SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
---
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 3
/ X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 4 / X /
(Check appropriate box or boxes.)
THE BSG FUNDS - FILE NOS. 333-22075 AND 811-8061
- ------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1105 SCHROCK ROAD, SUITE 437, 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
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b)
/ / on ____________________ pursuant to paragraph (b)
/ X / 60 days after filing pursuant to paragraph (a) (1)
/ / on (date) pursuant to paragraph (a) (1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / on (date) pursuant to paragraph (a) (2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
THE BSG FUNDS
-------------
CROSS REFERENCE SHEET
---------------------
FORM N-1A
---------
FOR BANC STOCK GROUP FUND
-------------------------
ITEM SECTION IN EACH PROSPECTUS
- ---- --------------------------
1........................Cover Page
2........................Summary of Fund Expenses; Supplement to Prospectus
3........................Performance Information; Financial Highlights
4........................The Fund, Investment Objective and Strategies and
Risk Considerations, Investment Policies
and Techniques, Operation of the Fund,
General Information; Supplement to
Prospectus
5........................Operation of the Fund; Supplement to Prospectus
5A....................... None
6........................Cover Page, Dividends and Distributions, Taxes,
General Information, How to Redeem Shares;
Supplement to Prospectus
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund, How to
Redeem Shares; Supplement to Prospectus
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,
Distribution Plans
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>
BANC STOCK GROUP FUND
SUPPLEMENT DATED __________, 1999 TO
PROSPECTUS DATED AUGUST 20, 1998
Effective March 1, 1999, Mutual Funds Service Co. (MFS) is the Fund's
Transfer Agent. After that date, please direct all purchase and redemption
requests and all shareholder inquiries to:
MUTUAL FUNDS SERVICE CO.
6000 MEMORIAL DRIVE
DUBLIN, OH 43017
800-___-____
On January 20, 1999, the Board of Trustees approved the addition of a
new Class of shares, Class C shares, and renamed the existing shares Class A
shares. On __________, 1999, the shareholders of Class A shares approved a Rule
12b-1 Distribution Plan for Class A shares and a new Management Agreement for
the Fund. As a result, the expense information for Class A shares has been
restated to reflect the changes in annual operating expenses. The expense
information for Class C shares is based on estimated amounts for the current
fiscal year.
REPLACE THE EXPENSE TABLE ON PAGE 3 WITH THE FOLLOWING:
SHAREHOLDER TRANSACTION EXPENSES(1) CLASS A CLASS C
Maximum Front End Sales Load Imposed on Purchases
(as a percentage of offering price) ........................4.00%........NONE
Maximum CDSC (as a percentage of _________)..................NONE.........2.00%
Sales Load Imposed on Reinvested Dividends...................NONE.........NONE
Redemption Fee...............................................NONE.........NONE
Exchange Fee.................................................NONE.........NONE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(2)
Management Fees....................................2.25%.......2.25%
12b-1 Charges......................................0.25%.......1.00%
Other Expenses (after reimbursement)(3)............0.00%.......0.00%
Total Fund Operating Expenses (after reimbursement)(3).......2.50%.......3.25%
(1) Processing organizations may impose transactional fees on shareholders.
(2) Because the Adviser pays all operating expenses (except brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses), the Fund's total operating expenses are equal to the management fee
paid to the Adviser plus the 12b-1 charges.
(3) The Adviser has agreed to reimburse other expenses for the fiscal year
ending February 28, 1999 to the extent necessary to maintain total operating
expenses as indicated. For the period ended February 28, 1998, other expenses
(fees and expenses of the trustees who are not "interested persons" as defined
in the Investment Company Act) were 0.25% of average net assets and total fund
operating expenses were 2.75% of average net assets, absent any waiver or
reimbursement.
<PAGE>
REPLACE THE EXPENSE EXAMPLE ON PAGE 3 WITH THE FOLLOWING:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A $64 $115 $168 $312
Class C
if you sold your shares
at the end of the period $__ $___ $___ $___
if you stayed in the fund $__ $___ $___ $___
READ THE FOLLOWING IN CONJUNCTION WITH THE SECTIONS TITLED "THE FUND" ON PAGE 3
AND "SHAREHOLDER RIGHTS" ON PAGE 13:
On __________, 1999, the Trustees renamed the existing shares "Class A"
shares and added another class of shares called "Class C" shares. The classes
differ as follows: 1) Class A shares are charged an initial sales charge of
4.00% and Class C shares are charged a contingent deferred sales charge of __%,
2) Class A shares pay 12b-1 expenses of 0.25% and Class C shares pay 12b-1
expenses of 1.00%, and 3) each class may bear differing amounts of certain class
specific expenses.
READ THE FOLLOWING IN CONJUNCTION WITH THE SECTIONS TITLED "HOW TO INVEST IN THE
FUND" ON PAGE 6, "HOW TO REDEEM SHARES" ON PAGE 9 AND "SHAREHOLDER RIGHTS" ON
PAGE 13:
Class C shares are offered at net asset value, without initial sales
charge, subject to an annual distribution fee of 1% (of which 0.75% is an asset
based sales charge and 0.25% is a service fee). Class C shares are subject to a
contingent deferred sales charge ("CDSC") of ___% if redeemed within two years
of the purchase date. The CDSC will be waived (i) on redemption of shares
following the death of the shareholder and (ii) on certain redemptions in
connection with IRAs and other qualified retirement plans.
When purchasing shares, specify whether the order is for Class A or
Class C shares. All purchase orders that fail to specify a Class will
automatically be invested in Class A shares.
The differing sales charges and other expenses applicable to the
different classes of the Fund's shares may affect the performance of those
classes. Broker/dealers and others entitled to receive compensation for selling
or servicing Fund shares may receive more with respect to one class than
another. The Board of Trustees of the Trust does not anticipate that there will
be any conflicts among the interests of the holders of the different classes of
Fund shares. On an ongoing basis, the Board will consider whether any such
conflict exists and, if so, take appropriate action.
ADD THE FOLLOWING SECTION:
DISTRIBUTION PLANS
Each Class has adopted a plan, pursuant to Rule 12b-1 under the
Investment Company Act of 1940, which permits the Fund to pay for certain
distribution and promotion expenses related to marketing its shares. The amount
payable by Class A shares is 0.25% of average daily net assets for the year and
by Class C shares is 1.00% of its average daily net assets for the year (of
which 0.75% is an asset based sales charge and 0.25% is a service fee).
Expenditures pursuant to the Plans and related agreements may reduce current
yield after expenses.
