the termination of this Agreement.
VIII. B. Actions not Required by Custodian. Without limiting the
generality of the foregoing, the Custodian, acting in the capacity of Custodian
hereunder, shall be under no obligation to inquire into, and shall not be liable
for:
- - 20 -
<PAGE>
1.) The validity of the issue of any Securities purchased by or for
the account of any Fund, the legality of the purchase thereof, or
the propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the account
of any Fund, or the propriety of the amount for which the same
are sold;
3.) The legality of the issue or sale of any Shares of any Fund, or
the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any Shares of any Fund, or the
propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend by the
Trust in respect of Shares of any Fund;
6.) The legality of any borrowing by the Trust on behalf of the Trust
or any Fund, using Securities as collateral;
7.) Whether the Trust or a Fund is in compliance with the 1940 Act,
the regulations thereunder, the provisions of the Trust's charter
documents or by-laws, or its investment objectives and policies
as then in effect.
VIII. C. No Duty to Collect Amounts Due From Dividend and Transfer
Agent. The Custodian shall not be under any duty or obligation to take action to
effect collection of any amount due to the Trust from any Dividend and Transfer
Agent of the Trust nor to take any action to effect payment or distribution by
any Dividend and Transfer Agent of the Trust of any amount paid by the Custodian
to any Dividend and Transfer Agent of the Trust in accordance with this
Agreement.
- 21 -
<PAGE>
VIII. D. No Enforcement Actions. Notwithstanding Section D of Article
V, the Custodian shall not be under any duty or obligation to take action, by
legal means or otherwise, to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if payment is refused after
due demand or presentation, unless and until (i) it shall be directed to take
such action by Written Instructions and (ii) it shall be assured to its
satisfaction (including prepayment thereof) of reimbursement of its costs and
expenses in connection with any such action.
VIII. E. Authority to Use Agents and Sub-Custodians. The Trust
acknowledges and hereby authorizes the Custodian to hold Securities through its
various agents described in Appendix C annexed hereto. In addition, the Trust
acknowledges that the Custodian may appoint one or more financial institutions,
as agent or agents or as sub-custodian or sub-custodians, including, but not
limited to, banking institutions located in foreign countries, for the purpose
of holding Securities and moneys at any time owned by the Fund. The Custodian
shall not be relieved of any obligation or liability under this Agreement in
connection with the appointment or activities of such agents or sub-custodians.
Any such agent or sub-custodian shall be qualified to serve as such for assets
of investment companies registered under the Act. The Funds shall reimburse the
Custodian for all costs incurred by the Custodian in connection with opening
accounts with any such agents or sub-custodians. Upon request, the Custodian
shall promptly forward to the Trust any documents it receives from any agent or
sub-custodian appointed hereunder which may assist trustees of registered
investment companies to fulfill their responsibilities under Rule 17f-5 of the
Act.
- 22 -
<PAGE>
VIII. F. No Duty to Supervise Investments. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Trust are such as properly may
be held by the Trust under the provisions of the Declaration of Trust and the
Trust's By-Laws.
VIII. G. All Records Confidential. The Custodian shall treat all
records and other information relating to the Trust and the assets of all Funds
as confidential and shall not disclose any such records or information to any
other person unless (i) the Trust shall have consented thereto in writing or
(ii) such disclosure is compelled by law.
VIII. H. Compensation of Custodian. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian, for the Fund's account
from the Fund's assets only, such compensation as shall be determined pursuant
to Appendix E attached hereto, or as shall be determined pursuant to amendments
to Appendix E as approved by the Custodian and the Trust. The Custodian shall be
entitled to charge against any money held by it for the accounts of the Fund the
amount of any loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement as determined by agreement of the Custodian and the Trust or by the
final order of any court or arbitrator having jurisdiction and as to which all
rights of appeal shall have expired. The expenses which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
agents or Sub-Custodians incurred in settling transactions involving the
purchase and sale of Securities of the Fund.
