SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. 1 / X /
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 1 / X /
(Check appropriate box or boxes.)
Veredus Funds - File Nos. 333-51457 and 811-8771
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(Exact Name of Registrant as Specified in Charter)
6900 Bowling Blvd., Suite 250, Louisville, KY 40207
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (502) 899-4080
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B. Anthony Weber, Veredus Funds, 6900 Bowling Blvd., Suite 250,
Louisville, KY 40207
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(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)
/ / 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.
Title of Securities Being Registered: Shares
Omit from the facing sheet reference to the other Act if the
Registration Statement or amendment is filed under only one of the Acts. Include
the "Approximate Date of Proposed Public Offering" and "Title of Securities
Being Registered" only where securities are being registered under the
Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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Veredus Funds
CROSS REFERENCE SHEET
FORM N-1A
VEREDUS GROWTH FUND
ITEM SECTION IN PROSPECTUS
1........................Cover Page
2........................Summary of Fund Expenses
3........................Performance Information
4........................The Fund, Investment Objective and Strategies and
Risk Considerations, Operation of the Fund,
General Information
5........................Operation of the Fund
5A.......................None
6........................Cover Page, Dividends and Distributions, Taxes,
General Information, How to Redeem Shares
7........................Cover Page, How to Invest in the Fund, Share Price
Calculation, Operation of the Fund, How to Redeem
Shares
8........................How to Redeem Shares
9........................None..
13........................Investment Objectives and Strategies and Risk
Considerations
15........................General Information
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
10........................Cover Page
11........................Table of Contents
12........................None
13........................Additional Information About Fund Investments and
Risk Considerations, Investment Limitations
14........................Trustees and Officers
15........................Description of the Trust
16........................The Investment Adviser, Custodian, Transfer Agent,
Accountants, Trustees and Officers
17........................Portfolio Transactions and Brokerage
18........................Description of the Trust
19........................Determination of Share Price
20........................None
21........................Distributor
22........................Investment Performance
23........................Financial Statements
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VEREDUS GROWTH FUND
PROSPECTUS ______________, 1998
6900 Bowling Blvd., Suite 250
Louisville, KY 40207
For Information, Shareholder Services and Requests:
(877)- VEREDUS (877-837-3387)
The Veredus Growth Fund (the "Fund") is a diversified, open-end mutual
fund whose investment objective is to provide capital appreciation. Veredus
Asset Management LLC, the Fund's investment adviser, seeks to achieve this
objective by investing primarily in equity securities of companies whose
earnings are growing at an accelerating rate.
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 __________, 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
charge a 12b-1 fee. Unlike most other mutual funds, the Fund 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 operating expenses of the Fund
except brokerage, taxes, interest, fees and expenses of non-interested person
trustees and extraordinary expenses.
Shareholder Transaction Expenses(1)
Sales Load Imposed on Purchases .........................................NONE
Sales Load Imposed on Reinvested Dividends...............................NONE
Deferred Sales Load......................................................NONE
Redemption Fees..........................................................NONE
Exchange Fees............................................................NONE
Annual Fund Operating Expenses (as a percentage of average net assets)(2)
Management Fees (after expense reimbursements)..................1.46%
12b-1 Fees......................................................NONE
Other Expenses..................................................0.04%
Total Fund Operating Expenses............................................1.50%
(1) Processing organizations may impose transactional fees on shareholders.
(2) The Adviser's fee is equal to 1.50% of the Fund's average daily net assets
minus the amount by which the Fund's total expenses (including organizational
expenses, but excluding brokerage, taxes, interest and extraordinary expenses)
exceeds 1.50%. This means that the Fund's total operating expenses will be
1.50%. Because other expenses are estimated to be 0.04%, the management fee is
estimated to be 1.46%.
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
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$15 $47
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THE FUND
The Veredus Growth Fund (the "Fund") was organized as a series of
Veredus Funds, an Ohio business trust (the "Trust") on April 13, 1998. 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
Veredus Asset Management LLC (the "Adviser").
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide capital
appreciation. The Adviser seeks to achieve this objective by investing primarily
in equity securities of companies whose earnings are growing at an accelerating
rate. Typically, the companies that the Fund invests in will exhibit expanding
unit volume growth, new product development and expanding profit margins. Such
companies often experience increased earnings expectations from the investment
community. The Adviser will focus primarily on small capitalization (market
capitalization of $1 billion or less) and mid-size capitalization ($1 to $4
billion market capitalization) companies.
The Adviser generally plans to stay fully invested (subject to
liquidity requirements) in equity securities. The Fund may also invest in U.S.
government securities of any duration, and may engage in certain option
transactions and investment techniques described below. For temporary defensive
purposes under abnormal market or economic conditions, the Fund may hold all or
a portion of its assets in money market instruments, securities of no-load money
market funds or U.S. government repurchase agreements. The Fund may also invest
in such instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. If the Fund acquires securities of
another investment company, the shareholders of the Fund will be subject to
additional management fees.
By investing primarily in small and mid-size capitalization companies,
the Fund will be subject to the risks associated with such companies. Smaller
capitalization companies may experience higher growth rates and higher failure
rates than do larger capitalization companies. Companies in which the Fund is
likely to invest may have limited product lines, markets or financial resources
and may lack management depth. 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.
3
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Prior Performance of Similar Accounts
B. Anthony Weber, President of the Adviser, is primarily responsible
for the day-to-day management of the Fund. Prior to forming the Adviser in 1998,
Mr. Weber was President and Senior Portfolio Manager of SMC Capital, Inc. (from
its inception in 1993). Prior to that date, he was the portoflio manager
primarily responsible for management of certain accounts, including three common
tust funds, of Shelby County Trust Bank (from July 1, 1989). The performance
information presented below is the performance of a composite of those equity
accounts for which Mr. Weber was primarily responsible for the day-to-day
management (since July 1, 1989) which have investment objectives, policies and
strategies substantially similar to those of the Fund. The composite does not
include performance of The Shelby Fund, a mutual fund for which Mr. Weber was
co-manager. As of December 31, 1997, the assets in those accounts totaled
approximately $36 million.
<TABLE>
<S> <C> <C> <C>
Managed Accounts S&P 500 Index Russell 2000 Index
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1998* 19.35% 15.10% 10.67%
1997 4.82 33.36 22.36
1996 14.44 22.96 16.50
1995 39.67 37.59 28.44
1994 2.46 1.32 -1.82
1993 14.70 10.08 18.91
1992 32.98 7.64 18.41
1991 42.80 30.48 46.05
1990 -1.04 -3.12 -19.51
1989** 11.67 12.99 1.47
Average Annual Returns***
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One Year 48.70 41.07 42.40
Five years 18.75 23.25 18.46
Since July 1, 1989 19.80 18.42 14.63
* 1998 percentages represent the rates of return for the four month
period ended April 30, 1998.
** 1989 percentages represent the rates of return for the six month
period ended December 31, 1989.
*** Average Annual Returns for the periods ended April 30, 1998, using
the AIMR calculation of performance (see below), which differs from the
standardized SEC calculation.
</TABLE>
<PAGE>
From July 1, 1989 through December 31, 1991, the performance
information is based on a quarterly, linked time-weighted rate of return
calculation method. Beginning January 1, 1992, the accounts within the composite
allowed participants to contribute on a monthly basis. Therefore, beginning
January 1, 1992, the performance information is based on a monthly, liked,
time-weighted rate of return calculation method. The composite rate of return is
market-weighted, reflecting the relative size of each eligible account, at the
beginning of the relevant period. Performance figures reflected are net of
management fees and net of all expenses, including transaction costs and
commissions. Results include the reinvestment of dividends and capital gains.
The presentation of the performance composite complies with the Performance
Presentation Standards of the Association for Investment Management and Research
(AIMR). The AIMR calculation of performance differs from the standardized SEC
calculation.
The S&P 500 Index is a widely recognized, unmanaged index of market
activity based upon the aggregate performance of a selected portfolio of
publicly traded common stocks, including monthly adjustments to reflect the
reinvestment of dividends and other distributions. The Russell 2000 Index is a
widely recognized index of market activity based on the aggregate performance of
small to mid-sized publicly traded common stocks. Each Index reflects the total
return of securities comprising the Index, including changes in market prices as
well as accrued investment income, which is presumed to be reinvested.
Performance figures for each Index do not reflect deduction of transaction costs
or expenses, including management fees.
The performance of the accounts managed by the Adviser does not
represent the historical performance of the Fund and should not be considered
indicative of future performance of the Fund. Results may differ because of,
among other things, differences in brokerage commissions, account expenses,
including management fees (the use of the Fund's expense structure would have
lowered the performance results), the size of positions taken in relation to
account size and diversification of securities, timing of purchases and sales,
and availability of cash for
<PAGE>
new investments. In addition, the managed accounts are not subject to certain
investment limitations, diversification requirements, and other restrictions
imposed by the Investment Company Act and the Internal Revenue Code which, if
applicable, may have adversely affected the performance results of the managed
accounts composite. The results for different periods may vary.
General
As all investment securities are subject to inherent risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, you should be aware that the Adviser is a
recently formed limited liability company with no prior experience in managing
investment companies (although Mr. Weber, the portfolio manager of the Fund, was
the primary portfolio manager of another investment company (The Shelby Fund)
for almost four years) and that the Fund has no operating history. 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 and Risk Considerations" 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 $10,000 ($2,000 for qualified retirement accounts and medical
savings accounts) and minimum subsequent investments of $500. Investors choosing
to purchase or redeem their shares through a broker/dealer or other institution
may be charged a fee by that institution. Investors choosing to purchase or
redeem shares directly from the Fund will not incur charges on purchases or
redemptions. To the extent investments of individual investors are aggregated
into an omnibus account established by an investment adviser, broker or other
intermediary, the account minimums apply to the omnibus account, not to the
account of the individual investor. The Fund reserves the right to waive
minimums for any family member of a shareholder.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to the Veredus Growth Fund, and sent to the P.O. Box listed below.
