SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
THE BSG FUNDS
-------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
November 8, 2000
To all shareholders of THE BANC STOCK GROUP FUND and THE DIAMOND HILL FOCUS
FUND:
Enclosed for your review and for voting purposes is a proxy ballot for either
THE DIAMOND HILL FOCUS FUND or THE BANC STOCK GROUP Fund.
If you are a shareholder of both funds, you will receive two proxies and we
request that you vote them both in any of the following ways:
o Mark your ballot, sign where indicated and return in the postage paid
envelope.
o Following the instructions on your ballot, call the toll-free number
that is provided with your proxy card at hand.
o If you have internet access, enter WWW.PROXYVOTE.COM and follow the
instructions with the proxy card at hand. You will need the 12 digit
control number in order to vote by phone or by internet access.
We appreciate your interest in THE DIAMOND HILL FOCUS FUND or THE BANC STOCK
GROUP FUND. Your affirmative vote for the issues listed on your proxy will help
us to serve you better.
Sincerely,
THE DIAMOND HILL FOCUS FUND THE BANC STOCK GROUP FUND
<PAGE>
THE BSG FUNDS
1105 Schrock Road
Suite 437
Columbus, Ohio 43229
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 2000
Dear Shareholders:
A special meeting of shareholders of The BSG Funds, consisting of the Banc
Stock Group Fund and the Diamond Hill Focus Fund (each a "Fund"), will be held
on November 30, 2000 at 4:00 p.m., Eastern time, at the offices of The Banc
Stock Group, Inc., 1105 Schrock Road, Suite 437, Columbus, Ohio 43229, for the
purpose of considering the following proposals, all as described in the
accompanying proxy statement:
1. FOR ALL FUNDS: To elect members of the Board of Trustees to hold
office until their successors are duly elected and qualified.
2. FOR THE BANC STOCK GROUP FUND ONLY: To approve a new Management
Agreement between the Banc Stock Group Fund and Banc Stock Financial
Services, Inc.
3. FOR ALL FUNDS: To ratify the selection of McCurdy & Associates CPA's,
Inc. as the independent accountants for The BSG Funds for the fiscal
year ending February 28, 2001.
4. FOR ALL FUNDS: To transact such other business as may properly come
before the meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of a Fund at the close of business on October 27, 2000. Whether or
not you plan to attend the meeting in person, you may vote in any one of the
following three ways:
1. Vote, sign, date and return the enclosed proxy card in the enclosed
postage-paid envelope; or
2. Voteby telephone by following the instructions on the proxy card; or
3. Vote using the Internet by following the instructions on the proxy
card.
By Order of the Board of Trustees
LISA R. HUNTER
Secretary
Columbus, Ohio
November 7, 2000
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Please indicate your
voting instructions on the enclosed proxy card, date and sign the card, and
return it in the envelope provided. You may also vote by telephone or the
Internet. IF YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD BUT GIVE NO
VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE PROPOSALS NOTICED
ABOVE. In order to avoid the additional expense of further solicitation, we ask
your cooperation by voting promptly. Unless proxy cards submitted by
corporations and participants are signed by the appropriate persons as indicated
in the voting instructions on the proxy card, they will not be voted.
<PAGE>
THE BSG FUNDS
1105 Schrock Road
Suite 437
Columbus, Ohio 43229
---------------
PROXY STATEMENT
---------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 2000
INTRODUCTION
This proxy statement is furnished to the shareholders of The BSG Funds (the
"Trust"), consisting of the Banc Stock Group Fund and the Diamond Hill Focus
Fund (each a "Fund" and collectively, the "Funds"), in connection with a
solicitation of proxies by and on behalf of the Trust's Board of Trustees for
use at a special meeting of the shareholders of the Trust, to be held on
November 30, 2000 at 4:00 p.m., Eastern time, at 1105 Schrock Road, Suite 437,
Columbus, Ohio 43229 or any adjournment or adjournments thereof (collectively,
the "Meeting").
THE PROXY
The proxies named in the enclosed form of proxy will vote in accordance
with your direction when the proxy is returned properly executed. If you sign,
date and return the form of proxy but give no voting instructions, your shares
will be voted:
1. FOR ALL FUNDS: For the election of members of the Board of Trustees to
hold office until their successors are duly elected and qualified.
2. FOR THE BANC STOCK GROUP FUND ONLY: For approval of the Management
Agreement between the Banc Stock Group Fund and Banc Stock Financial
Services, Inc.
3. FOR ALL FUNDS: For the ratification of the selection of McCurdy &
Associates CPA's, Inc. as the independent accountants for the Trust
for the fiscal year ending February 28, 2001.
4. FOR ALL FUNDS: At the discretion of the holders of the proxy on any
other business as may properly come before the meeting or any
adjournment thereof.
You may revoke your proxy by giving another proxy or by letter directed to
the Trust showing your name and account number. Such revocation, to be
effective, must be received prior to the Meeting. In addition, if you attend the
Meeting in person you may, if you wish, vote by ballot at the Meeting, thereby
canceling any proxy previously given.
