SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
THE BSG FUNDS
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(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
THE BSG FUNDS
1105 SCHROCK ROAD
SUITE 437
COLUMBUS, OHIO 43229
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY ___, 1999
Dear Shareholders:
The Board of Trustees of The BSG Funds (the "Trust"), an open-end management
investment company organized as an Ohio business trust, has called a special
meeting of the shareholders of Banc Stock Group Fund (the "Fund") to be held at
__________________on __________, February ___, 1999 at _____ a.m., Eastern
Standard Time, for the following purposes:
I. Approval of a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended; and
II. Approval of a new Management Agreement between the Trust and
Heartland Advisory Group, Inc.; and
III. Ratification of the selection of McCurdy & Associates CPA's,
Inc. as the independent accountants for the Trust for the
fiscal year ending February 28, 2000; and
IV. Transaction of such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record of the Funds at the close of business on
February _____, 1999 are entitled to notice of, and to vote at, the special
meeting and any adjournment(s) or postponement(s) thereof.
By Order of the Board of Trustees
LISA R. HUNTER
Secretary
Columbus, Ohio
February __, 1999
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU EXPECT
TO BE PRESENT AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
THE BSG FUNDS
1105 SCHROCK ROAD
SUITE 437
COLUMBUS, OHIO 43229
------------
PROXY STATEMENT
------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY __, 1999
------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of The BSG Funds (the "Trust"), on behalf of
Banc Stock Group Fund (the "Fund") for use at the Special Meeting of
Shareholders of the Fund (the "Meeting") to be held at
_________________________on February ___, 1999 at _____ a.m., Eastern Standard
Time, and at any and all adjournments thereof. The Notice of Meeting, Proxy
Statement and accompanying form of proxy will first be mailed to shareholders on
or about February _____, 1999.
THE PROXY
The Board of Trustees solicits proxies so that every shareholder may
vote on the proposals to be considered at the Meeting. A proxy card for voting
your shares is enclosed. The shares represented by each valid proxy received in
time will be voted at the meeting as specified in the proxy. If no specification
is made, the shares represented by a duly executed proxy will be voted:
I. For approval of the Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended; and
II. For approval of the new Management Agreement between the Trust and
Heartland Advisory Group, Inc.; and
III. For the ratification of the selection of McCurdy & Associates
CPA's, Inc, as independent accountants for the Trust for the
fiscal year ending February 28, 2000; and
IV. At the discretion of the proxy holders on any other matter that
may come before the meeting.
You may revoke your proxy at any time before it is exercised by signing
and delivering a subsequently dated proxy card, by sending written notice to the
President of the Trust revoking your proxy or by attending and voting in person
at the Meeting. The solicitation of proxies will occur primarily by mail but
also may include telephone or oral communications by regular employees of
Heartland Advisory Group, Inc., the Fund's investment adviser (the "Adviser").
PROPOSALS
I. APPROVAL OF DISTRIBUTION PLAN
Recently, the Fund has been sold most successfully through
broker/dealers and other financial intermediaries who have been attracted to the
Fund's unique investment strategy and who have been able to explain the strategy
and its benefits to their customers. The Board of Trustees believes that the
Fund's interests will be best served by continued asset growth and that the most
promising source of that growth is expanded third party distribution. The Board
of Trustees also believes that present limitations on the Fund's ability to
access third party distribution channels will limit future growth and that it is
important to adopt policies that promote continued asset growth of the Fund.
A mutual fund can pay its own distribution expenses under a
distribution plan which conforms to Rule 12b-1 of the 1940 Act. Such plans have
become common among mutual funds. Under existing arrangements, third parties
have been compensated for their sales efforts by the Adviser, out of its own
resources, and not by the Fund. Management of the Fund believes that third
parties will be more likely to sell shares of the Fund if they are paid 12b-1
fees pursuant to a distribution plan because they are more accustomed to that
type of payment structure. Further, Management believes that an expanded third
<PAGE>
party distribution system will result in increased Fund sales which will
facilitate more efficient portfolio management.