If you prefer overnight delivery, use the overnight address listed below:
<TABLE>
<S> <C> <C> <C>
U.S. Mail: Veredus Growth Fund Overnight: Veredus Growth Fund
c/o Unified Fund Services, Inc. c/o Unified Fund Services, Inc.
P.O. Box 6110 431 N. Pennsylvania St.
Indianapolis, Indiana 46204-6110 Indianapolis, Indiana 46204
</TABLE>
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 877-837-3387 to set up your account
and obtain an account number. You should
<PAGE>
be prepared at that time to provide the information on the application by
facsimile. Then, you should provide your bank with the following information for
purposes of wiring your investment:
Star Bank, N.A.
ABA # 042000013
Attn: The Veredus Growth Fund
D.D.A. # 488920984
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. 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.
Additional Investments
You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to the Veredus Growth Fund and should be sent to the address listed
above. A bank wire should be sent as outlined above.
Automatic Investment Plan
You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, the Fund may be
a particularly 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 the Transfer Agent 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.
<PAGE>
Other Purchase Information
Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.
HOW TO REDEEM SHARES
All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
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. 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. Investors choosing to purchase or redeem their
shares through a broker/dealer or other institution may be charged a fee by that
institution.
By Mail - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:
Veredus Growth Fund
c/o Unified Fund Services, Inc.
431 N. Pennsylvania St.
Indianapolis, Indiana 46204
"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 a bank or member firm of a national
securities 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 877-837-3387. 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
<PAGE>
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 and 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 880-837-3387. 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 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.
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 $10,000 ($2,000 for qualified retirement
accounts and medical savings accounts) 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
<PAGE>
value or when restricted securities are being valued, such securities are valued
as determined in good faith by the Adviser, subject to review of the Board of
Trustees of the Trust.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Adviser, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an quarterly 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
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.
<PAGE>
The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.
On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.
OPERATION OF THE FUND
The Fund is a diversified series of Veredus Funds, an open-end
management investment company organized as an Ohio business trust on April 13,
1998. 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 Veredus Asset Management LLC, 6900 Bowling Blvd.,
Suite 250, Louisville, KY 40207 (the "Adviser") to manage the Fund's
investments. B. Anthony Weber controls the Adviser and has served as President
of the Adviser since April, 1998. Prior to June, 1998, he was the President of
SMC Capital, Inc., another registered investment adviser. Mr. Weber is
responsible for the day-to-day management of the Fund's portfolio. He has
managed equity accounts at SMC Capital, Inc. from the time of its founding in
1993 to the present. The Fund is authorized to pay the Adviser a fee, on a
monthly basis, equal to an annual average rate of 1.50% of its average daily net
assets, minus the amount by which the Fund's total expenses (including
organizational expenses, but excluding brokerage, taxes, interest and
extraordinary expenses) exceeds 1.50%. 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.
The Fund retains Unified Fund Services, Inc., 431 North Pennsylvania
Street, Indianapolis, Indiana 46204 (the "Administrator") to manage the Fund's
business affairs and provide the Fund with fund accounting and administrative
services, including all regulatory reporting and necessary office equipment,
personnel and facilities. The Fund also retains Unified Fund Services, Inc. (the
"Transfer Agent") to serve as transfer agent, dividend paying agent and
shareholder service agent. For its services as Administrator (including its fund
accounting services), Unified Fund Services, Inc. receives a monthly fee from
the Adviser equal to an annual average rate of 0.16% of the Fund's average daily
net assets. The Fund retains Unified Management Corporation, 431 North
Pennsylvania Street, Indianapolis, Indiana 46204 (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.
<PAGE>
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 Adviser (not the
Fund) may compensate brokers and other intermediaries for directing assets to or
retaining assets in the Fund.
INVESTMENT POLICIES AND TECHNIQUES AND RISK CONSIDERATIONS
This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.
Equity Securities. Equity securities consist of common stock, warrants,
rights, preferred stock and common stock equivalents (such as convertible
preferred stock and convertible debentures). Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation. Warrants are
options to purchase equity securities at a specified price 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. Although equity securities
have a history of long-term growth in value, their prices fluctuate based on
changes in a company's financial condition and on overall market and economic
conditions. The Fund will not invest more than 5% of its net assets in preferred
stock or common stock equivalents.
The Fund may invest up to 20% of its net assets in foreign equity
securities by purchasing American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs"). American Depository Receipts and EDRs are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
U.S. Government Obligations. U.S. government obligations may be backed
by the credit of the government as a whole or only by the issuing agency. U.S.
Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
<PAGE>
Repurchase Agreements. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with banks with assets of $1
billion or more and registered securities dealers determined by the Adviser
(subject to review by the Board of Trustees) to be creditworthy. The Adviser
monitors the creditworthiness of the banks and securities dealers with which the
Fund engages in repurchase transactions.
Investment Techniques. The Fund may purchase put and call options, and
may write covered call options on individual securities and market indices,
provided the Fund's investment in options (including premiums and potential
settlement obligations) does not exceed 5% of its net assets The Fund may engage
in short sales, but the percentage of the Fund's net assets that may be used as
collateral or segregated for short sales is limited to 5%.
When Issued Securities and Forward Commitments - The Fund may buy and
sell securities on a when-issued or delayed delivery basis, with payment and
delivery taking place at a future date. The price and interest rate that will be
received on the securities are each fixed at the time the buyer enters into the
commitment. The Fund may enter into such forward commitments if they hold, and
maintain until the settlement date in a separate account at the Fund's
Custodian, cash or U.S. government securities in an amount sufficient to meet
the purchase price. Forward commitments involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date. Any change
in value could increase fluctuations in the Fund's share price and yield.
Although the Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to the settlement if the Adviser deems it appropriate to do so.
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.
Fund Turnover. The Fund does not intend to purchase or sell securities
for short term trading purposes. However, if the objective the Fund would be
better served, short-term profits or losses may be realized from time to time.
It is anticipated that portfolio turnover will not exceed 300%. The brokerage
commissions incurred by the Fund will generally be higher than those incurred by
a Fund with a lower portfolio turnover rate. The Fund does not anticipate any
adverse tax consequences as a result of its portfolio turnover rate, although
substantial net capital gains
<PAGE>
could be realized, and any distributions derived from such gains may be ordinary
income for federal tax purposes. Actual holding period will vary by type of
security and market conditions.
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. Prior to the offering made by this Prospectus,
Veredus Asset Management LLC Profit Sharing Plan and Trust for the benefit of B.
Anthony Weber purchased for investment all of the outstanding shares of the Fund
and as a result may be deemed to control the Fund.
PERFORMANCE INFORMATION
The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.
The Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index, the Russell 2000 Index or the Dow Jones Industrial
Average.
The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
<PAGE>
Investment Adviser Transfer Agent and Administrator
Veredus Asset Management LLC Unified Fund Services, Inc.
6900 Bowling Blvd., Suite 250 431 North Pennsylvania Street
Louisville, KY 40207 Indianapolis, Indiana 46204
Custodian Auditors
Star Bank, N.A. Arthur Andersen LLP
425 Walnut Street., M.L. 6118 425 Walnut Street
Cincinnati, Ohio 45202 Cincinnati, OH 45202
Distributor
Unified Management Corporation
431 North Pennsylvania Street
Indianapolis, Indiana 46204
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.
<PAGE>
TABLE OF CONTENTS PAGE
SUMMARY OF FUND EXPENSES
Shareholder Transaction Expenses
Annual Fund Operating Expenses
THE FUND
INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS
Prior Performance of Similar Accounts
General
HOW TO INVEST IN THE FUND
Initial Purchase
Additional Investments
Automatic Investment Plan
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 AND RISK CONSIDERATIONS
Equity Securities
U.S. Government Obligations
Repurchase Agreements
Investment Techniques
When Issued Securities and Forward Commitments
GENERAL INFORMATION
Fundamental Policies
Fund Turnover
Shareholder Rights
PERFORMANCE INFORMATION
<PAGE>
VEREDUS GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
June __, 1998
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Veredus Growth Fund dated June __,
1998. A copy of the Prospectus can be obtained by writing the Fund at 6900
Bowling Blvd., Suite 250, Louisville, KY 40207, or by calling
877-VEREDUS (877-837-3387).
<PAGE>
<TABLE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
<S> <C>
DESCRIPTION OF THE TRUST................................................................................................ 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS................................................................................................. 1
INVESTMENT LIMITATIONS.................................................................................................. 3
THE INVESTMENT ADVISER.................................................................................................. 5
TRUSTEES AND OFFICERS................................................................................................... 6
PORTFOLIO TRANSACTIONS AND BROKERAGE.................................................................................... 7
DETERMINATION OF SHARE PRICE............................................................................................ 8
INVESTMENT PERFORMANCE.................................................................................................. 9
CUSTODIAN............................................................................................................... 9
TRANSFER AGENT.......................................................................................................... 10
ACCOUNTANTS............................................................................................................. 10
DISTRIBUTOR............................................................................................................. 10
FINANCIAL STATEMENTS.................................................................................................... 11
</TABLE>
<PAGE>
DESCRIPTION OF THE TRUST
Veredus Growth Fund (the "Fund") was organized as a series of Veredus
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 April 13,
1998 (the "Trust Agreement"). The Trust Agreement permits the Trustees to issue
an unlimited number of shares of beneficial interest of separate series without
par value. The Fund is the only series currently authorized by the Trustees.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. For
other information concerning the purchase and redemption of shares of the Fund,
see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK
CONSIDERATIONS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objective and Strategies").
A. Preferred Stocks. Preferred stock, unlike common stock, offers a
stated dividend rate payable from the issuer's earnings. Preferred stock
dividends may be cumulative or non-cumulative, participating, or auction rate.
If interest rates rise, the fixed dividend on preferred stocks may be less
attractive, causing the price of preferred stocks to decline. Preferred stock
may have mandatory sinking fund provisions, as well as call/redemption
provisions prior to maturity, a negative feature when interest rates decline.