Under the Plans, the Trust may engage in any activities related to the
distribution of Fund shares, including without limitation the following: (a)
payments, including incentive compensation, to securities dealers or other
<PAGE>
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, or that hold
Shares for shareholders in omnibus accounts or as shareholders of record or
provide shareholder support or administrative services to the Fund and its
shareholders, or for rendering shareholder support services, including allocated
overhead, office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Trust, processing shareholder
transactions, and providing such other shareholder services as the Trust may
request; (b) expenses of maintaining personnel (including personnel of
organizations with which the Trust has entered into agreements related to this
Plan) who engage in or support distribution of Shares; (c) costs of preparing,
printing and distributing Fund prospectuses and statements of additional
information and reports for recipients other than existing Fund shareholders;
(d) costs of formulating and implementing marketing and promotional activities,
including sales seminars, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (e) costs of preparing,
printing and distributing sales literature; (f) costs of obtaining such
information, analyses and reports with respect to marketing and promotional
activities as the Trust may deem advisable; and (g) costs of implementing and
operating the Plans.
REPLACE THE FOURTH AND FIFTH PARAGRAPHS OF THE SECTION TITLED "OPERATION OF THE
FUND" ON PAGE 12 WITH THE FOLLOWING:
The Fund is authorized to pay the Adviser a fee equal to an annual
average rate of 2.25% of its average daily net assets. The Adviser pays all of
the operating expenses of the Fund except brokerage, taxes, interest, expenses
which the Fund is authorized to pay pursuant to the Distribution Plans, 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.
Effective March 1, 1999, MFS is the Fund's Administrator. As
Administrator, MFS manages the Fund's business affairs and provides the Fund
with administrative services, including all regulatory reporting and necessary
office equipment. For these services, MFS receives a monthly fee from the
Adviser equal 0.05% of the Fund's average monthly net assets (subject to a
minimum annual payment of $30,000).
ADD THE FOLLOWING SECTION:
YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the Adviser, Administrator or other service providers
to the Fund do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Issue." The Adviser and Administrator have taken steps that they believe are
reasonably designed to address the Year 2000 Issue with respect to computer
systems that are used and to obtain reasonable assurances that comparable steps
are being taken by the Fund's major service providers. At this time, however,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Fund. In addition, the Adviser cannot make assurances that
the Year 2000 Issue will not affect the banks and other companies in the Fund's
portfolio or worldwide markets and economies. However, a critical part of the
Adviser's Year 2000 Compliance Program is devoted to determining the extent to
which the Fund is at risk because of the failure of the companies in its
portfolio to address the Year 2000 Issue. The Adviser is communicating with
these portfolio companies to ascertain whether they are addressing their Year
2000 Issues and are either Year 2000 compliant or expect to be compliant on a
timely basis. To the extent any company in the portfolio does not provide
satisfactory responses, the Fund will sell the corresponding securities from the
portfolio.
<PAGE>
BANC STOCK GROUP FUND
PROSPECTUS AUGUST 20, 1998
1105 Schrock Road, Suite 437
Columbus, Ohio 43229
For Information, Shareholder Services and Requests:
(888) BANK-595
Banc Stock Group 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 August 20, 1998, 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 operating expenses incurred during
the most recent 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.
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..........................4.00%
Sales Load Imposed on Reinvested Dividends.....................NONE
Redemption Fee..............................................................NONE
Exchange Fees...............................................................NONE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets) (2)
Management Fees.....................................2.50%
12b-1 Charges........................................NONE
Other Expenses (after reimbursement)(3).........................0.00%
Total Fund Operating Expenses (after reimbursement)(3)....................2.50%
(1) Processing organizations may impose transactional fees on shareholders.
(2) 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 3).
(3) The Adviser has agreed to reimburse other expenses for the fiscal year
ending February 28, 1999 to the extent necessary to maintain total operating
expenses as indicated. For the period ended February 28, 1998, other expenses
(fees and expenses of the trustees who are not "interested persons" as defined
in the Investment Company Act) were 0.25% of average net assets and total fund
operating expenses were 2.75% of average net assets, absent any waiver or
reimbursement.
-4-
<PAGE>
EXAMPLE
- -------
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$64 $115 $168 $312
THE FUND
Banc Stock Group Fund (the "Fund") was organized as a series of The BSG
Funds, an Ohio business trust (the "Trust") on January 14, 1997, and commenced
operations on August 1, 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").
FINANCIAL HIGHLIGHTS
The following condensed supplementary financial information for the
period August 1, 1997 (commencement of operations) through February 28, 1998 is
derived from the audited financial statements of the Fund. The financial
statements of the Fund have been audited by McCurdy & Associates CPA's, Inc.,
independent public accountants, and are included in the Fund's Annual Report.
The Annual Report contains additional performance information and is available
upon request and without charge.
<TABLE>
<CAPTION>
For a share outstanding throughout the period
from August 1, 1997 (Commencement of Operations)
through February 28, 1998
<S> <C>
Net asset value, beginning of period ............... $ 10.00
---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net investment loss ........ ....................... (0.07)
Net realized and unrealized gain on
investments ................................... 2.82
---------
Total from investment operations ................... 2.75
---------
LESS DISTRIBUTIONS
Dividends from net investment income ............... 0.00
Distribution from realized gains from security
transactions .................................. 0.00
---------
Total distributions ................................ 0.00
---------
Net asset value, end of period ..................... $ 12.75
=========
Total return** ..................................... 52.24% *
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (in 000's) ................ 13,702
Ratio of expenses to average net assets ............ 2.50% *
Ratio of net investment income (loss) to average
net assets .................................... (1.07)% *
Portfolio turnover rate ............................ 26.65%
<FN>
* Annualized
** Based on net asset value per share
</FN>
</TABLE>
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.
-5-
<PAGE>
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 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. 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 Banc Stock Group Fund to the P.O. Box listed below. If
you prefer overnight delivery, use the overnight address listed below.
-6-
<PAGE>
U.S. MAIL: OVERNIGHT:
c/o American Data Services, Inc. c/o American Data Services, Inc.
P.O. Box 5536 150 Motor Parkway
Hauppauge, NY 11788-0132 Suite 150
Hauppauge, NY 11788-5167
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>
<CAPTION>
SALES LOAD AS OF % OF:
PUBLIC NET
OFFERING AMOUNT DEALER REALLOWANCE AS % OF
AMOUNT OF INVESTMENT PRICE INVESTED PUBLIC OFFERING PRICE
-------------------- ----- -------- ---------------------
<S> <C> <C> <C>
Less than $50,000 4.00% 4.38% 3.75%
$50,000 but less than $100,000 3.50% 3.73% 3.25%
$100,000 but less than $250,000 2.75% 2.88% 2.50%
$250,000 but 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.