The Trustees believe that a Distribution Plan would significantly
enhance the Fund's ability to expand distribution and thereby allow more
efficient management of the Fund's portfolio. Therefore, the Trustees are
strongly recommending that the Fund adopt the proposed Distribution Plan (the
"Distribution Plan"), under which the Fund will pay its own distribution
expenses.
In conjunction with the Distribution Plan, the Trustees and the Adviser
have proposed that the Trust enter into a new Management Agreement with the
Adviser (the "New Agreement") whereby the Adviser will no longer pay the Fund's
distribution expenses. To offset the shift of distribution expenses from the
Adviser to the Fund, the Adviser has agreed to lower its management fee by
0.25%, the amount of the proposed 12b-1 fee. THEREFORE, THE EXPENSES TO
SHAREHOLDERS WILL NOT INCREASE IF THE PLAN IS ADOPTED. Significant provisions of
the Plan are summarized below; however, this summary is qualified in its
entirety by reference to the Distribution Plan, a copy of which is attached
hereto as Appendix A.
PROPOSED DISTRIBUTION ARRANGEMENTS
----------------------------------
The Distribution Plan permits the Fund to engage, directly or
indirectly, in any activity related to the distribution of its shares. These
activities may include, but are not limited to, the following: (a) payments,
including incentive compensation, to securities dealers or other financial
intermediaries, financial institutions, investment advisors and others that are
engaged in the sale of shares, or that may be advising shareholders of the Trust
regarding the purchase, sale or retention of shares; (b) expenses of maintaining
personnel (including personnel of organizations with which the Trust has entered
into agreements related to the Distribution Plan) who engage in or support
distribution of shares; (c) costs of preparing, printing and distributing
prospectuses and statements of additional information and reports of the Fund
for recipients other than existing shareholders of the Fund; (d) costs of
formulating and implementing marketing and promotional activities, including,
but not limited to, sales seminars, direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising; (e) costs of
preparing, printing and distributing sales literature; and (f) costs of
implementing and operating the Distribution Plan.
Under the Distribution Plan, the Fund would pay the Adviser 0.25% of
the Funds' average daily net assets for all distribution related services and
expenses. The Adviser has agreed to lower its fee by 0.25% if the Plan is
adopted. THEREFORE, IF THE DISTRIBUTION PLAN IS IMPLEMENTED, THE EXPENSES TO
SHAREHOLDERS OF THE FUND WILL NOT INCREASE. Michael E.Guirlinger and Lisa R.
Hunter, trustees of the Trust, may benefit indirectly from payments received by
the Adviser under the Distribution Plan because of their relationships with the
Adviser and its affiliates. Mr. Guirlinger is an executive officer of the
Adviser and Ms. Hunter is an executive officer of an affiliate of the Adviser.
The Distribution Plan does not obligate the Fund to reimburse the
Adviser for the expenses that the Adviser may incur in connection with the sales
and promotion of the Fund. Thus, under the Distribution Plan, even if the
Adviser's expenses for distributing the shares exceed the fee payable by the
Fund, the Fund would not be obligated to pay more than that fee. Conversely,
although it is not expected to be the case in the foreseeable future, if the
Adviser's expenses are less than the fee it receives, the Adviser would retain
the full amount of the fee and thereby realize a profit. The 12b-1 fee would be
paid by the Fund to the Adviser unless and until the Distribution Plan is
terminated or not renewed. In any event, any distribution or service expenses
incurred by the Adviser in excess of the 12b-1 fee payments it has received or
accrued through the termination date would be the sole responsibility and
liability of the Adviser and would not be obligations of the Fund.
Among other things, the Distribution Plan also provides that (1) at
least quarterly, the Treasurer of the Trust will submit to the Trust's Board of
Trustees, and the trustees will review, reports regarding all amounts expended
under the Distribution Plan and the purposes for which such expenditures were
made, (2) the Distribution Plan and any related agreements will continue in
effect only so long as they are approved at least annually by the Trust's Board
of Trustees, as well as by the Qualified Trustees, acting in person at a meeting
called for that purpose, (3) payments by the Fund under the Distribution Plan
shall not be materially increased without the affirmative vote of the holders of
a majority of the applicable class of shares, and (4) while the Distribution
Plan remains in effect, the selection and nomination of trustees who are not
"interested persons" of the Trust shall be committed to the discretion of the
trustees who are not interested persons of the Trust.