B. Convertible Securities. A convertible security (also known as a
common stock equivalent) is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a
1
<PAGE>
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest generally paid or accrued on
debt or the dividend paid on preferred stock until the convertible security
matures or is redeemed, converted or exchanged. Convertible securities have
several unique investment characteristics, such as (a) higher yields than common
stocks, but lower yields than comparable nonconvertible securities, (b) a lesser
degree of fluctuation in value than the underlying stock since they have fixed
income characteristics, and (c) the potential for capital appreciation if the
market price of the underlying common stock increases. A convertible security
might be subject to redemption at the option of the issuer at a price
established in the convertible security's governing instrument. If a convertible
security held by the Fund is called for redemption, the Fund may be required to
permit the issuer to redeem the security, convert it into the underlying common
stock or sell it to a third party.
C. American Depository Receipts and European Depository Receipts.
American Depository Receipts ("ADRs") and European Depository Receipts ("EDRs")
are certificates evidencing ownership of shares of a foreign-based issuer held
in trust by a bank or similar financial institution. They are alternatives to
the direct purchase of the underlying securities in their national markets and
currencies. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those in
the U.S. Other risks associated with investments in foreign securities include
changes in restrictions on foreign currency transactions and rates of exchanges,
changes in the administrations or economic and monetary policies of foreign
governments, the imposition of exchange control regulations, the possibility of
expropriation decrees and other adverse foreign governmental action, the
imposition of foreign taxes, less liquid markets, less government supervision of
exchanges, brokers and issuers, difficulty in enforcing contractual obligations,
delays in settlement of securities transactions and greater price volatility. In
addition, investing in foreign securities will generally result in higher
commissions than investing in similar domestic securities.
D. Short Sales. The Fund may sell a security short in anticipation of a
decline in the market value of the security. When a 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 in order to deliver it to the buyer. The Fund
must replace the borrowed 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.
2
<PAGE>
E. Options Transactions. The Fund may purchase put and call options,
and may write covered call options on individual securities and stock indices,
provided the Fund's investment in options (including premiums and potential
settlement obligations) does not exceed 5% of its net assets. To cover the
potential obligations involved in writing options, the Fund will either (a) own
the underlying security, or in the case of an option on a market index, will
hold a portfolio of stocks substantially replicating the movement of the index,
or (b) the Fund will segregate with the Custodian high grade liquid debt
obligations sufficient to purchase the underlying security or equal to the
market value of the stock index option, marked to market daily.
By purchasing a put option, the Fund obtains the right (but not the
obligation) to sell the option's underlying instrument at a fixed "strike"
price. In return for this right, the Fund pays the current market price for the
option (known as the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities prices, and
futures contracts. The Fund may terminate its position in a put option it has
purchased by allowing it to expire or by exercising the option. If the option is
allowed to expire, the Fund will lose the entire premium it has paid. If the
Fund exercises the option, it completes the sale of the underlying instrument at
the "strike" price. The Fund also may terminate a put option position by closing
it out in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's "strike"
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to suffer
a loss if the underlying prices do not rise sufficiently to offset the cost of
the option.
The Fund may write (sell) covered call options on individual stocks and
on stock indices and engage in related closing transactions. A covered call
option on a security is an agreement to sell a particular portfolio security if
the option is exercised at a specified price, or before a set date. An option on
a stock index gives the option holder the right to receive, upon exercising the
option, a cash settlement amount based on the difference between the exercise
price and the value of the underlying stock index. Risks associated with writing
covered options include the possible inability to effect closing transactions at
favorable prices and an appreciation limit on the securities set aside for
settlement. There is no assurance of liquidity in the secondary market for
purposes of closing out covered call option positions.
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
3
<PAGE>
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present or represented at such meeting; or
(2) more than 50% of the outstanding shares of the Fund. Other investment
practices which may be changed by the Board of Trustees without the approval of
shareholders to the extent permitted by applicable law, regulation or regulatory
policy are considered non-fundamental ("Non-Fundamental").
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is 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.
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. This limitation is not applicable to
investments in obligations issued or
4
<PAGE>
guaranteed by the U.S. government, its agencies and instrumentalities or
repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
Non-Fundamental. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental (see "Investment
Restrictions" above).
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not borrow money or enter into reverse
repurchase agreements.
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.
4. Options. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus or Statement of Additional
Information.
5. Loans. The Fund will not loan its portfolio securities.
THE INVESTMENT ADVISER
The Fund's investment adviser is Veredus Asset Management LLC, 6900
Bowling Blvd., Suite 250, Louisville, KY 40207 (the "Adviser"). B. Anthony Weber
controls the Adviser and has served as President of the Adviser since April,
1998.
5
<PAGE>
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 1.50% of
the average daily net assets of the Fund, minus the amount by which the Fund's
total expenses (including organizational expenses, but excluding brokerage,
taxes, interest and extraordinary expenses) exceeds 1.50%. The Adviser may waive
all or part of its fee, at any time, and at its sole discretion, but such action
shall not obligate the Adviser to waive any fees in the future.
The Adviser retains the right to use the name "Veredus" 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 name "Veredus"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
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. The officers of
the Trust listed below are affiliated persons of the Trust.
<TABLE>
Name, Age and Address Position Principal Occupations During Past 5 Years
- --------------------- -------- -----------------------------------------
<S> <C> <C>
B. Anthony Weber * Trustee, President President and Chief Investment Officer of Veredus Asset
Age: 39 and Treasurer Management LLC since 6/98; President and Director of SMC
6900 Bowling Blvd., Suite 250 Capital, Inc., an investment adviser, from 5/93 to 5/98.
Louisville, KY 40207
Charles P. McCurdy, Jr.* Trustee and Secretary Executive Vice President and Director of Research of
Age: 37 Veredus Asset Management LLC since 6/98; Director of
6900 Bowling Blvd., Suite 250 Research of SMC Capital, Inc., an investment adviser, from
Louisville, KY 40207 11/94 to 5/98; Manager of Investment Bonds of Stockyards
Bank & Trust from 10/92 to 11/94.
James R. Jenkins* Chief Financial Officer Vice President and Chief Operating Officer of Veredus Asset
Age: 34 Management LLC since 5/98; Trust Officer at Shelby
6900 Bowling Blvd., Suite 250 County Trust Bank from 6/93 to 5/98.
Louisville, KY 40207
Michael B. Mountjoy Trustee President of Carpenter, Mountjoy & Bressler, Certified
Age: 48 Public Accounts, since 1988; Secretary and Treasurer of
2300 Waterfront Plaza T-Shirts & More, Inc., an active wear distributor, since
Louisville, KY 40202 1991; Member of Security Storage Center, a self storage
facility, from 1993 to 1997; Director of Delta Dental of
Kentucky, a dental insurance company, since 1995.
Michael J. Kelley Trustee President and Chief Executive Officer of Richards
Age: 40 Industries, a contracting manufacturer, since 9/81.
3170 Wasson Road
Cincinnati, OH 45209
J. Sherman Henderson, III Trustee President and Chief Executive Officer of UniDial, Inc.,
Age: 55 a long distance telecommunications reseller, since 1993.
9931 Corporate Campus, Suite 3000
Louisville, KY 40223
</TABLE>
Trustee fees are Trust expenses. The following table estimates the
Trustees' compensation for the first fiscal year of the Trust ending May 31,
1999.
Total Compensation from Trust
Name (the Trust is not in a Fund Complex)
---- ------------------------------------
B. Anthony Weber 0
Charles P.McCurdy 0
Michael B. Mountjoy $2,000
Michael J. Kelley $2,000
J. Sherman Henderson, III $2,000
6
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing of
the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Fund effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
7
<PAGE>
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.
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.
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. The allocation may be adjusted by the Adviser, taking into account such
factors as the size of the individual orders and transaction costs, when the
Adviser believes adjustment is reasonable. Transactions of advisory clients
(including the Fund) may also be blocked with those of the Adviser.
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as
of the close of The New York Stock Exchange (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.
8
<PAGE>
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 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. 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. A non-standardized quotation
of total return will always be accompanied by the Fund's average annual total
return as described above.
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, the Russell 2000 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, M.L. 6118, 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.
9
<PAGE>
TRANSFER AGENT
Unified Fund Services, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, Unified Fund Services, Inc., in its capacity as Fund Administrator,
provides the Fund with certain monthly reports, record-keeping and other
management-related services. For a description of the fees paid by the Adviser
on behalf of the Fund for these administrative services, see "Operation of the
Fund" in the Fund's Prospectus.
ACCOUNTANTS
The firm of Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio
45202, has been selected as independent public accountants for the Trust for the
fiscal year ending May 31, 1999. Arthur Andersen LLP performs an annual audit of
the Fund's financial statements and provides financial, tax and accounting
consulting services as requested.
DISTRIBUTOR
Unified Management Corporation, Inc., 431 North Pennsylvania Street,
Indianapolis, Indiana 46204, is the exclusive agent for distribution of shares
of the Fund. The Distributor is obligated to sell shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.
10
<PAGE>
FINANCIAL STATEMENTS
VEREDUS FUNDS
VEREDUS GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF JUNE 18, 1998
TOGETHER WITH AUDITORS' REPORT
11
<PAGE>
Report of Independent Public Accountants
To the Trustees of the
Veredus Growth Fund of Veredus Funds:
We have audited the accompanying statement of assets and liabilities of the
Veredus Growth Fund of Veredus Funds as of June 18, 1998. This financial
statement is the responsibility of the Trust's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets and liabilities are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Veredus
Growth Fund of Veredus Funds as of June 18, 1998 in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Louisville, Kentucky
June 18, 1998
12
<PAGE>
Veredus Funds
Veredus Growth Fund
Statement of Assets and Liabilities
June 18, 1998
Assets
Cash $ 100,000
Organization costs (Note 2) 24,000
----------
Total assets 124,000
----------
Liabilities
Accrued expenses (Note 2) 24,000
----------
Total liabilities 24,000
----------
Net assets for shares of beneficial interest outstanding $ 100,000
==========
Shares outstanding 10,000
==========
Net asset value, offering price and redemption price per share $ 10.00
==========
The accompanying notes are an integral part of this statement.