THE TRUST WILL SUPPLY WITHOUT COST, UPON WRITTEN REQUEST, A COPY OF THE
TRUST'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS, WHICH INCLUDE FINANCIAL AND
OTHER INFORMATION ABOUT THE FUNDS. SUCH REQUEST SHOULD BE DIRECTED TO THE BSG
FUNDS, 1105 SCHROCK ROAD, SUITE 437, COLUMBUS, OHIO 43229, TELEPHONE NUMBER
(888) 226-5595. THE PROXY STATEMENT, ALONG WITH THE NOTICE OF MEETING AND PROXY
CARD(S) WILL FIRST BE MAILED TO SHAREHOLDERS ON OR ABOUT NOVEMBER 7, 2000.
1
<PAGE>
As of the record date, October 27, 2000, the Trust had 1,667,033.816 shares
of beneficial interest outstanding, consisting of 936,188.804 shares of the Banc
Stock Group Fund and 730,845.012 shares of the Diamond Hill Focus Fund. Roderick
H. Dillon, Jr., President, Chief Executive Officer and Chief Investment Officer
of The Banc Stock Group, 1105 Schrock Road, Suite 437, Columbus, Ohio 43229,
owned 40,967.833 shares of the Diamond Hill Focus Fund, representing 5.61% of
the Diamond Hill Focus Fund's outstanding shares as of the record date.
Management does not know of any other person who owned beneficially 5% of more
of a Fund's outstanding shares on the record date. The solicitation of proxies
will occur primarily by mail but also may include telephone or oral
communications by regular employees of Banc Stock Financial Services, Inc.
Shareholders of record on the record date are entitled to one vote for each
share held and fractional votes for fractional shares held.
The presence in person or by proxy at the Meeting of the owners of a
majority of the shares entitled to vote is required for a quorum. If a quorum is
not present at the Meeting, or if a quorum is present at the Meeting but
sufficient votes to approve any of the proposals are not received, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote FOR any such proposal in favor of such adjournment,
and will vote those proxies required to be voted AGAINST any such proposal
against such adjournment. A shareholder vote may be taken on one or more of the
proposals in this proxy statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
With respect to Proposal 1, Trustees may be elected by a vote of the
holders of a plurality of the shares of the Trust voted, by person or by proxy,
at the Meeting. With respect to Proposal 2, approval requires the affirmative
vote of a "majority" (as defined in the Investment Company Act of 1940 (the
"1940 Act")) of the outstanding shares of the Banc Stock Group Fund entitled to
vote at the Meeting. As defined in the 1940 Act, a majority of the outstanding
shares means the vote of (1) 67% or more of the voting shares of the Banc Stock
Group Fund present at the meeting, if the holders of more than 50% of the
outstanding shares are present in person or represented by proxy, or (ii) more
than 50% of the outstanding voting shares of the Banc Stock Group Fund,
whichever is less. The affirmative vote of a simple majority of the voted shares
of each Fund is required to approve Proposal 3, ratification of the selection of
McCurdy & Associates CPA's, Inc.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Abstentions and broker non-votes will be counted as shares present
for purposes of determining whether a quorum is present but will not be voted
for or against any adjournment or proposal. Accordingly, abstentions and broker
non-votes effectively will be a vote against Proposal 2, because the required
vote is a percentage of the shares present or outstanding. However, with respect
to Proposal 1 and Proposal 3, they will have no effect because the required vote
is a plurality of voted shares for Proposal 1, and a majority of voted shares
for Proposal 3.
A shareholder receiving this proxy statement may hold shares in one or more
of the Funds. A proxy card with respect to each Fund of which a shareholder owns
shares accompanies this proxy statement. A shareholder may execute proxies or
vote at the Meeting with respect to all shares owned in each of the Funds.
2
<PAGE>
PROPOSALS
ELECTION OF TRUSTEES
The Board of Trustees has nominated the five individuals identified below
for election to the Board. Each of the five Trustees elected will hold office
until his or her successor is selected and qualified. Unless you give contrary
instructions in the form of proxy, your proxy will be voted for the election of
the five nominees. Each of the nominees has indicated a willingness to serve if
elected. If a nominee should withdraw or otherwise become unavailable for
election due to events not now known or anticipated, unless the Board reduces
the number of trusteeships or you have withheld authority as to the election of
the Trustees, your proxies will be voted for such other nominee or nominees as
the Board may recommend.
Two of the nominees are currently Trustees of the Trust: John M. Bobb and
Lisa R. Hunter. Ms. Hunter is Treasurer, Secretary, and Chief Financial Officer
of the Trust. Mr. Bobb is not affiliated with the Trust. The nominees for
election, their ages, and a description of their principal occupations are
listed in the table below.
<TABLE>
<CAPTION>
=========================== =================================================================================
NOMINEE BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
=========================== =================================================================================
<S> <C>
John M. Bobb Trustee of the Trust since October 1997. Director of Headwaters Group, a fine
Age: 58 arts consulting agency, since 1994.
--------------------------- ---------------------------------------------------------------------------------
Roderick H. Dillon, Jr.* President, Chief Executive Officer and Chief Investment Officer of The Banc
Age: 44 Stock Group, a holding company that owns Diamond Hill Capital Management and
Banc Stock Financial Services, Inc., since April 2000; Vice President with
Loomis, Sayles & Company, a financial services company, from October 1997
to April 2000; President and Chief Investment Officer of Dillon Capital
Management, an investment advisory firm, from July 1993 to October 1997.