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<PAGE>
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES.
--------------------------------------------
On January 20, 1999, the Trust's Board of Trustees, by unanimous vote
of both the full Board and those trustees who have no financial interest in the
operation of the Distribution Plan or any agreement related thereto ("Qualified
Trustees"), approved the Distribution Plan.
Prior to approving the Distribution Plan, the trustees were provided
with detailed information relating thereto. Among other things, the trustees
considered information relating to the merits of certain possible alternatives
to the Distribution Plan, the potential costs and benefits of the Distribution
Plan to shareholders, the compensation that the Adviser would receive from the
Fund, including the 12b-1 fees, and the likelihood that the Distribution Plan
would succeed in producing its intended results.
The trustees also considered the benefits to shareholders of growth of
Fund assets. In particular, the trustees noted that an increase in the size of
the Fund will facilitate more efficient portfolio management and assist the Fund
in seeking to achieve its investment objective. The trustees also noted that
increases in Fund assets would enable the Adviser to further diversify the
Fund's portfolio by investing in stocks of more issuers. In addition, the
Adviser indicated to the trustees that it would strongly consider future
reductions in fees, thereby reducing the Fund's expense ratio, if the Adviser is
able to realize economies of scale as a result of such growth.
In approving the Distribution Plan, the trustees considered the methods
of distribution of Fund shares and discussed the likelihood of growth of the
Fund without a Distribution Plan. The trustees also considered the features of
the proposed distribution system with respect to the Fund, including (1) the
current distribution expenses paid by the Adviser, (2) management's belief that
the Distribution Plan expenditures would be attractive to the broker/dealers and
other third party distribution channels, resulting in greater growth of the Fund
than might otherwise be the case, (3) the Fund's estimated expenses and costs
under the Distribution Plan, and (4) the anticipated benefits of the
Distribution Plan, including more efficient portfolio management and possible
reductions in the Fund's expense ratio.
In particular, the trustees concluded that it was likely that the
Distribution Plan would enable the Fund to increase its assets and provide the
anticipated benefits to the Fund and its shareholders. The trustees also
considered, as discussed above, (i) that the Adviser agreed to lower its fee by
the amount of the Distribution Plan so that shareholder expenses would not
increase as a result of its adoption and (ii) although there is no assurance,
that the Adviser may reduce its fees if it achieves sufficient economies of
scale.
Following their consideration, the trustees, including the Qualified
Trustees, concluded that the fees payable by the Fund under the Distribution
Plan were reasonable, in view of the services that would be provided by the
Adviser and the anticipated benefits of the Distribution Plan, and that the
Distribution Plan would provide the needed flexibility to the Adviser in its
distribution efforts. The trustees, including a majority of the Qualified
Trustees, determined that approval of the Distribution Plan would be in the best
interests of the Fund and would have a reasonable likelihood of benefiting the
Fund and its shareholders, once approved. Accordingly, the Board of Trustees
unanimously approved the Distribution Plan.
RECOMMENDATION OF THE BOARD OF TRUSTEES.
----------------------------------------
For the above mentioned reasons, the Board of Trustees recommends that
the shareholders of the Fund vote FOR the Distribution Plan. The Distribution
Plan will be effective only if the shareholder also approve the new Management
Agreement (Proposal II). If both the Distribution Plan and Proposal II are not
approved by the shareholders, the Board will take such action as is necessary or
appropriate in the best interest of the shareholders, subject to legal
requirements.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" PROPOSAL I.
II. APPROVAL OF MANAGEMENT AGREEMENT
The current Management Agreement between the Trust and Heartland
Advisory Group, Inc. was approved by shareholders on April 24, 1997 (the
"Current Agreement"). Under the Current Agreement, the Fund pays the Adviser an
annual fee of 2.50% of its average daily net assets. The Current Agreement
provides that the Adviser pays substantially all expenses of the Fund, including
compensation to third parties for their sales efforts.