13
<PAGE>
Veredus Funds
Veredus Growth Fund
Notes to Statement of Assets and Liabilities
As of June 18, 1998
(1) The Veredus Growth Fund (the Fund) is a diversified, open-end, mutual
fund of Veredus Funds. Veredus Funds was established as an Ohio
business trust under a Declaration of Trust dated April 13, 1998. On
June 18, 1998, 10,000 shares of the Fund were issued for cash at $10.00
per share. The Fund has had no operations except for the initial
issuance of shares.
(2) Expenses incurred in connection with the organization of the Fund and
the initial offering of shares are estimated to be $24,000. These
expenses will be paid by Veredus Asset Management LLC (the Adviser).
Upon commencement of the public offering of shares of the Fund, the
Fund will reimburse the Adviser for such expenses, with that amount
being capitalized and amortized on a straight-line basis over five
years. As of June 18, 1998, all outstanding shares of the Fund were
held by a principal of the Adviser, who purchased these initial shares
in order to provide the Fund with its required capital. In the event
the initial shares of the Fund are redeemed by any holder thereof at
any time prior to the complete amortization of organizational expenses,
the redemption proceeds payable with respect to such shares will be
reduced by the pro rata share (based upon the portion of the shares
redeemed in relation to the required capitalization) of the unamortized
deferred organizational expenses as of the date of such redemption.
In April 1998 a Statement of Position, "Reporting on the Costs of
Start-Up Activities", was issued which requires that organizational
cost be expensed as incurred unless shares are sold to independent
third parties (public offering) prior to June 30, 1998. Accordingly,
should a commencement of offering of shares to the public not occur
prior to June 30, 1998, a principal of the Adviser has agreed to
purchase an additional $24,000 in shares of the Fund.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Management Agreement with the
Adviser, tax aspects of the Funds and the calculation of the net asset
value of shares of the Fund.
14
<PAGE>
Veredus Funds
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A: None
Included in Part B: Statement of Assets and
Liabilities as of June 18, 1998 and Report of
Independent Public Accountants for the Veredus
Growth Fund.
(b) Exhibits
(1) Copy of Registrant's Agreement and
Declaration of Trust which was filed as an
Exhibit to Registrant's Registration
Statement, 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.
(4) Specimen of Share Certificates - None.
(5) Copy of Registrant's Management
Agreement with its Adviser, Veredus Asset
Management L.L.C., is filed herewith.
(6) Copy of Registrant's Distribution Agreement
with Unified Management Corporation is
filed herewith.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Custody Agreement with
Star Bank, N.A. is filed herewith.
(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 Registration
Statement, is hereby incorporated by
reference.
(11) Consent of Arthur Andersen LLP is filed
herewith.
<PAGE>
(12) Financial Statements Omitted from Item
23 - None.
(13) Copy of Letter of Initial Stockholder is
filed herewith.
(14) Model Plan used in Establishment of any
Retirement Plan - None.
(15) 12b-1 Distribution Expense Plan - None.
(16) Schedule for Computation of Each Performance
Quotation - None.
(17) Financial Data Schedule is filed herewith.
(18) Rule 18f-3 Plan - None.
(19) (i) Power of Attorney for Registrant and
Certificate with respect thereto are
filed herewith.
(ii) Powers of Attorney for Trustees and
Officers are filed herewith.
Item 25. Persons Controlled by or Under Common Control with the Registrant
None.
Item 26. Number of Holders of Securities (as of June 1, 1998)
Title of Class Number of Record Holders
Veredus Growth Fund 0
Item 27. Indemnification
(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:
Section 6.4 Indemnification of
Trustees, Officers, etc. Subject to and
except as otherwise provided in the
Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of
its Trustees and officers (including persons
who serve at the Trust's request as
directors, officers or trustees of another
organization in which the Trust has any
interest as a shareholder, creditor or
otherwise (hereinafter referred to as a
"Covered Person") against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or
as fines and penalties, and expenses,
including reasonable accountants' and
counsel fees, incurred by any Covered Person
in connection with the defense or
disposition of any action, suit or other
proceeding, whether civil or criminal,
before any 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
<PAGE>
thereafter, by reason of being or having
been such a Trustee or officer, director or
trustee, and except that no Covered Person
shall be indemnified against any liability
to the Trust or its Shareholders to which
such Covered Person would otherwise be
subject by reason of willful misfeasance,
bad faith, gross negligence or reckless
disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.5 Advances of Expenses.
The Trust shall advance attorneys' fees or
other expenses incurred by a Covered Person
in defending a proceeding to the full extent
permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code
Chapter 1707, as amended. In the event any
of these laws conflict with Ohio Revised
Code Section 1701.13(E), as amended, these
laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 Indemnification Not
Exclusive, etc. The right of indemnification
provided by this Article VI shall not be
exclusive of or affect any other rights to
which any such Covered Person may be
entitled. As used in this Article VI,
"Covered Person" shall include such person's
heirs, executors and administrators. Nothing
contained in this article shall affect any
rights to indemnification to which personnel
of the Trust, other than Trustees and
officers, and other persons may be entitled
by contract or otherwise under law, nor the
power of the Trust to purchase and maintain
liability insurance on behalf of any such
person.
The Registrant may not pay for insurance which
protects the Trustees and officers against
liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of
their offices.
(b) The Registrant may maintain a standard mutual fund
and investment advisory professional and directors
and officers liability policy. The policy, if
maintained, would provide coverage to the Registrant,
its Trustees and officers, and could cover its
Advisers, among others. Coverage under the policy
would include losses by reason of any act, error,
omission, misstatement, misleading statement, neglect
or breach of duty.
(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
<PAGE>
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. Veredus Asset Management L.L.C. ("VAM"), 6900 Bowling
Blvd., Suite 250, Louisville, KY 40207, adviser to
Veredus Funds, is a registered investment adviser.
(1) VAM has engaged in no other business
during the past two fiscal years.
(2) The following list sets forth other
substantial business activities of the
officers and directors of VAM (during the
past two fiscal years through May 29, 1998):
B. Anthony Weber, President of SMC Capital,
Inc., 6900 Bowling Blvd., Louisville, KY
40207, a registered investment adviser
("SMC").
Charles P. McCurdy, Jr., Director of
Research with SMC.
John S. Poole, Vice President of SMC.
Item 29. Principal Underwriters
(a) Unified Management Corporation, the Registrant's
distributor, acts as distributor for The Star Select
Funds and The Unified Funds, both at 431 North
Pennsylvania Street, Indianapolis, Indiana 46204;
Saratoga Advantage Trust, 1501 Franklin Avenue,
Mineola, NY 11501; and the SMT Funds, 620 Woodmere
Avenue, Suite B, Traverse City, MI 49686
(b) Information with respect to each director and officer
of Unified Management Corporation is incorporated by
reference to Schedule A of Form BD filed by it under
the Securities Exchange Act of 1934 (File No.
8-23508).
(c) Not applicable.
<PAGE>
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 6900 Bowling Blvd., Suite 250, Louisville, KY
40207 and/or by the Registrant's Custodian, Star Bank, N.A.,
425 Walnut Street, Cincinnati, Ohio 45202, and/or by the
Registrant's Transfer Agent, Unified Fund Services, Inc., 431
North Pennsylvania Street, Indianapolis, Indiana 46204.
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.
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 June,
1998.
Veredus Funds
By: /s/ Donald S. Mendelsohn
------------------------
Donald S. Mendelsohn
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
B. Anthony Weber,
President, Treasurer and Trustee
James R. Jenkins,
Chief Financial Officer
Charles P. McCurdy, Jr.,
Trustee
Michael J. Kelley,
Trustee
Michael B. Mountjoy,
Trustee
Sherman Henderson, III,
Trustee
By: /s/ Donald S. Mendelsohn
------------------------
Donald S. Mendelsohn,
Attorney-in-fact
June 22, 1998
<PAGE>
EXHIBIT INDEX
PAGE
1. Management Agreement...........................................EX-99.B5
2. Distribution Agreement.........................................EX-99.B6
3. Custody Agreement..............................................EX-99.B8
4. Consent of Arthur Andersen LLP................................EX-99.B11
5. Letter of Initial Stockholder.................................EX-99.B13
6. Financial Data Schedule.......................................EX-99.B17
7. Powers of Attorney............................................EX-99.POA
MANAGEMENT AGREEMENT
TO: Veredus Asset Management LLC
6900 Bowling Blvd., Suite 250
Louisville, KY 40206
Dear Sirs:
Veredus 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, Veredus
Growth 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, excluding 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
<PAGE>
Fund's current and prospective shareholders; the cost of printing or preparing
stock certificates or any other documents, statements or reports to
shareholders; expenses of shareholders' meetings and proxy solicitations;
advertising, promotion and other expenses incurred directly or indirectly in
connection with the sale or distribution of the Fund's shares; and all other
operating expenses not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
interest, fees and expenses of the non-interested person trustees and such
extraordinary or non-recurring expenses as may arise, including organizational
expenses, and 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 1.50% of the average value of its
daily net assets, minus the amount by which the Fund's total expenses (including
organizational expenses, but excluding brokerage, taxes, interest and
extraordinary expenses) exceeds 1.50%.
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.
<PAGE>
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Fund and to accounts over which you
exercise investment discretion. The Fund and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Fund's portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your shareholders,
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,
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
<PAGE>
services to or acting solely for the Trust and not as a director, officer,
employee, 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 (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Veredus" 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 name
"Veredus" shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the name 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 "Veredus" 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 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 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.
<PAGE>
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "Veredus Funds" means and refers to the Trustees from
time to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
6900 Bowling Blvd., Suite 250, Louisville, KY 40206, and your address for this
purpose shall be 6900 Bowling Blvd., Suite 250, Louisville, KY 40206.
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.