VIII. I. Reliance Upon Instructions. The Custodian shall be entitled to
rely upon any Proper Instructions if such reliance is made in good faith. The
Trust agrees to forward to the
- 23 -
<PAGE>
Custodian Written Instructions confirming Oral Instructions in such a
manner so that such Written Instructions are received by the Custodian, whether
by hand delivery, telex, facsimile or otherwise, on the same Business Day on
which such Oral Instructions were given. The Trust agrees that the failure of
the Custodian to receive such confirming instructions shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Trust. The Trust agrees that the Custodian shall incur no
liability to the Trust for acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions.
VIII. J. Books and Records. The Custodian will (i) set up and maintain
proper books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
VIII. K. Internal Accounting Control Systems. The Custodian shall send
to the Trust any report received on the systems of internal accounting control
of the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
VIII. L. No Management of Assets by Custodian. The Custodian performs
only the services of a custodian and shall have no responsibility for the
management, investment or reinvestment of the Securities or other assets from
time to time owned by any Fund. The Custodian is not a selling agent for Shares
of any Fund and performance of its duties as custodian
- 24 -
<PAGE>
shall not be deemed to be a recommendation to any Fund's depositors or
others of Shares of the Fund as an investment. The Custodian shall have no
duties or obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
VIII. M. Assistance to Trust. The Custodian shall take all reasonable
action, that the Trust may from time to time request, to assist the Trust in
obtaining favorable opinions from the Trust's independent accountants, with
respect to the Custodian's activities hereunder, in connection with the
preparation of the Fund's Form N- IA, Form N-SAR, or other annual reports to the
SEC.
VIII. N. Grant of Security Interest. The Trust hereby pledges to and
grants the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Fund to the Custodian for money borrowed from
the Custodian. This pledge is in addition to any other pledge of collateral by
the Trust to the Custodian.
ARTICLE IX
Termination
IX. A. Termination. Either party hereto may terminate this Agreement
for any reason by giving to the other party a notice in writing specifying the
date of such termination, which shall be not less than ninety (90) days after
the date of giving of such notice. If such notice is given by the Trust, it
shall be accompanied by a copy of a resolution of the Board of Trustees of the
Trust, certified by the Secretary of the Trust, electing to terminate this
Agreement and designating a successor custodian or custodians each of which
shall be a bank or trust
- 25 -
<PAGE>
company having not less than $100,000,000 aggregate capital, surplus, and
undivided profits. In the event such notice is given by the Custodian, the Trust
shall, on or before the termination date, deliver to the Custodian a copy of a
resolution of the Board of Trustees of the Trust, certified by the Secretary,
designating a successor custodian or custodians to act on behalf of the Trust.
In the absence of such designation by the Trust, the Custodian may designate a
successor custodian which shall be a bank or trust company having not less than
$100,000,000 aggregate capital, surplus, and undivided profits. Upon the date
set forth in such notice this Agreement shall terminate, and the Custodian,
provided that it has received a notice of acceptance by the successor custodian,
shall deliver, on that date, directly to the successor custodian all Securities
and monies then owned by the Fund and held by it as Custodian. Upon termination
of this Agreement, the Trust shall pay to the Custodian on behalf of the Trust
such compensation as may be due as of the date of such termination. The Trust
agrees on behalf of the Trust that the Custodian shall be reimbursed for its
reasonable costs in connection with the termination of this Agreement.
IX. B. Failure to Designate Successor Trustee. If a successor custodian
is not designated by the Trust, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will not serve, the
Trust shall, upon the delivery by the Custodian to the Trust of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Trust) and moneys then owned by the Trust, be deemed to be the custodian
for the Trust, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System,
- 26 -
<PAGE>
which cannot be delivered to the Trust, which shall be held by the Custodian
in accordance with this Agreement.
ARTICLE X
Force Majeure
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; labor
disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided,
however, that the Custodian, in the event of a failure or delay, shall use its
best efforts to ameliorate the effects of any such failure or delay.