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<PAGE>
The Current Agreement does not permit the Fund to bear any distribution
expenses under the proposed Distribution Plan. At their January 20, 1999
meeting, the Board of Trustees considered revisions to the Current Agreement to
allow the Fund to pay expenses pursuant to the Distribution Plan. Under the New
Agreement, the Adviser will continue to provide the same services to the Fund as
it does under the Current Agreement; however, it will not be required to pay
expenses that will be covered by the Distribution Plan. In order to keep
shareholder expenses at their current level once the Distribution Plan is
adopted, the Adviser has agreed to lower its fee to 2.25%, a decrease equal to
the 0.25% distribution fee. The New Agreement also permits the Fund to introduce
new classes of shares with different 12b-1 fees; however, the 12b-1 fee paid by
any new class will have no impact on the expenses of the Class A shares.
In addition, the Adviser retains the right to use certain names in
connection with another investment company or business enterprise with which the
Adviser is or may be associated. The Trust may use these names until ninety days
after the termination of the Management Agreement or upon ninety days notice
from the Adviser under the terms of the current agreement, the Adviser retains
the rights to use the names "BSG" and "First American Bancshares," a former name
of the Fund. Under the terms of the New Agreement, the Adviser retains the
rights to use the names "BSG" and "Banc Stock Group." The New Agreement also
contains other non-substantive changes. This discussion is qualified in its
entirety by reference to the New Agreement, a copy of which is attached hereto
as Appendix B.
MANAGEMENT OF THE ADVISER
-------------------------
The Adviser, an Ohio corporation, has acted as investment adviser to
the Fund since it commenced operations on August 1, 1997. Mr. Michael E.
Guirlinger is the President, Treasurer and a director of the Adviser. [Insert
name, address and principal occupation for each director of the Adviser]. For
the period ended February 28, 1998, the Fund paid a management fee of $110,653
to the Adviser. Because the Adviser pays all operating expenses of the Fund
(except brokerage, taxes, interest, fees and expenses on non-interested person
trustees and extraordinary expenses), the management fee paid to the Adviser was
equal to the Fund's total operating expenses. The Adviser has agreed to
reimburse other expenses for the fiscal year ending February 28, 1999 to the
extent necessary to maintain total expenses at a level equal to the management
fee. Under the New Agreement, the expenses of the Fund will remain at the same
level as under the Current Agreement because the compensation to the Adviser
will be reduced by 0.25%, but the 12b-1 expenses will be increased by the same
amount.
The Adviser is a subsidiary of Banc Stock Financial Services, Inc.,
("BSFS") 1105 Schrock Road, Suite 437, Columbus, Ohio 43229, the Fund's
Distributor. For the period ended February 28, 1998, the Fund paid BSFS
brokerage commissions of $196,987 (99.67% of all brokerage commissions) for
effecting 98.66% of the Fund's brokerage transactions.
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES.
--------------------------------------------
At their meeting on January 20, 1999, all trustees present, including
all of the independent trustees present, considered and unanimously approved the
New Agreement. Senior management of the Adviser presented information regarding
the revised fee structure of the New Agreement and its likely impact on
shareholders. In considering the New Agreement, the trustees reviewed the
services to be provided by the Adviser, analyzing factors they deemed relevant,
including (i) the nature, quality, and scope of the services to be provided,
(ii) the ability of the Adviser to provide such services, and (iii) the
reasonableness and fairness of the proposed fees in relation to the services to
the Fund. The trustees also reviewed the fees to be paid to the Adviser in light
of (i) the expenses of the Fund that would be paid by the Adviser and (ii) fees
paid to other investment managers by comparable funds.
In evaluating the New Agreement, there was considerable discussion by
the trustees about the proposed fee structure. The trustees placed importance on
the fact that the Adviser agreed to lower its fees by the amount of the
distribution fees in order to maintain shareholder expenses at their current
level. After consideration of these and other factors, the trustees, including a
majority of the independent trustees, approved the New Agreement.
RECOMMENDATION OF THE BOARD OF TRUSTEES.