<PAGE>
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: Veredus Funds
/s/ Charles P. McCurdy, Jr. By /s/ B. Anthony Weber
- --------------------------- --------------------
B. Anthony Weber, President
Name/Title: Charles P. McCurdy, Jr., Trustee
Dated: 6/10, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: Veredus Asset Management LLC
/s/ Charles P. McCurdy, Jr. By /s/ B. Anthony Weber
- --------------------------- --------------------
B. Anthony Weber, President
Name/Title: Charles P. McCurdy, Jr., EVP
Dated: 6/10, 1998
7
VEREDUS FUNDS
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of June 10, 1998 between the Veredus
Funds, an Ohio business trust (the "Trust"), and Unified Management Corporation,
an Indiana corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Trust desires to retain the Distributor as the principal
underwriter of the Trust's shares of beneficial interest (the "Shares"); and
WHEREAS, the Distributor is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
Section 1. Delivery of Documents. The Trust has delivered to the
Distributor copies of the following documents and will deliver to the
Distributor all future amendments and supplements thereto, if any:
(a) The Trust's Declaration of Trust and all amendments thereto (as
currently in effect and as from time to time amended, hereinafter referred to as
the "Declaration");
(b) The Trust's By-Laws (as currently in effect and as from time to
time amended, hereinafter referred to as the "By-Laws");
(c) Resolutions of the Board of Trustees authorizing the execution and
delivery of this Agreement;
(d) The Trust's Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1A most recently
filed with the Securities and Exchange Commission (the "Commission") and all
subsequent amendments or supplements thereto (the "Registration Statement");
(e) The Trust's Notification of Registration under the 1940 Act on Form
N-8A as filed with the Commission; and
(f) The Trust's current Prospectus and Statement of Additional
Information (as currently in effect and as from time to time
amended and supplemented, hereinafter collectively referred to as
the "Prospectus").
<PAGE>
Section 2. Distribution.
2.1 Appointment of Distributor. The Trust hereby appoints the Distributor as
principal underwriter of the Shares of each portfolio of the Trust that is set
forth on Exhibit A to this Agreement (each a "Fund") and the Distributor hereby
accepts such appointment and agrees to render the services and duties set forth
in this Agreement.
2.2 Services and Duties.
(a) The Trust agrees to sell through the Distributor, as agent, from
time to time during the term of this Agreement, Shares of each Fund upon the
terms and at the current offering prices as described in the Prospectus. The
Distributor will act only in its own behalf as principal in making agreements
with selected dealers or others for the sale and redemption of Shares, and shall
sell Shares only at the offering prices as set forth in the Prospectus. The
Distributor shall devote its best efforts to effect the sale of shares, but
shall not be obligated to sell any certain number of Shares.
(b) In all matters relating to the sale and redemption of Shares, the
Distributor and its designated agent(s) will act in conformity with the Trust's
Declaration, By-laws and Prospectus and with the instructions and directions of
the Board of Trustees and will conform and comply with the requirements of the
Securities Exchange Act of 1934, as amended, the 1933 Act, the 1940 Act, the
regulations of the National Association of Securities Dealers, Inc. and all
other applicable federal or state laws or regulations. In connection with the
sale of Shares, the Distributor acknowledges and agrees that it is not
authorized to provide any information or make any representation other than as
contained in the Trust's Registration Statement or Prospectus and any sales
literature approved by the Trust.
(c) The Trust will not bear any costs and expenses incurred with
respect to distribution of shares except to the extent the Trust is permitted to
do so by applicable law. It is understood that the Adviser will bear the costs
and expenses incurred for (i) printing and mailing to prospective investors
copies of the Prospectus (including supplements thereto) and annual and interim
reports of the Trust which are used in connection with the offering of Trust's
Shares; (ii) preparing, printing and mailing any other literature used by the
Distributor in connection with the sale of the Shares and (iii) reimbursement
for NASD advertising compliance expenses advanced by the Distributor.
(d) All Trust Shares offered for sale by the Distributor shall be
offered for sale to the public at a price per Share (the "offering price") equal
to their net asset value (determined in the manner set forth in the Trust's
then-current Prospectus).
2.3 Sales and Redemptions.
(a) The Trust shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Trust
hereunder, and all expenses in connection with preparing, printing and
distributing any Prospectus, except as set forth in Section 2.2(c) hereof.
(b) The Trust shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Trust's officers in connection with the qualification of the Shares for
sale in such states as the Distributor may designate to the Trust and the Trust
may approve, and the Trust shall pay all fees which may be incurred in
connection with such qualification. The Distributor shall pay all expenses
connected with its qualification as a dealer under state or federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by the Distributor in connection with the sale of the Shares as
contemplated in this Agreement. It is understood that certain advertising,
marketing, shareholder servicing, administration and/or distribution expenses to
be incurred in connection with the Shares may be paid as provided in any plan
which may be adopted by the Trust in accordance with Rule 12b-1 under the 1940
Act.
(c) The Trust shall have the right to suspend the sale of Shares at any
time in response to conditions in the securities markets or otherwise, and to
suspend the redemption of Shares at any time permitted by the 1940 Act or the
rules of the Commission
(d) The Trust reserves the right to reject any order for Shares.
(e) No Shares shall be offered by either the Trust or the Distributor
under any provisions of this Agreement and no orders for the purchase or sale of
Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the Registration Statement shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a Prospectus as required by
Section 10 of the 1933 Act is not on file with the Commission; provided,
however, that nothing contained in this subsection shall in any way restrict or
have any application to or bearing upon the Trust's obligation to repurchase any
Shares from any shareholder in accordance with the provisions of the Prospectus.
Section 3. Limitation of Liability. The Distributor shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
Distributor's part in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. Any person, even
though also an officer, director, partner, employee or agent of the Distributor,
who may be or become an officer, trustee, employee or agent of the Trust, shall
be deemed, when rendering services to the Trust, or acting on any business of
the Trust (other than services or business in connection with the Distributors
duties as distributor hereunder), to be rendering such services to or acting
solely for the Trust and not as an officer, director, partner, employee or agent
of, or one under the control or direction of, the Distributor even though paid
by the Distributor.
Section 4. Indemnification.
4.1. Trust Representations. The Trust represents and warrants to the
Distributor that at all times the Registration Statement and Prospectus will in
all material respects conform to the applicable requirements of the 1933 Act and
the rules and regulations thereunder and will not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made herein with respect to any statements in the
Registration Statement or Prospectus made in reliance upon and in conformity
with written information furnished to the Trust by, or on behalf of' and with
respect to, the Distributor specifically for use in the Registration Statement
or Prospectus.
4.2. Distributor's Representations. The Distributor represents and
warrants to the Trust that it is duly organized and validly existing as an
Indiana corporation and is and at all times will remain duly authorized and
licensed to carry out its services as contemplated herein.
4.3. Trust Indemnification. The Trust will indemnify, defend and hold
harmless the Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act, from
and against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus or in any application or other document executed by or
on behalf of the Trust, or arise out of, or are based upon, information
furnished by or on behalf of the Trust filed in any state in order to qualify
the Shares under the securities or blue sky laws thereof ("Blue Sky
Application"), or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, for any legal or
other expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim; provided, however,
that the Trust shall not be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectus, any Blue Sky Application or any
application or other document executed by or on behalf of the Trust in reliance
upon and in conformity with written information furnished to the Trust by, or on
behalf of, and with respect to, the Distributor specifically for inclusion
therein.
The Trust shall not indemnify any person pursuant to this Section 4.3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of obligations and duties,
under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of Trustees who are neither "interested persons" of the Trust
(as defined in the 1940 Act) nor parties to the proceeding, or by an independent
legal counsel in a written opinion.
The Trust shall advance attorneys' fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this Section 4.3, so long as such
person shall: (i) undertake to repay all such advances unless it is ultimately
determined that he is entitled to indemnification hereunder; and (ii) provide
security for such undertaking, or the Trust shall be insured against losses
arising by reason of any lawful advances, or a majority of a quorum of
disinterested non-party Trustees of the Trust (or an independent legal counsel
in a written opinion) shall determine based on a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to believe
that such person ultimately will be found entitled to indemnification hereunder.
4.4. Distributor's Indemnification. The Distributor will indemnify,
defend and hold harmless the Trust, the Trust's several officers and Trustees
and any person who controls the Trust within the meaning of Section 15 of the
1933 Act, from and against any losses, claims, damages or liabilities, joint or
several, to which any of them may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages, liabilities (or actions or
proceedings in respect hereof) arise out of, or are based upon, any breach of
its representations and warranties in Section 4.2 hereof, or which arise out of,
or are based upon, any true statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus, any Blue Sky
Application or any application or other document executed by or on behalf of the
Trust, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, which statement or omission was made in reliance upon and in
conformity with written information furnished to the Trust or any of its several
officers and Trustees by, or on behalf of, and with respect to, the Distributor
specifically for inclusion therein, and will reimburse the Trust, the Trust's
several officers and Trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act, for any legal or other expenses
reasonably incurred by any of them in investigating, defending or preparing to
defend any such action, proceeding or claim.
4.5. General Indemnity Provisions. No indemnifying party shall be
liable under its indemnity agreement contained in Section 4.3 or 4.4 hereof with
respect to any claim made against such indemnifying party unless the indemnified
party shall have notified the indemnifying party in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the indemnified party (or after
the indemnified party shall have received notice of such service on any
designated agent), but failure to notify the indemnifying party of any such
claim shall not relieve it from any liability which it may otherwise have to the
indemnified party. The indemnifying party will be entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, and if the indemnifying party elects
to assume the defense, such defense shall be conducted by counsel chosen by it
and reasonably satisfactory to the indemnified party. In the event the
indemnifying party elects to assume the defense of any such suit and retain such
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by the indemnified party.