CAT PROGRAM
When making your initial investment, you may choose to participate in
the Fund's continuing automatic transfer ("CAT") program by completing the
separate CAT Investment Application Form. The CAT Program offers reduced
investment minimums and helps investors make additional purchases of the
-7-
<PAGE>
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 Banc Stock Group Fund and
should be sent to the Custodian, as instructed above. To purchase shares of the
Fund by wire, call the Transfer Agent at (888) BANK-595 for instructions. Then,
you should provide your bank with the following information for purposes of
wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Banc Stock Group Fund
D.D.A. #486448004
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, including
members of the immediate family, may also purchase and redeem shares without
paying a sales charge.
Trustees, directors, officers and employees of the Trust, the Adviser,
service providers of the Trust, 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.
Broker -dealers with selling agreements with the Distributor and employee
benefit plans established by same, may 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.
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. Under
certain circumstances, shareholders of the Adviser's parent company, Banc Stock
Group, Inc., may purchase shares of the Fund during certain promotional periods
without paying a sales charge. Contact the Fund's distributor, Banc Stock
Financial Services, Inc., at 1-800-347-BANK for additional information.
-8-
<PAGE>
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 888-BANK-595 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.
-9-
<PAGE>
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.
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. 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:
Banc Stock Group Fund
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, New York 11788-0132
"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 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 (888) BANK-595. 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 (888) BANK-595. 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 cleared, which
normally may take up to fifteen calendar 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.
-10-
<PAGE>
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 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.
-11-
<PAGE>
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 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
short term 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.
-12-
<PAGE>
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., 1105 Schrock Road,
Suite 437, 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 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., P.O. Box 5536,
Hauppauge, New York 11788-0132 (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.
-13-
<PAGE>
The Fund retains Banc Stock Financial Services, Inc., 1105 Schrock
Road, Suite 437, 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. In addition, the Distributor (not the
Fund) may compensate brokers and other intermediaries for directing assets to or
retaining assets in the Fund. 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 Banc Stock Group, Inc., a
corporation which invests in financial services companies.
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
EQUITY SECURITIES
The Fund may invest in common stock, preferred stock and common stock
equivalents (such as convertible preferred stock and convertible debentures).
Convertible preferred stock is preferred stock that can be converted into common
stock pursuant to its terms. Convertible debentures are debt instruments that
can be converted into common stock pursuant to their terms. The Adviser intends
to invest only in convertible debentures rated A or higher by Standard & Poor's
Corporation ("S&P") or by Moody's Investors Services, Inc. ("Moody's"). The Fund
may hold warrants and rights issued in conjunction with common stock, but in
general will sell any such warrants or rights as soon as practicable after they
are received. Warrants are options to purchase equity securities at a specified
price valid for a specific time period. Rights are similar to warrants, but
normally have a short duration and are distributed by the issuer to its
shareholders.
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.
-14-
<PAGE>
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.
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. The Declaration of Trust can be amended by the Trustees, except that any
amendment that adversely effects the rights of shareholders must be approved by
the shareholders affected.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions and the deduction of
the current maximum sales load from the initial investment.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from "average
annual total return." A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions. A
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for "average annual total return." In addition, a non-standardized
quotation may be an indication of 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. These non-standardized quotations do not include the effect of
the applicable sales load which, if included, would reduce the quoted
performance. A non-standardized quotation will always be accompanied by the
Fund's "average annual total return" as described above.
-15-
<PAGE>
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to 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)
1105 Schrock Road, Suite 437 American Data Services, Inc.
Columbus, Ohio 43229 P.O. Box 5536
Hauppauge, New York 11788-0132
AUDITORS
CUSTODIAN
Star Bank, N.A. McCurdy & Associates CPA's, Inc.
425 Walnut Street, ML 27955 Clemens Road
Cincinnati, Ohio 45202-6118 Westlake, Ohio 44145
LEGAL COUNSEL DISTRIBUTOR
Brown, Cummins & Brown Co., L.P.A. Banc Stock Financial Services, Inc.
3500 Carew Tower, 441 Vine Street 1105 Schrock Road, Suite 437
Cincinnati, Ohio 45202 Columbus, Ohio 43229
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.
-16-
<PAGE>
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Annual Fund Operating Expenses
THE FUND
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
HOW TO INVEST IN THE FUND
CAT Program
Subsequent Purchases
Purchases at Net Asset Value
Tax Sheltered Retirement Plans
Other Purchase Information
HOW TO REDEEM SHARES
By Mail
By Telephone
Additional Information
SHARE PRICE CALCULATION
DIVIDENDS AND DISTRIBUTIONS
TAXES
OPERATION OF THE FUND
INVESTMENT POLICIES AND TECHNIQUES
Equity Securities
General
GENERAL INFORMATION
Fundamental Policies
Portfolio Turnover
Shareholder Rights
PERFORMANCE INFORMATION
<PAGE>
BANC STOCK GROUP FUND
STATEMENT OF ADDITIONAL INFORMATION
___________, 1999
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Banc Stock Group Fund dated August
20, 1998 and the Supplement to the Prospectus dated _______, 1999. A copy of the
Prospectus can be obtained by writing the Transfer Agent at 6000 Memorial Drive,
Dublin, Ohio 43017, or by calling 1-888-BANK-595.
<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
SHARES OF THE FUND.............................................................3
THE INVESTMENT ADVISER.........................................................5
TRUSTEES AND OFFICERS..........................................................6
PORTFOLIO TRANSACTIONS AND BROKERAGE...........................................7
DISTRIBUTION PLANS.............................................................7
DETERMINATION OF SHARE PRICE...................................................9
INVESTMENT PERFORMANCE.........................................................9
CUSTODIAN.....................................................................10
TRANSFER AGENT................................................................10
ACCOUNTANTS...................................................................11
DISTRIBUTOR...................................................................11
FINANCIAL STATEMENTS..........................................................11
2
<PAGE>
DESCRIPTION OF THE TRUST
Banc Stock Group 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 "Shares"). The Fund is the only series currently
authorized by the Trustees. There are currently two classes of Shares: Class A
and Class C.
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.
As of January 21, 1999, the officers and trustees as a group
beneficially owned less than 1% of the Fund.
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").
1
<PAGE>
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 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.
2
<PAGE>
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 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
3
<PAGE>
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 the 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).
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.
4
<PAGE>
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 transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
5
<PAGE>
4. OPTIONS. The Fund will not purchase or sell puts, calls, options or
-------
straddles, except as described in the Prospectus and the Statement of Additional
Information.
5. LOANS. The Fund will not loan its portfolio securities.
-----
6. REVERSE REPURCHASE AGREEMENTS. The Fund will not enter into reverse
-----------------------------
repurchase agreements.