--------------------------- ---------------------------------------------------------------------------------
Lisa R. Hunter* Treasurer and Chief Financial Officer of the Trust since April 2000, Secretary
Age: 46 and a Trustee of the Trust since January 1997. Vice President and Director of
Compliance of Banc Stock Financial Services, Inc., each Fund's distributor,
since December 1994.
--------------------------- ---------------------------------------------------------------------------------
George A. Skestos President of Homewood Corporation, a real estate development firm, since
Age: 31 September 1999; Director of the Midland Life Insurance Company since April
1998; Officer of Huntington Capital Corp. from April 1994 through September
1997.
--------------------------- ---------------------------------------------------------------------------------
William P. Zox Partner with Schottenstein, Zox and Dunn Co. LPA, a law firm, since January
Age: 33 2000; Associate with Schottenstein, Zox and Dunn Co. LPA from July 1993 to
January 2000.
=========================== =================================================================================
</TABLE>
*MR. DILLON AND MS. HUNTER ARE DEEMED TO BE "INTERESTED PERSONS" OF THE TRUST AS
THOSE TERMS ARE DEFINED IN THE 1940 ACT BECAUSE OF THEIR ASSOCIATIONS WITH THE
TRUST, THE TRUST'S DISTRIBUTOR, AND THE TRUST'S ADVISER.
3
<PAGE>
The shares of each Fund beneficially owned by each Trustee, Trustee
nominee, and named executive officer, as of October 27, 2000, is shown in the
following table. For this purpose, "beneficial ownership" is defined in the
regulations under section 13(d) of the Securities Exchange Act of 1934. The
information is based on statements furnished to the Trust by the nominees.
<TABLE>
<CAPTION>
================================ ========================================== ==========================================
BANC STOCK GROUP FUND DIAMOND HILL FOCUS FUND
========================== =============== ========================= ================
ALL NOMINEES, TRUSTEES, AND NUMBER OF SHARES PERCENT OF NUMBER OF SHARES PERCENT OF FUND
EXECUTIVE OFFICERS BENEFICIALLY OWNED FUND BENEFICIALLY OWNED
-------------------------------- -------------------------- --------------- ------------------------- ----------------
<S> <C> <C> <C> <C>
John M. Bobb 899.249 * 0 0
-------------------------------- -------------------------- --------------- ------------------------- ----------------
Roderick H. Dillon, Jr. 0 0 40,967.833 5.61%
-------------------------------- -------------------------- --------------- ------------------------- ----------------
Lisa R. Hunter 106.890 * 315.682 *
-------------------------------- -------------------------- --------------- ------------------------- ----------------
Virginia H. Rader 0 0 0 0
-------------------------------- -------------------------- --------------- ------------------------- ----------------
Gary A. Radville 0 0 0 0
-------------------------------- -------------------------- --------------- ------------------------- ----------------
Anthony J. Reilly 106.890 * 0 0
-------------------------------- -------------------------- --------------- ------------------------- ----------------
George A. Skestos 0 0 0 0
-------------------------------- -------------------------- --------------- ------------------------- ----------------
William P. Zox 0 0 0 0
-------------------------------- -------------------------- --------------- ------------------------- ----------------
All Trustees and Executive 1,113.029 * 41,128.515 5.65%
Officers as a Group
================================ ========================== =============== ========================= ================
<FN>
* Indicates beneficial ownership of less than 1% of the Fund.
</FN>
</TABLE>
COMPENSATION TABLE
The following table provides information relating to the compensation of
the Trust's Trustees for the fiscal year ended February 29, 2000.
================================== ===========================================
NAME TOTAL COMPENSATION FROM TRUST
---------------------------------- -------------------------------------------
Lisa R. Hunter $0
---------------------------------- -------------------------------------------
John M. Bobb $4,000
---------------------------------- -------------------------------------------
Virginia H. Rader $4,000
---------------------------------- -------------------------------------------
Gary A. Radville $4,000
================================== ===========================================
Those Trustees who are not affiliated with the Adviser are paid a fee of
$1,000 per meeting. The Board of Trustees held four regular meetings during the
last full fiscal year. The Trust also reimburses each Trustee for any reasonable
and necessary travel expenses incurred in connection with attendance at such
meetings. The Trust does not have a standing audit, compensation or nominating
committee.
No executive officer of the Trust received compensation from the Trust for
his or her services as officer.
4
<PAGE>
TRUSTEES AND OFFICERS
The Principal occupations of the Trustees and executive officers of the
Trust who are not Trustee nominees are as follows:
============================ ===================================================
TRUSTEES AND OFFICERS BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
============================ ===================================================
Virginia H. Rader Trustee of the Trust since April 1997. Retired.
Age: 53
---------------------------- ---------------------------------------------------
Gary A. Radville Trustee of the Trust since April 1997. Chief
Age: 42 Financial Officer of Peer Foods, Inc. Prior to
1996, Partner, Price Waterhouse.
---------------------------- ---------------------------------------------------
Anthony J. Reilly President of the Trust since April 2000. President
Age: 33 of Banc Stock Financial Services, Inc. since April
1992.
============================ ===================================================
RECOMMENDATION OF THE BOARD OF TRUSTEES
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES TO THE BOARD OF TRUSTEES OF THE TRUST.