Section 5. Duration and Termination. The term of this Agreement shall
begin on the date of this Agreement for each Fund that has executed an Exhibit
hereto on the date of this Agreement and shall continue in effect with respect
to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial term of this Agreement) for two years thereafter,
and shall continue in effect from year to year thereafter, subject to
termination as hereinafter provided, if such continuance is approved at least
annually by (a) a majority of the outstanding voting securities (as defined in
the 1940 Act) of such Fund or by vote of the Trust's Board of Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval. If a Fund is added pursuant to an Exhibit executed after the date
of this Agreement as described above, this Agreement shall become effective with
respect to that Fund upon execution of the applicable Exhibit and shall continue
in effect until the next annual continuance of this Agreement and from year to
year thereafter, subject to approval as described above. This Agreement may be
terminated by the Trust with respect to any Fund at any time, without the
payment of any penalty, by the Board of Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Fund, on 60
days' written notice to the Distributor, or by the Distributor at any time,
without the payment of any penalty, on 90 days' written notice to the Trust.
This Agreement will automatically and immediately terminate in the event of its
assignment (as defined in the 1940 Act).
Section 6. Miscellaneous.
6.1. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
6.2. Construction. 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 any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section 5 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
6.3. Notices. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust shall be sufficiently given
if addressed to the Trust and mailed or delivered to it at its principal office
set forth in the Registration Statement, or at such other place as the Trust may
from time to time designate in writing. Any notice or other instrument in
writing, authorized or required by this Agreement to be given to the Distributor
shall be sufficiently given if addressed to the Distributor and mailed or
delivered to it at 431 North Pennsylvania Street, Indianapolis, Indiana 46204,
Attention: President, or at such other place as the Distributor may from time to
time designate in writing.
6.4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date and year first above
written.
Veredus Funds
By /s/ B. Anthony Weber
--------------------
B. Anthony Weber, President
UNIFIED MANAGEMENT CORPORATION
By /s/ Lynn E. Wood
----------------
Title President
Date: 6/19/98
By /s/ Stephen D. Highsmith, Jr.
-----------------------------
Title Sr. Vice President & COO
Date: 6/19/98
<PAGE>
EXHIBIT A
to
Distribution Agreement
List of Portfolios
Veredus Growth Fund
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date and year first above
written.
VEREDUS FUNDS
By /s/ B. Anthony Weber
--------------------
B. Anthony Weber, President
UNIFIED MANAGEMENT CORPORATION
By /s/ Lynn E. Wood
----------------
Title President
Date: 6/19/98
By /s/ Stephen D. Highsmith, Jr.
-----------------------------
Title Sr. Vice President & COO
Date: 6/19/98
CUSTODY AGREEMENT
BETWEEN
STAR BANK, N.A.
AND
----------------------
VEREDUS FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Definitions 1
ARTICLE II - Appointment; Acceptence; and Furnishing of Documents
II. A. Appointment of Custodian. 5
II. B. Acceptance of Custodian. 5
II. C. Documents to be Furnished. 5
II. D. Notice of Appointment of Dividend and Transfer Agent. 5
ARTICLE III - Receipt of Trust Assets
III. A. Delivery of Moneys. 6
III. B. Delivery of Securities. 6
III. C. Payments for Shares. 6
III. D. Duties Upon Receipt. 7
ARTICLE IV - Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust. 7
IV. B. Segregation of Redemption Proceeds. 7
IV. C. Disbursements of Custodian. 8
IV. D. Payment of Custodian Fees. 8
ARTICLE V - Custody of Trust Assets
V. A. Separate Accounts for Each Fund. 8
V. B. Segregation of Non-Cash Assets. 9
V. C. Securities in Bearer and Registered Form. 9
V. D. Duties of Custodian as to Securities. 9
V. E. Certain Actions Upon Written Instructions. 10
V. F. Custodian to Deliver Proxy Materials. 11
V. G. Custodian to Deliver Tender Offer Information. 11
V. H. Custodian to Deliver Security and Transaction Information. 12
ARTICLE VI - Purchase and Sale of Securities
VI. A. Purchase of Securities. 12
VI. B. Sale of Securities. 13
VI. C. Delivery Versus Payment for Purchases and Sales. 14
VI. D. Payment on Settlement Date. 14
VI. E. Segregated Accounts. 14
VI. F. Advances for Settlement. 16
<PAGE>
ARTICLE VII - Trust Indebtedness
VII. A. Borrowings. 17
VII. B. Advances. 18
ARTICLE VIII - Concerning the Custodian
VIII. A. Limitations on Liability of Custodian. 18
VIII. B. Actions not Required by Custodian. 20
VIII. C. No Duty to Collect Amounts Due From Dividend and Transfer Agent. 21
VIII. D. No Enforcement Actions. 21
VIII. E. Authority to Use Agents and Sub-Custodians. 22
VIII. F. No Duty to Supervise Investments. 22
VIII. G. All Records Confidential. 23
VIII. H. Compensation of Custodian. 23
VIII. I. Reliance Upon Instructions. 23
VIII. J. Books and Records. 24
VIII. K. Internal Accounting Control Systems. 24
VIII. L. No Management of Assets by Custodian. 24
VIII. M. Assistance to Trust. 25
ARTICLE IX - Termination
IX. A. Termination. 25
IX. B. Failure to Designate Successor Trustee. 26
ARTICLE X - Force Majeure
ARTICLE XI - Miscellaneous
XI. A. Designation of Authorized Persons. 27
XI. B. Limitation of Personal Liability. 27
XI. C. Authorization By Board. 28
XI. D. Custodian's Consent to Use of Its Name. 28
XI. E. Notices to Custodian. 29
XI. F. Notices to Trust. 29
XI. G. Amendments In Writing. 29
XI. H. Successors and Assigns. 29
XI. I. Governing Law. 29
XI. J. Jurisdiction. 30
XI. K. Counterparts. 30
<PAGE>
XI. L. Headings. 30
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
</TABLE>
<PAGE>
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the 10th day of
June, 1998, by and between Veredus Funds, an Ohio business trust (the "Trust")
and Star Bank, National Association, (the "Custodian"), a national banking
association having its principal office at 425 Walnut Street, Cincinnati, Ohio,
45202.
WHEREAS, the Trust and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Trust
as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
Definitions
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended.
1934 Act - the Securities and Exchange Act of 1934, as amended.
Authorized Person - any person, whether or not any such person is an
officer or employee of the Trust, who is duly authorized by the Board of
Trustees of the Trust to give Oral Instructions and Written Instructions on
behalf of the Trust or any Fund, and named in Appendix A attached hereto and as
amended from time to time by resolution of the Board of Trustees, certified by
an Officer, and received by the Custodian.
Board of Trustees - the Trustees from time to time serving under the
Trust's Agreement and Declaration of Trust, as from time to time amended.
<PAGE>
Book-Entry System - a federal book-entry system as provided in Subpart
O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or
in such book-entry regulations of federal agencies as are substantially in the
form of Subpart O.
Business Day - any day recognized as a settlement day by The New York
Stock Exchange, Inc. and any other day for which the Trust computes the net
asset value of Shares of any fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s). Depository shall include any
other clearing agency registered with the SEC under Section 17A of the 1934 Act
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities provided that the Custodian
shall have received a copy of a resolution of the Board of Trustees, certified
by an Officer, specifically approving the use of such clearing agency as a
depository for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Trust.
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the
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<PAGE>
United States or of any state thereof, which have been issued and sold primarily
outside of the United States.
Fund - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
Oral Instructions - instructions orally transmitted to and received by
the Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
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Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the Trust's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets, including
securities of any registered investment company, that the Custodian has the
facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the units of beneficial
interest issued by the Trust on account of such Fund.
Trust - the business trust organized under the laws of Ohio which is an
open-end diversified management investment company registered under the Act.
Written Instructions - communications in writing actually received by
the Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Board of Trustees and the resolution is
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<PAGE>
certified by an Officer and delivered to the Custodian). All written
communications shall be directed to the Custodian, attention: Mutual Fund
Custody Department.
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
II. A. Appointment of Custodian. The Trust hereby constitutes and
appoints the Custodian as custodian of all Securities and cash owned by the
Trust at any time during the term of this Agreement.
II. B. Acceptance of Custodian. The Custodian hereby accepts
appointment as such custodian and agrees to perform the duties thereof as
hereinafter set forth.
II. C. Documents to be Furnished. The following documents, including
any amendments thereto, will be provided contemporaneously with the execution of
the Agreement, to the Custodian by the Trust:
1. A copy of the Declaration of Trust of the Trust
certified by the Secretary.
2. A copy of the By-Laws of the Trust certified by the
Secretary.
3. A copy of the resolution of the Board of Trustees of the
Trust appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Trust
setting forth the names and signatures of all Authorized Persons.
II. D. Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent.
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ARTICLE III
Receipt of Trust Assets
III. A. Delivery of Moneys. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all moneys to be
held by the Custodian for the account of any Fund. The Custodian shall be
entitled to reverse any deposits made on any Fund's behalf where such deposits
have been entered and moneys are not finally collected within 30 days of the
making of such entry.
III. B. Delivery of Securities. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all Securities to
be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian. The Custodian is hereby authorized by the
Trust, acting on behalf of the Fund, to actually deposit any assets of the Fund
in the Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Trust for the assets of the Fund so
deposited. Assets deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
III. C. Payments for Shares. As and when received, the Custodian shall
deposit to the account(s) of a Fund any and all payments for Shares of that Fund
issued or sold from time to time as they are received from the Trust's
distributor or Dividend and Transfer Agent or from the Trust itself.
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III. D. Duties Upon Receipt. The Custodian shall not be responsible for
any Securities, moneys or other assets of any Fund until actually received.
ARTICLE IV
Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust. The Trust shall furnish to
the Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary, either (i) setting forth the date of the
declaration of any dividend or distribution in respect of Shares of any Fund of
the Trust, the date of payment thereof, the record date as of which the Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date, or (ii) authorizing
the declaration of dividends and distributions in respect of Shares of a Fund on
a daily basis and authorizing the Custodian to rely on Written Instructions
setting forth the date of the declaration of any such dividend or distribution,
the date of payment thereof, the record date as of which the Fund shareholders
entitled to payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date, and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
IV. B. Segregation of Redemption Proceeds. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption
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<PAGE>
proceeds to be made by the Dividend and Transfer Agent from moneys held for the
account of the Fund so that they are available for such payment.