SHARES OF THE FUND
Two classes of Shares, Class A shares and Class C shares, are
authorized for the Fund. Both classes of shares represent an interest in the
same portfolio of investments of the Fund and have the same rights, except that
each class has exclusive voting rights with respect to its Rule 12b-1
distribution plan. The net asset value per share of both classes is expected to
differ from time to time.
The contingent deferred sales charge ("CDSC") imposed on Class C shares
will be waived (i) on redemption of shares following the death of the
shareholder and (ii) on certain redemptions in connection with IRAs and other
qualified retirement plans.
THE INVESTMENT ADVISER
The Fund's investment adviser is Heartland Advisory Group, Inc., 1105
Schrock Road, Suite 427, Columbus, Ohio 43229 (the "Adviser"). The Adviser is a
wholly owned subsidiary of The Banc Stock Group, Inc.
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 2.25% 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. For the period from August
1, 1997 (commencement of operations) through February 28, 1998, the Fund paid
fees to the Adviser of $110,653.
The Adviser retains the right to use the names "BSG" and "Banc Stock
Group" 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 "Banc Stock Group" 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
6
<PAGE>
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, as defined in
the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
===================================== -------------------------- ===========================================================
NAME, AGE POSITION PRINCIPAL OCCUPATIONS
AND ADDRESS DURING PAST 5 YEARS
===================================== -------------------------- ===========================================================
<S> <C> <C>
Michael E. Guirlinger * Trustee, President and Director, president and treasurer of Heartland Advisory
Age: 50 Treasurer Group, Inc.; director, president and treasurer of The
1105 Schrock Road, Suite 437 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, 1105 Schrock Road, Suite 427, Columbus,
Ohio.
===================================== -------------------------- ===========================================================
Lisa R. Hunter * Trustee and Secretary Vice president of Banc Stock Financial Services, Inc.**
Age: 44 Prior to 1995, compliance administrator of VESTAX
1105 Schrock Road, Suite 437 Securities Corp, 1932 Georgetown Rd., Hudson, Ohio 44256.
Columbus, Ohio 43229
===================================== -------------------------- ===========================================================
Jeffrey C. Barton Chief Financial Officer Vice President and Chief Financial Officer of The Banc
Age: 52 Stock Group, Inc. and subsidiaries,** Chief Financial
1105 Schrock Road, Suite 437 Officer of Saunders Pearson Company, a contract financial
Columbus, Ohio 43229 management company, 1807 Riverhill Road, Columbus, Ohio.
===================================== -------------------------- ===========================================================
John M. Bobb Trustee Director of Headwater Group, 8200 Clonse Road, New
Age: 57 Albany, Ohio, a fine arts consulting agency, 1994 to
8200 Clonse Road present. Prior to 1994, sales and marketing director
New Albany, Ohio 43054 with Bush Brothers, a food company in Knoxville,
Tennessee.
===================================== -------------------------- ===========================================================
Virginia H. Rader Trustee Retired.
Age: 52
600 Fairway Blvd.
Columbus, Ohio 43215
===================================== ========================== ===========================================================
Gary A. Radville Trustee Chief Financial Officer of Peer Foods, Inc., 4631 S.
Age: 41 McDowell St., Chicago, Illinois. Prior to 1996,
4631 S. McDowell St. Partner, Price Waterhouse, 200 E. Randolph St., Chicago,
Chicago, Illinois 60609 Illinois.
===================================== ========================== ===========================================================
</TABLE>
7
<PAGE>
Trustee fees are Trust expenses. The compensation paid to the Trustees
for the first full year of the Trust ended February 28, 1998 is set forth in the
following table:
<TABLE>
<CAPTION>
================================ ==============================
TOTAL COMPENSATION
FROM TRUST (THE TRUST IS
NAME NOT IN A FUND COMPLEX)
================================ ==============================
<S> <C>
Michael E. Guirlinger 0
================================ ==============================
Lisa R. Hunter 0
================================ ==============================
John M. Bobb $3,000
================================ ==============================
Virginia H. Rader $4,000
================================ ==============================
Gary A. Radville $4,000
================================ ==============================
</TABLE>
** 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.
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.
8
<PAGE>
While the Fund does not deem it practicable and in its best interests
to solicit competitive bids for commission rates on each transaction,
consideration is regularly given to posted commission rates as well as other
information concerning the level of commissions charged on comparable
transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that Banc Stock
Financial Services, Inc. ("BSFS"), in its capacity as a registered
broker-dealer, will effect substantially all securities transactions which are
executed on a national securities exchange and over-the-counter transactions
conducted on an agency basis. Such transactions will be executed at competitive
commission rates through Mesirow Financial, Inc.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Adviser (such as BSFS) may be prohibited from dealing with the
Fund as a principal in the purchase and sale of securities. Therefore, BSFS will
not serve as the Fund's dealer in connection with over-the-counter transactions.
However, BSFS may serve as the Fund's broker in over-the-counter transactions
conducted on an agency basis and will receive brokerage commissions in
connection with such transactions. Such agency transactions will be executed
through Mesirow Financial, Inc.
The Fund will not effect any brokerage transactions in its portfolio
securities with BSFS if such transactions would be unfair or unreasonable to
Fund shareholders, and the commissions will be paid solely for the execution of
trades and not for any other services. The Agreement provides that affiliates,
or any affiliates of affiliates, of the Adviser may receive brokerage
commissions in connection with effecting such transactions for the Fund. In
determining the commissions to be paid 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.
9
<PAGE>
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. BSFS will not receive reciprocal brokerage business as a result of the
brokerage business placed by the Fund with others.
When the Fund and another of the Adviser's clients seek to purchase or
sell the same security at or about the same time, the Adviser may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated on a pro rata
basis. Transactions of advisory clients (including the Fund) may also be blocked
with those of the Adviser, the Distributor or any of their affiliates. 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.
For the period from August 1, 1997 (commencement of operations) through
February 28, 1998, the Fund paid total brokerage commissions of $197,647. Banc
Stock Financial Services, Inc. was paid $196,987 (99.67% of all brokerage
commissions) for effecting 98.66% of the Fund's brokerage transactions.