FOR BANC STOCK GROUP FUND SHAREHOLDERS ONLY:
APPROVAL OF MANAGEMENT AGREEMENT
The current Management Agreement (the "Current Management Agreement")
between the Trust on behalf of Banc Stock Group Fund and Diamond Hill Capital
Management, formerly known as Heartland Advisory Group, Inc. (the "Current
Adviser"), was approved by shareholders on February 26, 1999, at which time the
Current Agreement was adopted to reflect a 0.25% reduction in the Current
Adviser's annual fee. The Board subsequently amended the Current Management
Agreement as of July 1, 2000 to reflect a further reduction in the Current
Adviser's annual fee, which is presently at 1.50% of the Fund's average daily
net assets. Pursuant to the Current Management Agreement, the Current Adviser
provides investment advisory services and certain administrative services to the
Fund and pays all operating expenses of the Fund, except for brokerage, taxes,
interest, Trustee expenses, and Rule 12b-1 distribution expenses. In addition,
an Addendum to the Current Management Agreement provides that the Current
Adviser shall reimburse the Fund for all Trustee expenses until June 1, 2003.
The Current Adviser's principal executive offices are located at 1105
Schrock Road, Suite 437, Columbus, Ohio 43229. Roderick H. Dillon, Jr. is
President of the Current Adviser. Jeffrey C. Barton, Chief Financial Officer of
The Banc Stock Group, is Treasurer and sole Director of the Current Adviser. The
Current Adviser is a wholly owned subsidiary of The Banc Stock Group, Inc., 1105
Schrock Road, Suite 437, Columbus, Ohio 43229.
The Trust is seeking to retain Banc Stock Financial Services, Inc. (the
"New Adviser") as the Banc Stock Group Fund's investment adviser. The New
Adviser is a sister company of the Current Adviser, which currently manages both
the Banc Stock Group Fund and the Diamond Hill Focus Fund. The personnel and
operations of the Current Adviser and the New Adviser are being realigned by the
parent company so that the Current Adviser will provide general advisory
services, and the New Adviser will provide specialized advisory services
pertaining primarily to investments in the securities of banks, lending
institutions, and financial services companies. As a result of this realignment,
it is proposed that the investment advisory services provided to the Banc Stock
Group Fund by the Current Adviser will now be provided by the New Adviser.
Replacing the Current Adviser with the New Adviser will result in no practical
change in the management of the Banc Stock Group Fund. The New Adviser will
retain the same portfolio manager, Mark Davis, and adhere to the same investment
objectives and strategies as the Current Adviser.
5
<PAGE>
In an effort to distinguish investment advisory services provided by the
New Adviser from administrative services, the Banc Stock Group Fund is seeking
to enter into two separate agreements with the New Adviser: a Management
Agreement that covers investment management services provided to the Fund by the
New Adviser (the "New Management Agreement") and an Administrative Services
Agreement that covers administrative services provided to the Fund by the New
Adviser (the "Administrative Services Agreement"). Therefore, certain
administrative responsibilities of the Current Adviser that are contained in the
Current Management Agreement will be contained in the Administrative Services
Agreement, rather than the New Management Agreement.
The New Management Agreement provides that the New Adviser will provide the
Fund with such investment advice as it deems advisable, furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies, and 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 of Trustees may from time to time establish. The New Management Agreement
also provides that the New Adviser 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 of Trustees and the appropriate committees of the Board
of Trustees regarding the conduct of the business of the Fund.
In connection with purchases or sales of portfolio securities for the
account of the Fund, the New Adviser 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 the New Adviser, subject to review of these selections by
the Board of Trustees from time to time. The New Adviser is responsible for the
negotiation and allocation of principal business and portfolio brokerage. In the
selection of such brokers or dealers and the placing of such orders, the New
Adviser must at all times 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.
The New Adviser generally seeks favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, the New Adviser is 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 the New Adviser exercises investment discretion. The New
Management Agreement also authorizes the New Adviser 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
the New Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or the overall responsibilities of the
New Adviser with respect to the Fund and to accounts over which the New Adviser
exercises investment discretion. The Fund and the New Adviser understand and
acknowledge that, although the information may be useful to the Fund and the New
Adviser, it is not possible to place a dollar value on such information. The
Board of Trustees periodically reviews 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, the New
Adviser 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, the
Adviser, any of its affiliates or any affiliates of its 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 the Adviser gives any advice to its clients concerning the shares of the
Fund, it will act solely as investment counsel for such client and not in any
way on behalf of the Fund. The Adviser's services to the Fund pursuant to the
6
<PAGE>
Agreement are not to be deemed to be exclusive and it is understood that the
Adviser may render investment advice, management and other services to others,
including other registered investment companies.
The New Management Agreement provides that the New Adviser and its
shareholders, members, officers, directors, employees, agents, control persons
or affiliates of any thereof shall not be liable for 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, the New Management Agreement or
any other matter to which the Agreement relates, except by reason of willful
misfeasance, bad faith or gross negligence on the part of any such persons in
the performance of the New Adviser's duties under the New Management Agreement,
or by reason of reckless disregard by any of such persons of the New Adviser's
obligations and duties under the New Management Agreement.