----------------------------------------
For the above mentioned reasons, the Board of Trustees recommends that
the shareholders of the Fund vote FOR the New Agreement. The New Agreement will
be effective only if the shareholders also approve the Distribution Plan
(Proposal I). If both the New Agreement and Proposal I are not approved by the
shareholders, the Current Agreement will remain in place and the Board of
Trustees will consider whether other action should be taken.
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<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" PROPOSAL II.
III. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The 1940 Act, which is the primary federal law that regulates the
Trust, requires every registered investment company to be audited at least once
a year by independent accountants selected by the Board of Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act). The 1940 Act also requires that the selection be submitted for
ratification by the shareholders at their next meeting following the selection.
Under this proposal, shareholders of the Trust are asked to ratify the
Board's unanimous selection of McCurdy & Associates CPA's, Inc. ("McCurdy &
Associates") as the Trust's independent accountants for the fiscal year ending
February 28, 2000. McCurdy has been the Trust's independent accountants since
April 24, 1997. At that time, the Board of Directors unanimously selected
McCurdy & Associates based on its industry experience and depth of expertise. At
a meeting on April 22, 1998, the Board again elected McCurdy & Associates as
independent accountants.
McCurdy & Associates representatives are not expected to be present at
the meeting. Unless otherwise instructed, the proxies will vote for the
ratification of the selection of McCurdy & Associates as the Trust's independent
accountants.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" PROPOSAL III.
VOTING SECURITIES AND VOTING
There were _____________ shares of beneficial interest of the Fund
issued and outstanding at the close of business on February ___, 1999, the
record date for the purpose of determining the shareholders entitled to notice
of and to vote at the Meeting and any adjournment(s) thereof (the "Record
Date").
Only shareholders of record on the Record Date are entitled to vote at
the Meeting. Each holder of shares is entitled to one (1) vote per share held,
and fractional votes for fractional shares held, of record on the Record Date on
any matter submitted to a vote at the Meeting.
The presence, in person or by proxy, of the holders of at least a
majority of the shares entitled to vote is necessary to constitute a quorum at
the Meeting. If a quorum is not present at the Meeting or if a quorum is present
but sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies.The persons named as proxies may also
adjourn the meeting for any other reason in their discretion. Any such
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. The persons named as proxies
will vote those proxies that they are entitled to vote FOR any proposal in favor
of such an adjournment, and will vote those proxies required to be voted AGAINST
any proposal against such adjournment. A shareholder vote may be taken on one or
more of the proposals in this Proxy Statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
With respect to Proposals I and II, approval requires the affirmative
vote of a "majority" (as defined in the 1940 Act) of the outstanding shares of
the Fund entitled to vote at the Meeting. As defined in the 1940 Act, a majority
of the outstanding shares means the vote of (1) 67% or more of the voting shares
present at the meeting, if the holders of more than 50% of the outstanding
shares are present in person or represented by proxy, or (ii) more than 50% of
the outstanding voting shares, whichever is less. The affirmative vote of a
simple majority of the voted shares of each class of each Fund is required to
approve Proposal III, ratification of the selection of McCurdy & Associates
CPA's, Inc. Unless otherwise instructed, the proxies will vote FOR the approval
of the Distribution Plan, the Management Agreement and McCurdy & Associates
CPA's, Inc.
As of _______, the following shareholders are the beneficial owners of
5% or more of the Fund:________________________. As of ________, the Trustees
and officers of the Fund beneficially owned the following shares of the Fund:
__________________.
"Broker non-votes" and abstentions will be considered present for
purposes of determining the existence of a quorum and the number of shares
represented at the meeting, but are not affirmative votes for any proposal.
Broker non-votes are shares held in street name for which the broker indicates
that instructions have not been received from the beneficial owners or other
persons entitled to vote, and the broker does not have discretionary voting
authority. With respect to Proposals I and II, non-votes and abstentions will
have the same effect as a vote against the proposal because the required vote is
a percentage of the shares present or outstanding. However, with respect to
Proposal III, they will have no effect on its approval or disapproval because
approval requires a majority of voted shares.