DISTRIBUTION PLANS
With respect to the Fund, the Trust has adopted a separate Distribution
Plan for each class of shares, pursuant to Rule 12b-1 which was promulgated by
the Securities and Exchange Commission pursuant to the Investment Company Act of
1940 (the "Plans"). Each Plan provides for payment of fees to the Adviser to
finance any activity which is principally intended to result in the sale of the
Fund's shares subject to the Plans. Such activities are described in the
Prospectus. Pursuant to the Plans, the Adviser may pay fees to brokers and
others for such services. The Trustees expect that the adoption of the Plans
will significantly enhance the Fund's ability to expand distribution. It is also
anticipated 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 maximum amount payable with respect to each class
under the Plans is described in the Prospectus. The Plans have been approved by
the Fund's Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund and how have no direct or indirect financial
interest in the Plans or any related agreement, by a vote cast in person.
continuation of the Plans and the related agreements must be approved by the
Trustees annually, in the same manner, and a Plan or any related agreement may
be terminated at any time without penalty by a majority of such independent
Trustees or by a majority of the outstanding shares of the applicable class. Any
amendment increasing the maximum percentage payable under a Plan or other
material change must be approved by a majority of the outstanding shares of the
applicable class, and all other material amendments to a Plan or any related
agreement must be approved by a majority of the independent Trustees. Michael M.
Guirlinger and Lisa R. Hunter, trustees of the Trust, may benefit indirectly
from payments received by the Adviser under the Plans 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.
10
<PAGE>
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, Martin
Luther King, Jr. 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, five and ten year periods) 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, that the maximum sales load is
deducted from the initial $1,000 and that a complete redemption occurs at the
end of the applicable period. If the Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public offering
of shares will be substituted for the periods stated. The average annual total
return of the Fund for the period August 1, 1997 (commencement of operations)
through February 28, 1998 was 41.78%.
The Fund may also advertise performance information (a
"non-standardized quotation") which is calculated differently from average
annual total return. A non-standardized quotation of total return may be a
cumulative return which measures the percentage change in the value of an
account between the beginning and end of a period, assuming no activity in the
account other than reinvestment of dividends and capital gains distributions.
The total return of the Fund as calculated in this manner for the period August
1, 1997 (commencement of operations) through February 28, 1998 was 27.50%. A
11
<PAGE>
non-standardized quotation may also be an average annual compounded rate of
return over a specified period, which may be a period different from those
specified for average annual total return. The average annual compounded rate of
return of the Fund for the period August 1, 1997 (commencement of operations)
through February 28, 1998 was 52.24%. In addition, a non-standardized quotation
may be an indication of 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. This value, for the period ended February 28, 1998, was $12,750. These
non-standardized quotations do not include the effect of the applicable sales
load which, if included, would reduce the quoted performance. A non-standardized
quotation of total return will always be accompanied by the Fund's average
annual total return as described above.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or to prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's and
Fortune also may be used.
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is
Custodian of the Fund's investments. The Custodian acts as the Fund's
depository, safekeeps its portfolio securities, collects all income and other
payments with respect thereto, disburses funds at the Fund's request and
maintains records in connection with its duties.
12
<PAGE>
TRANSFER AGENT
Effective March 1, 1999, Mutual Funds Service Co. (MFS), 6000 Memorial
Drive, Dublin, Ohio 43017 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. MFS also
acts as the Fund's administrator and, in such capacity, manages the Fund's
business affairs. In addition, MFS, in its capacity as fund accountant, provides
the Fund with certain monthly reports, record-keeping and other
management-related services. For its services as fund accountant, MFS receives
an annual fee from the Adviser equal to 0.05% of the Fund's assets up to $100
million (subject to a minimum annual fee of $20,000, which increases as
additional classes are added). Prior to March 1, 1999, American Data Services,
Inc. ("ADS"), P.O. Box 5536, Hauppauge, New York 11788-0132 served as fund
accountant and administrator. For the period from August 1, 1997 (commencement
of operations) through February 28, 1998 and for the fiscal year ended February
28, 1999, ADS received $_______ and $_______, respectively, from the Adviser
(not the Fund) for these services.
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, 1999. 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. ("BSFS"), 1105 Schrock Road, Suite
437, 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. The aggregate commissions paid
for the period from August 1, 1997 (commencement of operations) through February
28, 1998 was $212,007, of which BSFS earned $14,661 for acting as distributor
and an additional $49,158 for acting as broker-dealer for the Fund.
FINANCIAL STATEMENTS
The financial statements and independent accountants' report required
to be included in this Statement of Additional Information are incorporated
herein by reference to the Trust's Annual Report to Shareholders for the fiscal
year ended February 28, 1998. The Fund will provide the Annual Report without
charge at written request or request by telephone.
13
THE BSG FUNDS
PART C. OTHER INFORMATION
-----------------
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
- ------- ---------------------------------
(a) Financial Statements
Included in Part A: Audited Financial Highlights for
the period from August 1, 1997 (commencement of
operations) through February 28, 1998.
Included in Part B:
(1) Audited Statement of Assets and Liabilities as of
February 28, 1998 and Report of Independent
Public Accountants.
(2) Audited Statement of Assets and Liabilities -
February 28, 1998.
(3) Audited Statement of Operations - for the period
August 1, 1997 (commencement of operations)
through February 28, 1998.
(4) Audited Statement of Changes in Net Assets - for the
period August 1, 1997 (commencement of
operations) through February 28, 1998.
(5) Audited Schedule of Investments - February 28, 1998.
(6) Notes to Financial Statements - February 28, 1998.
(7) Audited Financial Highlights for the period August 1,
1997 (commencement of operations) through
February 28, 1998.
(b) Exhibits
(1) (i) Copy of Registrant's Amended and Restated
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 1, is hereby incorporated by
reference.
(ii) Copy of Amendment No. 1 to Registrant's Amended
and Restated Declaration of Trust, which was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1, is hereby
incorporated by reference.
(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.
-3-
<PAGE>
(4) Specimen of Share Certificates- None
(5) (i) Copy of Registrant's Management with its
Adviser, Heartland Advisory Group, which was
filed as an Exhibit to Registrant's
Pre-Effective Amendment, is hereby incorporated
by reference
(ii) Copy of Registrant's Proposed New 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.,
which was filed as an Exhibit to
Registrant's Pre-Effective Amendment, is
hereby incorporated by reference.
(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., which was filed
as an Exhibit to Registrant's Pre-Effective
Amendment, is hereby incorporated by
reference.
(9) Other Material Contracts - None.
(10) Opinion and Consent of Brown, Cummins &
Brown Co., L.P.A., which was filed as an
Exhibit to Registrant's Pre-Effective
Amendment, is hereby incorporated by
reference.
(11) Consent of McCurdy & Associates CPA's, Inc. is
filed herewith.
(12) Financial Statements Omitted from Item 23 - None.
(13) Copy of Letter of Initial Stockholder, which
was filed as an Exhibit to Registrant's
Pre-Effective Amendment, is hereby
incorporated by reference.
(14) Model Plan used in Establishment of any Retirement
Plan - None.
(15) (i) Proposed Class A Shares 12b-1 Distribution
Expense Plan is filed herewith.
(ii) Proposed Class C Shares 12b-1 Distribution
Expense Plan is filed herewith.