Under the New Management Agreement, the Trust and the New Adviser
acknowledge that all rights to the names "BSG" and "Banc Stock Group" belong to
the New Adviser and that the Trust is being granted a limited license to use
such words in its Fund name or in any class name. In the event the New Adviser
ceases to be the adviser to the Fund, the Trust's rights to the use of the names
"BSG" and "Banc Stock Group" with respect to the Fund will automatically cease
on the ninetieth day following the termination of the New Management Agreement.
The use of the names may also be withdrawn by the New Adviser during the term of
the New Management Agreement upon ninety (90) days' written notice by the New
Adviser to the Trust. Nothing contained in the Agreement impairs, or diminishes
in any respect, the New Adviser's right to use the names "BSG" and "Banc Stock
Group" in the name of, or in connection with, any other business enterprises
with which the New Adviser is or may become associated. There is no charge to
the Trust for the right to use the name.
No provisions of the New Management Agreement may be changed, waived,
discharged or terminated orally, and no amendment of the Agreement is effective
until approved by the Board of Trustees, including a majority of the Trustees
who are not interested persons of the New Adviser 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) by vote of the holders of a majority of the outstanding
voting securities of the series to which the amendment relates.
The New Management Agreement will become effective on the date the
shareholders of the Fund approve the New Management Agreement. The New
Management Agreement will continue in effect for two years from its effective
date, and may continue thereafter on a year-to-year basis, subject to approval
by the Trustees of the Trust or the vote of the holders of a majority of the
outstanding shares of the Fund (as defined in the 1940 Act), and also, in either
event by a vote of the majority of the disinterested Trustees of the Trust in
accordance with the 1940 Act and pursuant to the terms and conditions of the New
Management Agreement. The New Management Agreement may be terminated upon sixty
days written notice by the Board of Trustees of the Trust, by a vote of a
majority of the outstanding voting securities of the Fund, or by the New
Adviser.
If the New Management Agreement is not approved by the shareholders, the
Current Adviser will continue to act as the adviser of the Fund pursuant to the
Current Management Agreement.
The terms of the New Management Agreement are substantially similar to the
terms of the Current Management Agreement, except (1) as described above with
respect to administrative responsibilities, and (2) with regard to the payment
of operating expenses and compensation. Whereas the Current Adviser pays the
Fund's operating expenses and has agreed to reimburse Trustee expenses until
June 1, 2003 pursuant to the terms of the Current Management Agreement, the New
Adviser would pay operating expenses and agree to reimburse Trustee expenses
until June 1, 2003 under the terms of the Administrative Services Agreement.
Furthermore, under the Current Management Agreement, the Current Adviser
receives an annual investment management fee of 1.50%, whereas under the terms
of the New Management Agreement, the New Adviser would receive an annual
investment management fee of 1.00%. However, the New Adviser would also receive
a separate annual administrative services fee of 0.50% pursuant to the
Administrative Services Agreement, which when combined with the 1.00% investment
management fee, would equal the 1.50%
7
<PAGE>
annual fee the Current Adviser receives from the Fund under the Current
Management Agreement. The New Management Agreement also contains other
non-substantive changes. The New Management Agreement is attached as Appendix A.
You should read the Agreement. The description in this proxy statement is only a
summary.
For the fiscal year ended February 29, 2000, the Banc Stock Group Fund paid
investment management fees of $277,238 to the Current Adviser. Had the Fund paid
the Current Adviser the 1.00% investment management fee called for under the
terms of the New Management Agreement, the Current Adviser would have received
investment management fees of $139,113 during this period, which would have been
a decrease of 49.82%. However, this change in investment management fees does
not take into account administrative fees, which would have been paid pursuant
to the Administrative Services Agreement, rather than the New Management
Agreement.
The following table compares the fees and expenses of each Class of the
Fund under the Current Management Agreement with the fees and expenses of each
Class of the Fund under the New Management Agreement.
<TABLE>
<CAPTION>
------------------------------ ---------------------------- --------------------------
CLASS A Shareholder Fees Under the Shareholder Fees Under the
Current Management Agreement New Management Agreement
------------------------------ ---------------------------- --------------------------
<S> <C> <C>
Management Fees 1.50% 1.00%
------------------------------ ---------------------------- --------------------------
Distribution Expenses 0.25% 0.25%
------------------------------ ---------------------------- --------------------------
Other Expenses 0.09% 0.59%
------------------------------ ---------------------------- --------------------------
Total Annual Fund
Operating Expenses
1.84% 1.84%
------------------------------ ---------------------------- --------------------------
Expense Reimbursement* (0.09%) (0.09%)
------------------------------ ---------------------------- --------------------------
Net Fund Operating Expenses 1.75% 1.75%
------------------------------ ---------------------------- --------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------ ---------------------------- --------------------------
CLASS C Shareholder Fees Under the Shareholder Fees Under the
Current Management Agreement New Management Agreement
------------------------------ ---------------------------- --------------------------
<S> <C> <C>
Management Fees 1.50% 1.00%
------------------------------ ---------------------------- --------------------------
Distribution Expenses 1.00% 1.00%
------------------------------ ---------------------------- --------------------------
Other Expenses 0.10% 0.60%
------------------------------ ---------------------------- --------------------------
Total Annual Fund
Operating Expenses
2.60% 2.60%
------------------------------ ---------------------------- --------------------------
Expense Reimbursement* (0.10%) (0.10%)
------------------------------ ---------------------------- --------------------------
Net Fund Operating Expenses 2.50% 2.50%
------------------------------ ---------------------------- --------------------------
</TABLE>
* The Current Adviser has made, and the New Adviser will agree to make, an
irrevocable commitment to reimburse the Fund's trustee expenses through June 1,
2003.