IV. C. Disbursements of Custodian. Upon receipt of a Certificate
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
IV. D. Payment of Custodian Fees. Upon receipt of Written Instructions
directing payment, the Custodian shall disburse moneys from the assets of the
Trust in payment of the Custodian's fees and expenses as provided in Article
VIII hereof.
ARTICLE V
Custody of Trust Assets
V. A. Separate Accounts for Each Fund. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
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<PAGE>
V. B. Segregation of Non-Cash Assets. All Securities and non-cash
property held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
V. C. Securities in Bearer and Registered Form. All Securities held
which are issued or issuable only in bearer form, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Custodian, any sub-custodian appointed in accordance with this
Agreement, or the nominee of any of them. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold, or deliver in
proper form for transfer, any Securities that it may hold for the account of any
Fund and which may, from time to time, be registered in the name of a Fund.
V. D. Duties of Custodian as to Securities. Unless otherwise instructed
by the Trust, with respect to all Securities held for the Trust, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix D):
1.) Collect all income due and payable with respect
to such Securities;
2.) Present for payment and collect amounts payable
upon all Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
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<PAGE>
3.) Surrender interim receipts or Securities in temporary form
for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect.
V. E. Certain Actions Upon Written Instructions. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be designated
in such Written Instructions proxies, consents, authorizations, and any other
instruments whereby the authority of the Trust as beneficial owner of any
Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation, or recapitalization of any corporation, or
the exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization, or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
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<PAGE>
4.) Make such transfers or exchanges of the assets of any Fund
and take such other steps as shall be stated in the Written Instructions to be
for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Trust; and
5.) Deliver any Securities held for any Fund to the depository
agent for tender or other similar offers.
V. F. Custodian to Deliver Proxy Materials. The Custodian shall
promptly deliver to the Trust all notices, proxy material and executed but
unvoted proxies pertaining to shareholder meetings of Securities held by any
Fund. The Custodian shall not vote or authorize the voting of any Securities or
give any consent, waiver or approval with respect thereto unless so directed by
Written Instructions.
V. G. Custodian to Deliver Tender Offer Information. The Custodian
shall promptly deliver to the Trust all information received by the Custodian
and pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix D. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
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<PAGE>
V. H. Custodian to Deliver Security and Transaction Information. On
each Business Day that the Federal Reserve Bank is open, the Custodian shall
furnish the Trust with a detailed statement of monies held for the Fund under
this Agreement and with confirmations and a summary of all transfers to or from
the account of the Fund. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the Securities held for the
Fund under this Agreement. Where Securities are transferred to the account of
the Fund without physical delivery, the Custodian shall also identify as
belonging to the Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
With respect to information provided by this section, it shall not be necessary
for the Custodian to provide notice as described by Article XI Section F.
Notices to Trust; it shall be sufficient to communicate by such means as shall
be mutually agreeable to the Trust and the Custodian.
ARTICLE VI
Purchase and Sale of Securities
VI. A. Purchase of Securities. Promptly after each purchase of
Securities by the Trust, the Trust shall deliver to the Custodian (i) with
respect to each purchase of Securities which are not Money Market Securities,
Written Instructions, and (ii) with respect to each purchase of Money Market
Securities, Proper Instructions, specifying with respect to each such purchase
the;
1.) name of the issuer and the title of the Securities,
2.) the number of shares, principal amount purchased (and
accrued interest, if any) or other units purchased,
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3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through
which, the purchase was made,
7.) the name of the person to whom such amount is
payable, and
8.) the Fund for which the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the
Trust, pay out of the moneys held for the account of such Fund the total amount
specified in the Written Instructions, or Oral Instructions, if applicable, to
the person named therein. The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for a Fund, if in the
relevant Fund custody account there is insufficient cash available to the Fund
for which such purchase was made. With respect to any repurchase agreement
transaction for the Funds, the Custodian shall assure that the collateral
reflected on the transaction advice is received by the Custodian.
VI. B. Sale of Securities. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
3.) date of sale and settlement,
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4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through
which, the sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
specified in the Written Instructions, or Oral Instructions, if applicable.
VI. C. Delivery Versus Payment for Purchases and Sales. Purchases and
sales of Securities effected by the Custodian will be made on a delivery versus
payment basis. The Custodian may, in its sole discretion, upon receipt of
Written Instructions, elect to settle a purchase or sale transaction in some
other manner, but only upon receipt of acceptable indemnification from the Fund.
VI. D. Payment on Settlement Date. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery.
VI. E. Segregated Accounts. The Custodian shall, upon receipt of Proper
Instructions so directing it, establish and maintain a segregated account or
accounts for and on behalf of a Fund. Cash and/or Securities may be transferred
into such account or accounts for specific purposes, to-wit:
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<PAGE>
1.) in accordance with the provision of any agreement among
the Trust, the Custodian, and a broker-dealer registered under the 1934 Act, and
also a member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of the
Options Clearing Corporation and of any registered national securities exchange,
the Commodity Futures Trading Commission, any registered contract market, or any
similar organization or organizations requiring escrow or other similar
arrangements in connection with transactions by the Fund;
2.) for purposes of segregating cash or Securities in
connection with options purchased, sold, or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the Fund with the
procedures required for reverse repurchase agreements, firm commitment
agreements, standby commitment agreements, short sales, or any other securities
by Act Release No. 10666, or any subsequent release or releases or rule of the
SEC relating to the maintenance of segregated accounts by registered investment
companies;
4.) for the purpose of segregating collateral for loans
of Securities made by the Fund; and
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<PAGE>
5.) for other proper corporate purposes, but only upon receipt
of, in addition to Proper Instructions, a copy of a resolution of the Board of
Trustees, certified by an Officer, setting forth the purposes of such segregated
account.
Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
VI. F. Advances for Settlement. Except as otherwise may be agreed upon
by the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
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ARTICLE VII
Trust Indebtedness
VII. A. Borrowings. In connection with any borrowings by the Trust, the
Trust will cause to be delivered to the Custodian by a bank or broker requiring
Securities as collateral for such borrowings (including the Custodian if the
borrowing is from the Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of collateral. The
Trust shall promptly deliver to the Custodian Written Instructions specifying
with respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the Trust, or a loan
agreement, (c) the date, and time if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Trust on the borrowing date, and (f) the description of
the Securities securing the loan, including the name of the issuer, the title
and the number of shares or other units or the principal amount. The Custodian
shall deliver on the borrowing date specified in the Written Instructions the
required collateral against the lender's delivery of the total loan amount then
payable, provided that the same conforms to that which is described in the
Written Instructions. The Custodian shall deliver, in the manner directed by the
Trust, such Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
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The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
VII. B. Advances. With respect to any advances of cash made by the
Custodian to or for the benefit of a Fund for any purpose which results in the
Fund incurring an overdraft at the end of any Business Day, such advance shall
be repayable immediately upon demand made by the Custodian at any time.
ARTICLE VIII
Concerning the Custodian
VIII. A. Limitations on Liability of Custodian. Except as otherwise
provided herein, the Custodian shall not be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its negligence or
willful misconduct. The Trust, on behalf of the Fund and only from assets of the
Fund (or insurance purchased by the Trust with respect to its liabilities on
behalf of the Fund hereunder), shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Trust's duties hereunder or any other
action or inaction of the Trust or its Trustees, officers, employees or agents,
except such as may arise from the negligent action, omission, willful misconduct
or breach of this Agreement by the Custodian, its directors, officers, employees
or agents.. The Custodian shall defend, indemnify and hold harmless
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<PAGE>
the Trust and its trustees, officers, employees or agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Custodian's duties as specifically set
forth in this agreement with respect to the Fund hereunder or any other action
or inaction of the Custodian or its directors, officers, employees, agents,
nominees, or Sub-Custodians as to the Fund, except such as may arise from the
negligent action, omission or willful misconduct of the Trust, its trustees,
officers, employees, or agents. The Custodian may, with respect to questions of
law apply for and obtain the advice and opinion of counsel to the Trust at the
expense of the Fund, or of its own counsel at its own expense, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Trust, and shall be
similarly protected with respect to anything done or omitted by it in good faith
in conformity with advice or opinion of its counsel, unless counsel to the Fund
shall, within a reasonable time after being notified of legal advice received by
the Custodian, have a differing interpretation of such question of law. The
Custodian shall be liable to the Trust for any proximate loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or misconduct on the part of the Custodian
or any of its employees, agents, nominees or Sub-Custodians, but not for any
special, incidental, consequential, or punitive damages; provided, however, that
nothing contained herein shall preclude recovery by the Trust, on behalf of the
Fund, of principal and of interest to the date of recovery on Securities
incorrectly omitted from the Fund's account or penalties imposed on the Trust,
in connection with the Fund, for any failures to deliver Securities. In any case
in which one party hereto may be asked to indemnify the other or hold the other
harmless, the party from
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whom indemnification is sought (the "Indemnifying Party") shall be advised of
all pertinent facts concerning the situation in question, and the party claiming
a right to indemnification (the "Indemnified Party") will use reasonable care to
identify and notify the Indemnifying Party promptly concerning any situation
which presents or appears to present a claim for indemnification against the
Indemnifying Party. The Indemnifying Party shall have the option to defend the
Indemnified Party against any claim which may be the subject of the
indemnification, and in the event the Indemnifying Party so elects, such defense
shall be conducted by counsel chosen by the Indemnifying Party and satisfactory
to the Indemnified Party and the Indemnifying Party will so notify the
Indemnified Party and thereupon such Indemnifying Party shall take over the
complete defense of the claim and the Indemnifying Party shall sustain no
further legal or other expenses in such situation for which indemnification has
been sought under this paragraph, except the expenses of any additional counsel
retained by the Indemnified Party. In no case shall any party claiming the right
to indemnification confess any claim or make any compromise in any case in which
the other party has been asked to indemnify such party (unless such confession
or compromise is made with such other party's prior written consent. The
provisions of this section VIII. A. shall survive the termination of this
Agreement.