ARTICLE XI
Miscellaneous
XI. A. Designation of Authorized Persons. Appendix A sets forth the
names and the signatures of all Authorized Persons as of this date, as certified
by the Secretary of the Trust. The Trust agrees to furnish to the Custodian a
new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new Appendix
A shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement
- 27 -
<PAGE>
upon Oral Instructions or signatures of the then current Authorized Persons
as set forth in the last delivered Appendix A.
XI. B. Limitation of Personal Liability. No recourse under any
obligation of this Agreement or for any claim based thereon shall be had against
any organizer, shareholder, officer, trustee, past, present or future as such,
of the Trust or of any predecessor or successor, either directly or through the
Trust or any such predecessor or successor, whether by virtue of any
constitution, statute or rule of law or equity, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and the obligations thereunder are enforceable solely
against the assets of the Trust, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the organizers, shareholders,
officers, or trustees of the Trust or of any predecessor or successor, or any of
them as such, because of the obligations contained in this Agreement or implied
therefrom and that any and all such liability is hereby expressly waived and
released by the Custodian as a condition of, and as a consideration for, the
execution of this Agreement.
XI. C. Authorization By Board. The obligations set forth in this
Agreement as having been made by the Trust have been made by the Board of
Trustees, acting as such Trustees for and on behalf of the Trust, pursuant to
the authority vested in them under the laws of the State of Ohio, the
Declaration of Trust and the By-Laws of the Trust. This Agreement has been
executed by Officers of the Trust as officers, and not individually, and the
obligations contained herein are not binding upon any of the Trustees, Officers,
agents or holders of shares, personally, but bind only the Trust and then only
to the extent of the assets of the Trust.
- 28 -
<PAGE>
XI. D. Custodian's Consent to Use of Its Name. The Trust shall obtain
the Custodian's consent prior to the publication and/or dissemination or
distribution, of the Prospectus and any other documents (including advertising
material) specifically mentioning the Custodian (other than merely by name and
address).
XI. E. Notices to Custodian. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at Star Bank Center, 425 Walnut .Street, M. L. 6118, Cincinnati,
Ohio 45202, attention Mutual Fund Custody Department, or at such other place as
the Custodian may from time to time designate in writing.
XI. F. Notices to Trust. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 6230 Busch Boulevard, Suite 201,
Columbus, Ohio 43215 or at such other place as the Trust may from time to time
designate in writing.
XI. G. Amendments In Writing. This Agreement, with the exception of the
Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
XI. H. Successors and Assigns. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Trust or
by the Custodian, and no attempted
- 29 -
<PAGE>
assignment by the Trust or the Custodian shall be effective without the
written consent of the other party hereto.
XI. I. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
XI. J. Jurisdiction. Any legal action, suit or proceeding to be
instituted by either party with respect to this Agreement shall be brought by
such party exclusively in the courts of the State of Ohio or in the courts of
the United States for the Southern District of Ohio, and each party, by its
execution of this Agreement, irrevocably (i) submits to such jurisdiction and
(ii) consents to the service of any process or pleadings by first class U.S.
mail, postage prepaid and return receipt requested, or by any other means from
time to time authorized by the laws of such jurisdiction.
XI. K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
XI. L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
- 30 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: TRUST:
The BSG Funds
By:________________________
Title:_______________________
ATTEST: CUSTODIAN:
Star Bank, N.A.
By:_________________________
Title:_______________________
- 31 -
<PAGE>
APPENDIX A
Authorized Persons Specimen Signatures
Chairman: ------------------ -------------------
President: ------------------ -------------------
Secretary: ------------------ -------------------
Treasurer: ------------------ -------------------
Senior Vice
President: ------------------ -------------------
Assistant
Secretary: ------------------ -------------------
Assistant
Treasurer: ------------------ -------------------
Adviser Employees: ------------------ -------------------
Transfer Agent/
Trust Accountant
Employees: ------------------ -------------------
------------------ -------------------
------------------ -------------------
------------------ -------------------
* Authority restricted; does not include:
- -----------------------------------------------------------------------------
- 32 -
<PAGE>
APPENDIX B
1. First American Bancshares Fund
- 33 -
<PAGE>
APPENDIX C
Agents of the Custodian
The following agents are employed currently by Star Bank, N.A. for
securities processing and control ...