8
<PAGE>
EXAMPLE:
The example below is intended to help you compare the cost of investing in
the Fund under the Current Management Agreement with the cost of investing in
the Fund under the New Management Agreement. The example uses the following
assumptions: a $10,000 initial investment for the time periods indicated,
reinvestment of dividends and distributions, 5% annual total return, constant
operating expenses, and sale of all shares at the end of each time period.
Although your actual expenses may be different, based on these assumptions your
costs will be:
CURRENT MANAGEMENT AGREEMENT
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- --------
CLASS A $743 $1,094 $1,478 $2,575
CLASS C
If you sold your shares
at the end of the period $453 $778 $1,340 $1,340
If you stayed in the Fund $253 $778 $1,340 $2,895
NEW MANAGEMENT AGREEMENT
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ -------- ------- --------
CLASS A $743 $1,094 $1,478 $2,575
CLASS C
If you sold your shares
at the end of the period $453 $778 $1,340 $1,340
If you stayed in the Fund $253 $778 $1,340 $2,895
NEW ADVISER
The New Adviser's principal executive offices are located at 1105 Schrock
Road, Suite 437, Columbus, Ohio 43229. Anthony J. Reilly is President of the New
Adviser. Mr. Reilly is also President of the Trust. Jeffrey C. Barton, Chief
Financial Officer of The Banc Stock Group, is Treasurer and sole Director of the
Current Adviser. The New Adviser is a wholly owned subsidiary of The Banc Stock
Group, Inc., 1105 Schrock Road, Suite 437, Columbus, Ohio 43229.
The New Adviser also acts as the Banc Stock Group Fund's distributor. For
the fiscal year ended February 29, 2000, the New Adviser, in its capacity as the
Fund's distributor, retained $1,545 in total underwriting commissions. It is
anticipated that the New Adviser will continue to act as the Trust's distributor
after the New Agreement is approved. In addition, the New Adviser was paid
$144,454 in commissions for effecting 100% of the Fund's brokerage transactions
during the fiscal year ended February 29, 2000.
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES
At their meeting on August 25, 2000, all Trustees, including all of the
independent Trustees, considered and unanimously approved the New Agreement. In
considering the New Agreement, the trustees reviewed the services to be provided
by the New Adviser, analyzing factors they deemed relevant, including (i) the
nature, quality, and scope of the services to be provided, (ii) the ability of
the New Adviser to provide such services, (iii) the fact that the New Adviser
would employ the same portfolio manager as the Current Adviser, (iv) the
performance of the Fund relative to other funds in its peer group and to various
bank stock indices, and (v) the reasonableness and fairness of the proposed fees
in relation to the services to the Fund. The Trustees also reviewed the fees to
be paid to the New Adviser in light of the fees paid to other investment
managers by comparable funds.
9
<PAGE>
In evaluating the New Agreement, there was considerable discussion by the
Trustees about the proposed fee structure, which includes both an investment
management fee and an administration fee. The trustees placed importance on the
fact that the total amount of fees paid to the New Adviser would be identical to
the fees paid to the Current Adviser, and that other than shifting
administrative responsibilities and fees to a separate agreement, the terms of
the Current Agreement and the New Agreement are substantially similar. After
consideration of these and other factors, including a review of the New
Adviser's financial statements, the Trustees, including all of the independent
Trustees, approved the New Agreement.
RECOMMENDATION OF THE BOARD OF TRUSTEES
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE NEW AGREEMENT.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The 1940 Act, which is the primary federal law that regulates the Trust,
requires every registered investment company to be audited at least once a year
by independent accountants selected by the Board of Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act). The 1940 Act also requires that the selection be submitted for
ratification by the shareholders at their next meeting following the selection.
Under this proposal, shareholders of the Trust are asked to ratify the
Board's unanimous selection of McCurdy & Associates CPA's, Inc. ("McCurdy &
Associates") as the Trust's independent accountants for the fiscal year ending
February 28, 2001. McCurdy & Associates has been the Trust's independent
accountants since April 24, 1997. At that time, the Board of Directors
unanimously selected McCurdy & Associates based on its industry experience and
depth of expertise. At a meeting on April 28, 2000, the Board again elected
McCurdy & Associates as independent accountants.
Representatives of McCurdy & Associates are not expected to be present at
the meeting, although they will have an opportunity to attend and to make a
statement, if they desire to do so. If representatives of McCurdy & Associates
are present, they will be available to respond to appropriate questions from
shareholders. Unless otherwise instructed, the proxies will vote for the
ratification of the selection of McCurdy & Associates as the Trust's independent
accountants.
RECOMMENDATION OF THE BOARD OF TRUSTEES
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF
MCCURDY & ASSOCIATES AS THE TRUST'S INDEPENDENT ACCOUNTANTS.
SHAREHOLDER PROPOSALS
The Trust has not received any shareholder proposals to be considered for
presentation at the Meeting. Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals may, under certain conditions, be
included in the Trust's proxy statement and proxy for a particular meeting.