(16) Schedules for Computation of Performance
quotations, which were filed as an Exhibit
to Registrant's Post-Effective Amendment No.
1, are hereby incorporated by reference.
(17) Financial Data Schedule - None.
(18) Rule 18f-3 Plan is filed herewith.
-4-
<PAGE>
(19) (i) Power of Attorney for Registrant and Certificate
with respect thereto, which were filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 1, are 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
- -------- -----------------------------------------------------------------
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES (AS OF JANUARY 21, 1999)
- -------- ----------------------------------------------------------
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
Banc Stock Group Fund 1597
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 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.
-5-
<PAGE>
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.
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, The Banc Stock Group, Inc., 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.
-6-
<PAGE>
(b) Michael E. Guirlinger: director, president and
treasurer of HAG; director, president and treasurer of
The Banc Stock Group, Inc.; 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, Inc.
and BSE.
ITEM 29. PRINCIPAL UNDERWRITERS
- -------- ----------------------
(a) None.
(b) Banc Stock Financial Services, Inc. ("BSFS"), 6230
Busch Blvd., Suite 201, Columbus, Ohio it 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.
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.
-7-
<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 22nd day of
January, 1999.
The BSG Funds
By:
---------------------------
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:
--------------------------
Donald S. Mendelsohn,
Lisa R. Hunter, Trustee Attorney-in-Fact
John M. Bobb, Trustee January 22, 1999
Virginia H. Rader, Trustee
Gary A. Radville, Trustee
Jeffrey C. Barton, Chief Financial Officer
-8-
<PAGE>
EXHIBIT INDEX
-------------
PAGE
----
1. Proposed New Management Agreement...............................EX-99.B5
2. Consent of McCurdy & Associates CPA's, Inc......................EX-99.B11
3. Proposed Class A 12b-1 Plan.....................................EX-99.B15.1
4. Proposed Class C 12b-1 Plan.....................................EX-99.B15.2
5. Proposed Rule 18f-3 Plan .......................................EX-99.B18
6. Powers of Attorney..............................................EX-99.POA
-9-
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: Banc
Stock Group 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 effective 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 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 (excluding expenses which the Fund is authorized to pay
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act")
as amended); 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. The Fund will also pay expenses which it is
authorized to pay pursuant to Rule 12b-1 under the 1940 Act. 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
-2-
<PAGE>
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Fund and to accounts over which you
exercise investment discretion. The Fund and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, 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 1940 Act or
the rules thereunder, neither you nor your shareholders, members, officers,
directors, 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 director, partner, officer,
employee, member, shareholder 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 director,
partner, officer, employee, member, shareholder 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 1940 Act) of the
-3-
<PAGE>
outstanding voting securities of the Fund, provided that in either event
continuance is also approved by a majority of the trustees who are not
"interested persons," as defined in the 1940 Act, 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 "Banc Stock Group" 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", "Banc Stock Group" 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", "Banc Stock Group" 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
these right to use these 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 1940 Act by the Securities and Exchange
Commission or its staff) 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 1940 Act) 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 the Securities and Exchange Commission or its staff. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement is revised by rule, regulation, order of the Securities and Exchange
Commission or its staff, such provision shall be deemed to incorporate the
effect of such rule, regulation, order or interpretation.
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
Michael Guirlinger, President
Name/Title:___________________ Dated: _________________, 1999
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATTEST: HEARTLAND ADVISORY GROUP, INC.
BY
- --------------------------- -----------------------------
Michael Guirlinger, President
Name/Title:___________________ Dated: _________________, 1999
-6-
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment No. 3 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.
January 22, 1999
BANC STOCK GROUP FUND
CLASS A PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
----------------------
WHEREAS, The BSG Funds, an Ohio business trust (the "Trust"), engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which may be divided into
one or more series of Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Qualified Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit the Banc Stock Group Fund (the
"Fund") and the Class A shareholders of the Fund, have approved this Plan by
votes cast in person at a meeting called for the purpose of voting hereon and on
any agreements related hereto;
NOW THEREFORE, the Trust hereby adopts this Plan for the Class A Shares of
the Fund, in accordance with Rule 12b-1 under the 1940 Act, on the following
terms and conditions:
1. DISTRIBUTION ACTIVITIES. Subject to the supervision of the
-----------------------
Trustees of the Trust, the Trust may, directly or indirectly,
engage in any activities related to the distribution of Class A
Shares of the Fund, which 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 Class A Shares, or that
may be advising shareholders of the Trust regarding the purchase,
sale or retention of Class A Shares, or that hold Class A Shares
for shareholders in omnibus accounts or as shareholders of record
or provide shareholder support or administrative services to the
Fund and its shareholders; (b) payments made to securities
dealers or other financial intermediaries, financial
institutions, investment advisors and others that render
shareholder support services not otherwise provided by the
Trust's transfer agent, including, but not limited to, allocated
overhead, office space and equipment, telephone facilities and
expenses, answering routine inquiries regarding the Trust,
processing shareholder transactions, and providing such other
shareholder services as the Trust may reasonably request; (c)
expenses of maintaining personnel (including personnel of
organizations with which the Trust has entered into agreements
related to this Plan) who engage in or support distribution of
Class A Shares;
<PAGE>
(d) 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; (e)
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; (f) costs of preparing, printing
and distributing sales literature; (g) costs of obtaining such
information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem
advisable; and (h) costs of implementing and operating this Plan.
The Trust is authorized to engage in the activities listed above,
and in any other activities related to the distribution of Class
A Shares, either directly or through other persons with which the
Trust has entered into agreements related to this Plan.
2. ANNUAL FEE. The Fund will pay the Fund's investment adviser ("the
----------
Adviser") an annual fee for the Adviser's services in connection
with the sales and promotion of the Fund, including its expenses
in connection therewith (collectively, "Distribution Expenses").
The annual fee paid to the Adviser under this Plan will be
calculated daily and paid monthly by the Fund on the first day of
each month at an annual rate of 0.25% of the average daily net
assets of the Class A shares of the Fund. Payments received by
the Advisor pursuant to this Plan are in addition to fees paid by
the Fund pursuant to the Management Agreement.
3. TERM AND TERMINATION.
(a) This Plan shall become effective on March 1, 1999 provided it
is approved by a majority of the Class A shareholders of the
Fund.
(b) Unless terminated as herein provided, this Plan shall continue
in effect for one year from the effective date and shall
continue in effect for successive periods of one year
thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Qualified Trustees, cast in
person at a meeting called for the purpose of voting on such
approval.
(c) This Plan may be terminated at any time by the vote of a
majority of the Rule 12b-1 Trustees or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act)
of the Class A Shares of the Fund. If this Plan is terminated,
the Fund will not be required to make any payments for expenses
incurred after the date of termination.