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible Securities)
- 34 -
<PAGE>
APPENDIX D
Standards of Service Guide
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to compete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers
Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal.
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond
Source, Kenny Information Systems, Standard & Poor's Corporation, and DTC
Important Notices. Star Bank will not notify clients of optional put
opportunities.
Any securities delivered free to Star Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Star Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide is subject
to change. Should any changes be made Star Bank will provide you with an updated
copy of its Standards of Service Guide.
- 35 -
<PAGE>
<TABLE>
<CAPTION>
STAR BANK SECURITY SETTLEMENT STANDARDS
<S> <C> <C>
Transaction Type Instructions Deadlines* Delivery Instructions
- ------------------- --------------------------- --------------------------------
DTC - Clearing House Funds 11:00 A.M. on Settlement Date DTC Participant #2219
For Account#_____________
DTC - Same Day
Funds Settlement 12:30 P.M. on Settlement Date DTC Participant #2219
For Account #____________
Federal Reserve Bank of Cinti/Trust
Federal Reserve Book Entry 1:00 P.M. on Settlement Date for Star Bank, N.A. ABA# 042000013
For Account #_____________
Federal Reserve Book Entry
(Repurchase Agreement Federal Reserve Bank of Cinti/Spec
Collateral Only) 1:00 P.M. on Settlement Date for Star Bank, N.A. ABA# 042000013
For Account #_____________
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BTRST/CUST
(GNMA Book Entry) (for Deliveries by minus 1 Sub Account: Star Bank, N.A. #090334
5:00 P.M. on Settlement Date
10:00 A.M. EST on Settlement Date Bankers Trust Company
Physical Securities (for Deliveries, by 4:00 P.M.
on Settlement Date 16 Wall Street 4th Floor, Window 43
minus 1) for Star Bank Account #090334
Bankers Trust Company
CEDEL/EURO-CLEAR 4:00 P.M. on Settlement Date Euroclear # 91648
minus 3 For Star Bank Account #090334
Cash Wire Transfer 3:00 P.M. Star Bank,N.A. Cinti/Trust ABA# 042000013
Credit Account #9901877
Further Credit to ___________
Account # _______________
<FN>
* All times listed are Cincinnati time.
</FN>
</TABLE>
- 36 -
<PAGE>
<TABLE>
<CAPTION>
STAR BANK PAYMENT STANDARDS
<S> <C> <C>
Security Type Income Principal
- ----------------------------------------------- -------------------------- -------------------------
Equities Payable Date + 1
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date + 1 Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
CMOs *
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 2 Payable Date + 2
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date + 1 Payable Date + 1
Certificates of Deposit* Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entr Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 2 Payable Date + 2
<FN>
NOTE: If a payable date falls on a weekend or bank holiday, payment will be
made on the immediately following business day.
</FN>
</TABLE>
- 37 -
<PAGE>
<TABLE>
<CAPTION>
STAR BANK CORPORATE REORGANIZATION STANDARDS
<S> <C> <C> <C>
Deadline for Client Transaction
Type of Action Notification to Client Instructions
to Star Bank Posting
- ----------------------------------- ------------------------------------------- --------------------------- ----------------
Rights, Warrants, Later of 10 business days prior to 5 business days prior Upon receipt
and Optional Mergers expiration or receipt of notice to expiration
Mandatory Puts with Later of 10 business days prior to 5 business days prior Upon receipt
Option to Retain expiration or receipt of notice to expiration
Class Actions 10 business days prior to expiration date 5 business days prior Upon receipt
to expiration
Voluntary Tenders,
Exchanges, Later of 10 business days prior to 5 business days prior Upon receipt
and Conversions expiration or receipt of notice to expiration
Mandatory Puts, Defaults,
Liquidations, Bankruptcies,
Stock Splits, Mandatory At posting of funds or securities received None Upon receipt
Exchanges
Full and Partial Calls Later of 10 business days prior to None Upon receipt
expiration or receipt of notice
<FN>
NOTE: Fractional shares/par amounts resulting from any of the above
will be sold.