Under these rules, proposals submitted for inclusion in the Trust's proxy
materials must be received by the Trust a reasonable time before the
solicitation is made. The fact that the Trust receives a shareholder proposal in
a timely manner does not insure its inclusion in its proxy materials, because
there are other requirements in the proxy rules relating to such inclusion. You
should be aware that annual meetings of shareholders are not required as long as
there is no particular requirement under the 1940 Act which must be met by
convening such a shareholder meeting. Any shareholder proposal should be sent to
Lisa Hunter at The BSG Funds, 1105 Schrock Road, Suite 437, Columbus, Ohio
43229.
10
<PAGE>
COST OF SOLICITATION
The cost of preparing and mailing this Proxy Statement, the accompanying
Notice of Special Meeting and Proxy and any additional material relating to the
meeting and the cost of soliciting proxies will be borne by the Current Adviser.
In addition to solicitation by mail, the Trust will request banks, brokers and
other custodial nominees and fiduciaries to supply proxy material to the
beneficial owners of shares of whom they have knowledge, and will reimburse them
for their expenses in so doing. Certain officers and employees of the Trust and
the Adviser may solicit proxies in person or by telephone, facsimile
transmission or mail, for which they will not receive any special compensation.
OTHER MATTERS
The Trust's Board of Trustees knows of no other matters to be presented at
the Meeting other than as set forth above. However, if any other matters
properly come before the meeting that the Trust did not have notice of a
reasonable time prior to the mailing of this Proxy Statement, the holders of the
proxy will vote the shares represented by the proxy on such matters in
accordance with their judgment, and discretionary authority to do so is included
in the proxy.
<TABLE>
<CAPTION>
INVESTMENT ADVISER DISTRIBUTOR ADMINISTRATOR
<S> <C> <C>
Diamond Hill Capital Banc Stock Financial Services, Inc. Mutual Funds Service Co.
Management, Inc. 1105 Schrock Road, Suite 437 6000 Memorial Drive
1105 Schrock Road, Suite 437 Columbus, Ohio 45229 Dublin, Ohio 43017
Columbus, Ohio 45229
</TABLE>
BY ORDER OF THE BOARD OF TRUSTEES
LISA R. HUNTER
Dated November 7, 2000 Secretary
11
<PAGE>
MANAGEMENT AGREEMENT
TO: Banc Stock Financial Services, Inc.
1105 Schrock Road, Suite 437
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 two series of shares to investors, one of
which is the 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 the compensation and expenses of any persons rendering any
services to the Fund who are officers, directors, stockholders or employees of
your corporation and will make available, without expense to the Fund, the
services of such of your employees as may duly be elected officers or trustees
of the Trust, subject to their individual consent to serve and to any
limitations imposed by law. The compensation and expenses of any officers,
trustees and employees of the Trust who are not officers, directors, employees
or stockholders of your corporation will be paid by the Fund.
The Fund will be responsible for the payment of 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 (including fees and expenses payable to you under the
Administration Agreement between you and the Trust ), 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
12
<PAGE>
distribution of the Fund's shares (including expenses which the Fund is
authorized to pay pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act") or under the Fund's Shareholder Servicing
Plan); and all other operating expenses not specifically assumed by you. The
Fund will also pay all brokerage fees and commissions, taxes, borrowing costs
(such as dividend expense on securities sold short and interest), fees and
expenses of the non-interested person trustees and such extraordinary or
non-recurring expenses as may arise, including litigation to which the Fund may
be a party and indemnification of the Trust's trustees and officers with respect
thereto.
You may obtain reimbursement from the Fund, at such time or times as you
may determine in your sole discretion, for any of the expenses advanced by you,
which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made as provided
in this Agreement, as of the last business day of each month, the Fund will pay
you a fee at the annual rate of 1.00% 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 to the Fund and/or the other accounts over which
you exercise investment discretion. You are authorized to pay a broker or dealer
who provides such brokerage and research services a commission for executing a
Fund portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker or dealer. The determination may be viewed in terms of either a
particular transaction or your overall responsibilities with respect to the Fund
and to accounts over which you 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.
13
<PAGE>
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,
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, 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, 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, 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 of the outstanding voting securities of the Fund,
provided that in either event continuance is also approved by a majority of the
trustees who are not interested persons of you or the Trust, by a vote cast in
person at a meeting called for the purpose of voting such approval.
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" or any variation thereof belong to you, and that the Trust is being
granted a limited license to use such words in its 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" and "Banc Stock Group" 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 name names "BSG" and
"Banc Stock Group" in the name of, or in connection with, any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use this name.
14
<PAGE>
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
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. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "The BSG Funds" means and refers to the Trustees from time to time
serving under the Trust's Declaration of Trust as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust
personally, but bind only the trust property of the Trust, as provided in the
Declaration of Trust of the Trust. The execution and delivery of this Agreement
have been authorized by the trustees and shareholders of the Trust and signed by
officers of the Trust, acting as such, and neither such authorization by such
trustees and shareholders nor such execution and delivery by such officers shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Declaration of Trust. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the State of
Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) For the purpose of this Agreement, the terms "majority of the
outstanding voting securities," "control" and "interested person" shall have
their respective meanings as defined in the 1940 Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the 1940 Act; and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934.