4. AMENDMENTS. All material amendments to this Plan must be approved
----------
in the manner provided for annual renewal of this Plan in Section
3(b) hereof. In addition, this Plan may not be amended to
increase materially the amount of expenditures provided for in
Section 2 hereof unless such amendment is approved by a vote of
the majority of the outstanding voting securities of the Class A
Shares of the Fund (as defined in the 1940 Act).
5. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in
------------------------------------
effect, the selection and nomination of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust
shall be committed to the discretion of the Trustees who are not
interested persons of the Trust.
-2-
<PAGE>
6. QUARTERLY REPORTS. The Treasurer of the Trust shall provide to
-----------------
the Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and
any related agreement and the purposes for which such
expenditures were made.
7. RECORDKEEPING. The Trust shall preserve copies of this Plan and
-------------
any related agreement and all reports made pursuant to Section 6
hereof, for a period of not less than six years from the date of
this Plan, the agreements or such reports, as the case may be,
the first two years in an easily accessible place.
8. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration
-----------------------
of Trust of the Trust is on file with the Secretary of the State
of Ohio and notice is hereby given that this Plan is executed on
behalf of the Trustees of the Trust as trustees and not
individually and that the obligations of this instrument are not
binding upon the Trustees, the shareholders of the Trust
individually or the assets or property of any other series of the
Trust, but are binding only upon the assets and property of the
Fund.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of
the date set forth below.
Date: , 1999
Attest: The BSG Funds
By:
- ------------------------ ----------------------------
Lisa Hunter, Secretary Michael Guirlinger, President
-3-
BANC STOCK GROUP FUND
CLASS C PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1
----------------------
WHEREAS, The BSG Funds, an Ohio business trust (the "Trust"), engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which may be divided into
one or more series of Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Qualified Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit the Banc Stock Group Fund (the
"Fund") and the Class C shareholders of the Fund, have approved this Plan by
votes cast in person at a meeting called for the purpose of voting hereon and on
any agreements related hereto;
NOW THEREFORE, the Trust hereby adopts this Plan for the Class C Shares of
the Fund, in accordance with Rule 12b-1 under the 1940 Act, on the following
terms and conditions:
1. DISTRIBUTION ACTIVITIES. Subject to the supervision of the
-----------------------
Trustees of the Trust, the Trust may, directly or indirectly,
engage in any activities related to the distribution of Class C
Shares of the Fund, which 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 Class C Shares, or that
may be advising shareholders of the Trust regarding the purchase,
sale or retention of Class C Shares; (b) expenses of maintaining
personnel (including personnel of organizations with which the
Trust has entered into agreements related to this Plan) who
engage in or support distribution of Class C 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; (f) costs of obtaining such
information, analyses and reports with respect to marketing and
promotional activities as the Trust may, from time to time, deem
advisable; and (g) costs of implementing and operating this Plan.
The Trust is authorized to engage in the activities listed above,
and in any other activities related to the distribution of Class
C Shares, either directly or through other persons with which the
Trust has entered into agreements related to this Plan.
<PAGE>
2. ANNUAL FEE. The Fund will pay the Fund's investment adviser ("the
----------
Adviser") an annual fee for the Adviser's services in connection
with the sales and promotion of the Fund, including its expenses
in connection therewith (collectively, "Distribution Expenses").
The annual fee paid to the Adviser under this Plan will be
calculated daily and paid monthly by the Fund on the first day of
each month at an annual rate of 0.75% of the average daily net
assets of the Class C shares of the Fund. Payments received by
the Adviser pursuant to this Plan are in addition to fees paid by
the Fund pursuant to the Management Agreement.
3. SERVICE FEES. In addition to the payments provided for in Section
------------
2 and in order to further enhance the distribution of the Fund's
Class C Shares, the Fund shall pay the Adviser a rate of 0.25% of
the average daily net assets of the Class C Shares of the Fund
for payments made to securities dealers or other financial
intermediaries, financial institutions, investment advisors and
others that (a) hold Class C Shares for shareholders in omnibus
accounts or as shareholders of record or provide shareholder
support or administrative services to the Fund and its
shareholders or (b) render shareholder support services not
otherwise provided by the Trust's transfer agent, including, but
not limited to, allocated overhead, office space and equipment,
telephone facilities and expenses, answering routine inquiries
regarding the Trust, processing shareholder transactions, and
providing such other shareholder services as the Trust may
reasonably request. If the NASD adopts a definition of "service
fees" for purposes of Section 26(d) of the Rules of Fair Practice
of the NASD (or any successor to such rule) that differs from the
definition of service fees hereunder, the definition of service
fees hereunder shall be automatically amended, without further
action of the parties, to conform to such NASD definition.
4. TERM AND TERMINATION.
(a) This Plan shall become effective upon the first issuance of
Class C shares.
(b) Unless terminated as herein provided, this Plan shall continue
in effect for one year from the effective date and shall
continue in effect for successive periods of one year
thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Qualified Trustees, cast in
person at a meeting called for the purpose of voting on such
approval.
(c) This Plan may be terminated at any time by the vote of a
majority of the Rule 12b-1 Trustees or by vote of a majority
of the outstanding voting securities (as defined in the 1940
Act) of the Class C Shares of the Fund. If this Plan is
terminated, the Fund will not be required to make any payments
for expenses incurred after the date of termination.
5. AMENDMENTS. All material amendments to this Plan must be approved
----------
in the manner provided for annual renewal of this Plan in Section
4(b) hereof. In addition, this Plan may not be amended to
increase materially the amount of expenditures provided for in
Sections 2 and 3 hereof unless such amendment is approved by a
vote of the majority of the outstanding voting securities of the
Class C Shares of the Fund (as defined in the 1940 Act).
-2-
<PAGE>
6. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in
------------------------------------
effect, the selection and nomination of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust
shall be committed to the discretion of the Trustees who are not
interested persons of the Trust.
7. QUARTERLY REPORTS. The Treasurer of the Trust shall provide to
-----------------
the Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and
any related agreement and the purposes for which such
expenditures were made.
8. RECORDKEEPING. The Trust shall preserve copies of this Plan and
-------------
any related agreement and all reports made pursuant to Section 7
hereof, for a period of not less than six years from the date of
this Plan, the agreements or such reports, as the case may be,
the first two years in an easily accessible place.
9. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration
-----------------------
of Trust of the Trust is on file with the Secretary of the State
of Ohio and notice is hereby given that this Plan is executed on
behalf of the Trustees of the Trust as trustees and not
individually and that the obligations of this instrument are not
binding upon the Trustees, the shareholders of the Trust
individually or the assets or property of any other series of the
Trust, but are binding only upon the assets and property of the
Fund.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of
the date set forth below.