</FN>
</TABLE>
- 38 -
BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J. W. BROWN (1911-1995) 441 VINE STREET
JAMES R. CUMMINS CINCINNATI, OHIO 45202
ROBERT S BROWN TELEPHONE (513) 381-2121 OF COUNSEL
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 GILBERT BETTMAN
LYNNE SKILKEN
AMY G. APPLEGATE
KATHRYN KNUE PRZYWARA
MELANIE S. CORWIN
JOANN M. STRASSER
February 21, 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 Pre-Effective Amendment No. 1 of The BSG Funds
(the "Trust").
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 Pre-Effective Amendment No.
1 referred to above.
Very truly yours,
/s/ Brown, Cummins & Brown CO., L.P.A.
BROWN, CUMMINS & BROWN CO., L.P.A.
BCB:tms
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, were hereby consent to the use in
this Pre-Effective Amendment No. 1 to the Registration Statement for The BSG
Funds of all references to our firm included in or made a part of this
Amendment.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
April 22, 1997
April 24, 1997
The BSG Funds
6230 Busch Boulevard
Suite 201
Columbus, Ohio 43229
Gentlemen:
The undersigned hereby purchases 10,000 shares of the First American
Bancshares Fund at $10.00 per share, representing a total investment of
$100,000.00 in the shares of the series of The BSG Funds. The undersigned hereby
represents that (i) such purchase is for investment purposes, and (ii) the
undersigned has no present intention of redeeming or selling said shares.
Heartland Advisory Group, Inc.
By: /s/ Michael E. Guirlinger, President
Michael E. Guirlinger, President
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,
Pre-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee and the Secretary of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, her attorneys for her and
in her name, place and stead, and in her capacity in the Trust, to execute and
file such Pre-Effective Amendment, 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 she 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 her hand this 30th
day of April, 1997.
/s/ Lisa R. Hunter, Trustee and
Secretary
LISA R. HUNTER, Trustee and Secretary
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared LISA R. HUNTER, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that she
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 30th day of April, 1997.
/s/ Sandra L. Quinn
Notary Public
My commission expires: January 21, 2002
<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,
Pre-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, her attorneys for her and
in her name, place and stead, and in her capacity in the Trust, to execute and
file such Pre-Effective Amendment, 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 she 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 her hand this 24th
day of April, 1997.
/s/ Virginia H. Rader, Trustee
VIRGINIA H. RADER, Trustee
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared VIRGINIA H. RADER, known to me to be the person described in
and who executed the foregoing instrument, and who acknowledged to me that she
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 24th day of April, 1997.
/s/ JoAnn M. Strasser
Notary Public
My commission has no expiration date
<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,
Pre-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee 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 capacity in the Trust, to execute and
file such Pre-Effective Amendment, 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 24th
day of April, 1997.
/s/ Robert W. Klockars, Trustee
ROBERT W. KLOCKARS, Trustee
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared ROBERT W. KLOCKARS, 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 24th day of April, 1997.
/s/ JoAnn M. Strasser
Notary Public
My commission has no expiration date
<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,
Pre-Effective Amendment No. 1 to its Registration Statement; and
WHEREAS, the undersigned is a Trustee 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 capacity in the Trust, to execute and
file such Pre-Effective Amendment, 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 24th
day of April, 1997.
/s/ Gary A. Radville, Trustee
GARY A. RADVILLE, Trustee
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared GARY A. RADVILLE, 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 24th day of April, 1997.
/s/ JoAnn M. Strasser
Notary Public
My commission has no expiration date