(c) 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 or interpretation 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.
12. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 1105 Schrock
Road., Suite 437, Columbus, Ohio 43229, and your address for this purpose shall
be 1105 Schrock Road, Suite 437, Columbus, Ohio 43229.
15
<PAGE>
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
ATTEST:
The BSG Funds
By: _______________________________ By:________________________________
Name/Title Name/Title
Dated: ____________________________
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST:
Diamond Hill Capital Management, Inc.
By:________________________________ By:________________________________
Name/Title Name/Title
Dated: ____________________________
16
<PAGE>
BANC STOCK GROUP FUND
1105 SCHROCK ROAD, SUITE 437
COLUMBUS, OH 43229
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the Proxy card below
at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
BANC STOCK GROUP FUND
Vote On Proposals
PROPOSAL I. ELECTION OF TRUSTEES
Election of the following five persons to serve as members of the Board of
Trustees to hold office until their successors are duly elected and qualified:
1) John M. Bobb, 2) Roderick H. Dillon, Jr., 3) Lisa R. Hunter,
4) George A. Skestos, 5) William P. Zox
For Withhold For All To withhold authority to vote, mark "For All Except"
All All Except and write the nominee's number on the line below.
[ ] [ ] [ ] ____________________________________________________
PROPOSAL II. APPROVAL OF THE MANAGEMENT AGREEMENT
Approval or disapproval of the Management Agreement between the Trust, on behalf
of the Banc Stock Group Fund, and Banc Stock Financial Services, Inc.
For Against Abstain
[ ] [ ] [ ]
PROPOSAL III. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Ratification of the appointment of McCurdy & Associates CPA's, Inc. as
independent accountants of the Trust for the fiscal year ending February 28,
2001.
For Against Abstain
[ ] [ ] [ ]
THE BSG FUNDS
BANC STOCK GROUP FUND
SPECIAL MEETING OF SHAREHOLDERS
November 30, 2000
The undersigned shareholder of the Banc Stock Group Fund (the "Fund"), a
series of The BSG Funds (the "Trust"), hereby nominates, constitutes and
appoints Roderick H. Dillon, Jr. and Lisa R. Hunter and each of them, the
attorney, agent and proxy of the undersigned, with full powers of substitution,
to vote all the stock of the Fund which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the Trust to be held at the offices of
the Banc Stock Group, Inc., 1105 Schrock Road, Suite 437, Columbus, Ohio 43229
on November 30, 2000 at 4:00 p.m., Eastern time, and at any and all adjournments
thereof, as fully and with the same force and effect as the undersigned might or
could do if personally present as stated above:
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "FOR" ON PROPOSALS I, II AND III. THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY
SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF
ANY, PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN THE DISCRETION OF
THE PROXY HOLDERS, IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES, IF ANY.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE PRESIDENT OF THE TRUST AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY APPEARING IN PERSON AND VOTING AT THE MEETING.
(Please date this proxy and sign your name as it appears on the label.
Executors, administrators, trustees, etc. should give their full titles. All
joint owners should sign.)
________________________________________ ___________________________________
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE>
BANC STOCK GROUP FUND
1105 SCHROCK ROAD, SUITE 437
COLUMBUS, OH 43229
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the Proxy card below
at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DIAMOND HILL FOCUS FUND
Vote On Proposals
PROPOSAL I. ELECTION OF TRUSTEES
Election of the following five persons to serve as members of the Board of
Trustees to hold office until their successors are duly elected and qualified:
1) John M. Bobb, 2) Roderick H. Dillon, Jr., 3) Lisa R. Hunter,
4) George A. Skestos, 5) William P. Zox
For Withhold For All To withhold authority to vote, mark "For All Except"
All All Except and write the nominee's number on the line below.
[ ] [ ] [ ] ____________________________________________________
PROPOSAL III. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Ratification of the appointment of McCurdy & Associates CPA's, Inc. as
independent accountants of the Trust for the fiscal year ending February 28,
2001.
For Against Abstain
[ ] [ ] [ ]
THE BSG FUNDS
DIAMOND HILL FOCUS FUND
SPECIAL MEETING OF SHAREHOLDERS
November 30, 2000
The undersigned shareholder of the Diamond Hill Focus Fund (the "Fund"), a
series of The BSG Funds (the "Trust"), hereby nominates, constitutes and
appoints Roderick H. Dillon, Jr. and Lisa R. Hunter and each of them, the
attorney, agent and proxy of the undersigned, with full powers of substitution,
to vote all the stock of the Fund which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the Trust to be held at the offices of
the Banc Stock Group, Inc., 1105 Schrock Road, Suite 437, Columbus, Ohio 43229
on November 30, 2000 at 4:00 p.m., Eastern time, and at any and all adjournments
thereof, as fully and with the same force and effect as the undersigned might or
could do if personally present as stated above:
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "FOR" ON PROPOSALS I AND III. THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY
SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF
ANY, PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN THE DISCRETION OF
THE PROXY HOLDERS, IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES, IF ANY.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE PRESIDENT OF THE TRUST AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY APPEARING IN PERSON AND VOTING AT THE MEETING.
(Please date this proxy and sign your name as it appears on the label.
Executors, administrators, trustees, etc. should give their full titles. All
joint owners should sign.)
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