Date: , 1999
Attest: The BSG Funds
By:
- -----------------------
Lisa Hunter, Secretary Michael Guirlinger, President
-3-
THE BSG FUNDS
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
This Multiple Class Plan (the "Plan") is adopted in accordance with
Rule 18f-3 (the "Rule") under the Investment Company Act of 1940, as amended
(the "Act") by The BSG Funds (the "Trust") on behalf of its current series, The
Banc Stock Group Fund, and any series that may be established in the future
(collectively the "Funds" and individually a "Fund"). A majority of the
Trustees, including a majority of the Trustees who are not interested persons of
the Trust (as defined in the Act), having determined that the Plan is in the
best interests of each class of each Fund individually and of the Trust as a
whole, have approved the Plan.
The provisions of the Plan are:
1. GENERAL DESCRIPTION OF CLASSES. Each class of shares of a Fund
------------------------------
shall represent interests in the same portfolio of investments of
that Fund and shall be identical in all respects, except that
each class shall differ with respect to: (i) Rule 12b-1 Plans
adopted with respect to the class; (ii) distribution and related
services and expenses as provided for in the Plans; (iii) such
differences relating to purchase minimums, eligible investors and
exchange privileges as may be set forth in the prospectus(es) and
statement(s) of additional information of the Series, as the same
may be amended or supplemented from time to time; and (iv) the
designation of each class of Shares. There currently are two
classes designated: Class A and Class C.
a. Class A Shares are offered and sold at net asset
value plus a maximum sales load of 4.00%. Class A
Shares are subject to a maximum 0.25% annual
distribution fee.
b. Class C Shares are offered at net asset value,
without initial sales charge, subject to a maximum
1.00% annual distribution fee (of which .75% is an
asset based sales charge and .25% is a service fee)
and a CDSC of __% if redeemed within two years of the
purchase date.
2. EXPENSE ALLOCATIONS TO EACH CLASS.
a. In addition to the service and distribution fees
described above, certain expenses may be attributable
to a particular class of shares of a Fund ("Class
Expenses"). Class Expenses are charged directly to
net assets of the class to which the expense is
attributed and are borne on a pro rata basis by the
outstanding shares of that class.
Class Expenses may include;
(i) expenses incurred in connection with a meeting
of shareholders;
(ii) litigation expenses;
(iii) printing and postage expenses of shareholders
reports, prospectuses and proxies to current
shareholders of a specific class;
<PAGE>
(iv) expenses of administrative personnel and
services required to support the shareholders
of a specific class;
(v) transfer agent fees and shareholder servicing
expenses; and
(vi) such other expenses incurred by or
attributable to a specific class.
b. All other expenses of a Fund are allocated to each
class on the basis of the net asset value of that
class in relation to the net asset value of the Fund.
Notwithstanding the foregoing, the distributor or
adviser of a Fund may waive or reimburse the expenses
of a specific class or classes to the extent
permitted under the Rule.
3. CLASS DESIGNATION. Subject to the approval by the Trustees of
-----------------
the Trust, a Fund may alter the nomenclature for the
designations of one or more of its classes of shares.
4. ADDITIONAL INFORMATION. This plan is qualified by and subject
----------------------
to the terms of the then current Prospectus for the applicable
class of shares; provided, however, that none of the terms set
forth in any such Prospectus shall be inconsistent with the
terms of this Plan. The Prospectus for each class contains
additional information about the class and the Fund's multiple
class structure.
5. EFFECTIVE DATE. This Plan is effective on _______ ___, 1999,
--------------
provided that this Plan shall not become effective with
respect to any Fund or class unless first approved by a
majority of the Trustees, including a majority of the Trustees
who are not interested persons of the Trust (as defined in the
Act). This Plan may be terminated or amended at any time with
respect to the Trust or any Fund or class thereof by a
majority of the Trustees, including a majority of the Trustees
who are not interested persons of the Trust (as defined in the
Act).
-2-
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"), periodically files
amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; 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 any Amendment or Amendments to the Trust's Registration Statement, hereby
giving and granting to said attorneys full power and authority to do and perform
all and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as 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 13th
day of October, 1997.
/S/
------------------------------------
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 13th day of October, 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, its Registration
Statement, and periodically file amendments to its Registration Statement; and
WHEREAS, the undersigned is a Trustee and the President and Treasurer
of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and
in his name, place and stead, and in his capacity in the Trust, to execute and
file such Registration Statement and any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said attorneys full power
and authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully to all intents and
purposes as 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 his hand this 4th
day of February, 1997.
/S/
----------------------------------
MICHAEL E. GUIRLINGER,
Trustee, President and Treasurer
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared MICHAEL E. GUIRLINGER, known to me to be the person
described in and who executed the foregoing instrument, and who acknowledged to
me that she executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 4th day of February, 1997.
/S/ SANDRA L. QUINN
---------------------------------
Notary Public
Commission expires 1/21/2002
<PAGE>
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"), periodically files
amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; 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 any Amendment or Amendments to the Trust's Registration Statement, hereby
giving and granting to said attorneys full power and authority to do and perform
all and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as 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 13th
day of October, 1997.
/S/
--------------------------
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 13th day of October, 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"), periodically files
amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
WHEREAS, the undersigned is the Chief Financial Officer 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 any Amendment or Amendments to the Trust's Registration Statement, hereby
giving and granting to said attorneys full power and authority to do and perform
all and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 19th
day of August, 1998.
/S/
-------------------------------
JEFFREY C. BARTON,
Chief Financial Officer
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared JEFFREY C. BARTON, 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 19th day of August, 1998.
/S/ LISA HUNTER
---------------------------------
Notary Public
My commission expires: 6/13/99
<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"), periodically files
amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; 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 any Amendment or Amendments to the Trust's Registration Statement, hereby
giving and granting to said attorneys full power and authority to do and perform
all and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 13th
day of October, 1997.
/S/
---------------------------------
JOHN M. BOBB, III, Trustee
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, a Notary Public, in and for said county and state,
personally appeared JOHN M. BOBB, III, 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 13th day of October, 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"), periodically files
amendments to its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; 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 any Amendment or Amendments to the Trust's Registration Statement, hereby
giving and granting to said attorneys full power and authority to do and perform
all and every act and thing whatsoever requisite and necessary to be done in and
about the premises as fully to all intents and purposes as he might or could do
if personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 29th
day of October, 1997.
/S/
----------------------------
GARY A. RADVILLE, Trustee
STATE OF ILLINOIS )
) ss:
COUNTY OF COOK )
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 29th day of October, 1997.
/S/ DONNA M. RECUPIDO
-------------------------------
Notary Public
My commission expires: 7/31/2001