THE TRUST WILL SUPPLY WITHOUT COST, UPON WRITTEN REQUEST, A COPY OF THE
TRUST'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORT, WHICH INCLUDES FINANCIAL AND
OTHER INFORMATION ABOUT THE FUND. SUCH REQUEST SHOULD BE DIRECTED TO
____________, ______________________________________________________________,
TELEPHONE NUMBER (800) ___-____.
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<PAGE>
SHAREHOLDER PROPOSALS
Shareholders should be aware that annual meetings of shareholders are
not required as long as there is no particular requirement under the Investment
Company Act which must be met by convening such a shareholder meeting. If a
shareholder meeting is called for any purpose, shareholder proposals to be
presented must be received by the Trust at its principal office within a
reasonable time before the proxy solicitation is made.
COST OF SOLICITATION
The cost of preparing and mailing this Proxy Statement, the
accompanying Notice of Special Meeting and Proxy and any additional material
relating to the meeting and the cost of soliciting proxies will be borne by the
Adviser. In addition to solicitation by mail, the Trust will request banks,
brokers and other custodial nominees and fiduciaries to supply proxy material to
the beneficial owners of shares of whom they have knowledge, and will reimburse
them for their expenses in so doing. Certain officers and employees of the Trust
and the Adviser may solicit proxies in person or by telephone, facsimile
transmission or mail, for which they will not receive any special compensation.
OTHER MATTERS
The Trust's Board of Trustees knows of no other matters to be presented
at the Meeting other than as set forth above. However, if any other matters
properly come before the meeting, the holders of the proxy will vote the shares
represented by the proxy on such matters in accordance with their judgment, and
discretionary authority to do so is included in the proxy.
INVESTMENT ADVISER DISTRIBUTOR
Heartland Advisory Group, Inc. Banc Stock Financial Services, Inc.
1105 Schrock Road, Suite 437 1105 Schrock Road, Suite 437
Columbus, Ohio 45229 Columbus, Ohio 45229
ADMINISTRATOR
American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
BY ORDER OF THE BOARD OF TRUSTEES
LISA R. HUNTER
Dated February __, 1999 Secretary
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<PAGE>
PROXY
THE BSG FUNDS
BANC STOCK GROUP FUND
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY ___, 1999
The undersigned shareholder of the Banc Stock Group Fund (the "Fund"),
a portfolio of The BSG Funds (the "Trust"), hereby nominates, constitutes and
appoints Michael E. Guirlinger and Lisa R. Hunter and each of them, the
attorney, agent and proxy of the undersigned, with full powers of substitution,
to vote all the stock of the Fund which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the Fund to be held at
____________________________ on February ___, 1999 at _____ a.m. Eastern
Standard Time and at any and all adjournments thereof, as fully and with the
same force and effect as the undersigned might or could do if personally present
as follows:
PROPOSAL I. APPROVAL OF THE DISTRIBUTION PLAN
Approval or disapproval of the Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended.
|_| FOR |_| AGAINST |_| ABSTAIN
PROPOSAL II. APPROVAL OF THE NEW MANAGEMENT AGREEMENT
Approval or disapproval of the New Management Agreement
between the Trust and Heartland Advisory Group, Inc.
|_| FOR |_| AGAINST |_| ABSTAIN
PROPOSAL III. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Ratification of the appointment of McCurdy & Associates CPA's,
Inc. as independent accountants of the Trust for the fiscal year ending February
28, 2000.
|_| FOR |_| AGAINST |_| ABSTAIN
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "FOR" ON PROPOSALS I, II AND
III. THE PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF TRUSTEES UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS,
IF ANY, PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN THE DISCRETION OF
THE PROXY HOLDERS, IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES, IF ANY.
________________ DATED:______________ _________________________________
(Number of Shares) (Please Print Your Name)
- ---------------------------------
(Signature of Shareholder)
- ---------------------------------
(Please Print Your Name)
- ---------------------------------
(Signature of Shareholder)
(Please date this proxy and sign
your name as it appears on the
label. Executors, administrators,
trustees, etc. should give their
full titles. All joint owners
should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE PRESIDENT OF THE TRUST AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY APPEARING IN PERSON AND VOTING AT THE MEETING.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