VIII. B. Actions not Required by Custodian. Without limiting the
generality of the foregoing, the Custodian, acting in the capacity of Custodian
hereunder, shall be under no obligation to inquire into, and shall not be liable
for:
1.) The validity of the issue of any Securities
purchased by or for the account of any Fund, the legality of the purchase
thereof, or the propriety of the amount paid therefor;
- 20 -
<PAGE>
2.) The legality of the sale of any Securities by or for the
account of any Fund, or the propriety of the amount for which the same are sold;
3.) The legality of the issue or sale of any Shares of any
Fund, or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any Shares of any Fund,
or the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend
by the Trust in respect of Shares of any Fund;
6.) The legality of any borrowing by the Trust on behalf of
the Trust or any Fund, using Securities as collateral;
7.) Whether the Trust or a Fund is in compliance with the 1940
Act, the regulations thereunder, the provisions of the Trust's charter documents
or by-laws, or its investment objectives and policies as then in effect.
VIII. C. No Duty to Collect Amounts Due From Dividend and Transfer
Agent. The Custodian shall not be under any duty or obligation to take action to
effect collection of any amount due to the Trust from any Dividend and Transfer
Agent of the Trust nor to take any action to effect payment or distribution by
any Dividend and Transfer Agent of the Trust of any amount paid by the Custodian
to any Dividend and Transfer Agent of the Trust in accordance with this
Agreement.
VIII. D. No Enforcement Actions. Notwithstanding Section D of Article
V, the Custodian shall not be under any duty or obligation to take action, by
legal means or
- 21 -
<PAGE>
otherwise, to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
Written Instructions and (ii) it shall be assured to its satisfaction (including
prepayment thereof) of reimbursement of its costs and expenses in connection
with any such action.
VIII. E. Authority to Use Agents and Sub-Custodians. The Trust
acknowledges and hereby authorizes the Custodian to hold Securities through its
various agents described in Appendix C annexed hereto. In addition, the Trust
acknowledges that the Custodian may appoint one or more financial institutions,
as agent or agents or as sub-custodian or sub-custodians, including, but not
limited to, banking institutions located in foreign countries, for the purpose
of holding Securities and moneys at any time owned by the Fund. The Custodian
shall not be relieved of any obligation or liability under this Agreement in
connection with the appointment or activities of such agents or sub-custodians.
Any such agent or sub-custodian shall be qualified to serve as such for assets
of investment companies registered under the Act. The Funds shall reimburse the
Custodian for all costs incurred by the Custodian in connection with opening
accounts with any such agents or sub-custodians. Upon request, the Custodian
shall promptly forward to the Trust any documents it receives from any agent or
sub-custodian appointed hereunder which may assist trustees of registered
investment companies to fulfill their responsibilities under Rule 17f-5 of the
Act.
VIII. F. No Duty to Supervise Investments. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it
- 22 -
<PAGE>
for the account of the Trust are such as properly may be held by the Trust under
the provisions of the Declaration of Trust and the Trust's By-Laws.
VIII. G. All Records Confidential. The Custodian shall treat all
records and other information relating to the Trust and the assets of all Funds
as confidential and shall not disclose any such records or information to any
other person unless (i) the Trust shall have consented thereto in writing or
(ii) such disclosure is compelled by law.
VIII. H. Compensation of Custodian. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian, for the Fund's account
from the Fund's assets only, such compensation as shall be determined pursuant
to Appendix E attached hereto, or as shall be determined pursuant to amendments
to Appendix E as approved by the Custodian and the Trust. The Custodian shall be
entitled to charge against any money held by it for the accounts of the Fund the
amount of any loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement as determined by agreement of the Custodian and the Trust or by the
final order of any court or arbitrator having jurisdiction and as to which all
rights of appeal shall have expired. The expenses which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
agents or Sub-Custodians incurred in settling transactions involving the
purchase and sale of Securities of the Fund.
VIII. I. Reliance Upon Instructions. The Custodian shall be entitled to
rely upon any Proper Instructions if such reliance is made in good faith. The
Trust agrees to forward to the Custodian Written Instructions confirming Oral
Instructions in such a manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex, facsimile or otherwise, on the
same Business Day on which such Oral Instructions were
- 23 -
<PAGE>
given. The Trust agrees that the failure of the Custodian to receive such
confirming instructions shall in no way affect the validity of the transactions
or enforceability of the transactions hereby authorized by the Trust. The Trust
agrees that the Custodian shall incur no liability to the Trust for acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions.
VIII. J. Books and Records. The Custodian will (i) set up and maintain
proper books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
VIII. K. Internal Accounting Control Systems. The Custodian shall send
to the Trust any report received on the systems of internal accounting control
of the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
VIII. L. No Management of Assets by Custodian. The Custodian performs
only the services of a custodian and shall have no responsibility for the
management, investment or reinvestment of the Securities or other assets from
time to time owned by any Fund. The Custodian is not a selling agent for Shares
of any Fund and performance of its duties as custodian shall not be deemed to be
a recommendation to any Fund's depositors or others of Shares of the Fund as an
investment. The Custodian shall have no duties or obligations
- 24 -
<PAGE>
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
VIII. M. Assistance to Trust. The Custodian shall take all reasonable
action, that the Trust may from time to time request, to assist the Trust in
obtaining favorable opinions from the Trust's independent accountants, with
respect to the Custodian's activities hereunder, in connection with the
preparation of the Fund's Form N- IA, Form N-SAR, or other annual reports to the
SEC.
VIII. N. Grant of Security Interest. The Trust hereby pledges to and
grants the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Fund to the Custodian for money borrowed from
the Custodian. This pledge is in addition to any other pledge of collateral by
the Trust to the Custodian.
ARTICLE IX
Termination
IX. A. Termination. Either party hereto may terminate this Agreement
for any reason by giving to the other party a notice in writing specifying the
date of such termination, which shall be not less than ninety (90) days after
the date of giving of such notice. If such notice is given by the Trust, it
shall be accompanied by a copy of a resolution of the Board of Trustees of the
Trust, certified by the Secretary of the Trust, electing to terminate this
Agreement and designating a successor custodian or custodians each of which
shall be a bank or trust company having not less than $100,000,000 aggregate
capital, surplus, and undivided profits. In the event such notice is given by
the Custodian, the Trust shall, on or before the termination date, deliver to
the Custodian a
- 25 -
<PAGE>
copy of a resolution of the Board of Trustees of the Trust, certified by the
Secretary, designating a successor custodian or custodians to act on behalf of
the Trust. In the absence of such designation by the Trust, the Custodian may
designate a successor custodian which shall be a bank or trust company having
not less than $100,000,000 aggregate capital, surplus, and undivided profits.
Upon the date set forth in such notice this Agreement shall terminate, and the
Custodian, provided that it has received a notice of acceptance by the successor
custodian, shall deliver, on that date, directly to the successor custodian all
Securities and monies then owned by the Fund and held by it as Custodian. Upon
termination of this Agreement, the Trust shall pay to the Custodian on behalf of
the Trust such compensation as may be due as of the date of such termination.
The Trust agrees on behalf of the Trust that the Custodian shall be reimbursed
for its reasonable costs in connection with the termination of this Agreement.
IX. B. Failure to Designate Successor Trustee. If a successor custodian
is not designated by the Trust, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will not serve, the
Trust shall, upon the delivery by the Custodian to the Trust of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Trust) and moneys then owned by the Trust, be deemed to be the custodian
for the Trust, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System, which cannot be delivered to the
Trust, which shall be held by the Custodian in accordance with this Agreement.
- 26 -
<PAGE>
ARTICLE X
Force Majeure
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; labor
disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided,
however, that the Custodian, in the event of a failure or delay, shall use its
best efforts to ameliorate the effects of any such failure or delay.
ARTICLE XI
Miscellaneous
XI. A. Designation of Authorized Persons. Appendix A sets forth the
names and the signatures of all Authorized Persons as of this date, as certified
by the Secretary of the Trust. The Trust agrees to furnish to the Custodian a
new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new Appendix
A shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the then
current Authorized Persons as set forth in the last delivered Appendix A.
XI. B. Limitation of Personal Liability. No recourse under any
obligation of this Agreement or for any claim based thereon shall be had against
any organizer, shareholder,
- 27 -
<PAGE>
officer, trustee, past, present or future as such, of the Trust or of any
predecessor or successor, either directly or through the Trust or any such
predecessor or successor, whether by virtue of any constitution, statute or rule
of law or equity, or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Agreement and the
obligations thereunder are enforceable solely against the assets of the Trust,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the organizers, shareholders, officers, or trustees of the Trust or
of any predecessor or successor, or any of them as such, because of the
obligations contained in this Agreement or implied therefrom and that any and
all such liability is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
XI. C. Authorization By Board. The obligations set forth in this
Agreement as having been made by the Trust have been made by the Board of
Trustees, acting as such Trustees for and on behalf of the Trust, pursuant to
the authority vested in them under the laws of the State of Ohio, the
Declaration of Trust and the By-Laws of the Trust. This Agreement has been
executed by Officers of the Trust as officers, and not individually, and the
obligations contained herein are not binding upon any of the Trustees, Officers,
agents or holders of shares, personally, but bind only the Trust and then only
to the extent of the assets of the Trust.
XI. D. Custodian's Consent to Use of Its Name. The Trust shall obtain
the Custodian's consent prior to the publication and/or dissemination or
distribution, of the Prospectus and any other documents (including advertising
material) specifically mentioning the Custodian (other than merely by name and
address).
- 28 -
<PAGE>
XI. E. Notices to Custodian. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at Star Bank Center, 425 Walnut .Street, M. L. 6118, Cincinnati,
Ohio 45202, attention Mutual Fund Custody Department, or at such other place as
the Custodian may from time to time designate in writing.
XI. F. Notices to Trust. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 6900 Bowling Blvd., Suite 250,
Louisville, KY 40207 or at such other place as the Trust may from time to time
designate in writing.
XI. G. Amendments In Writing. This Agreement, with the exception of the
Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
XI. H. Successors and Assigns. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Trust or
by the Custodian, and no attempted assignment by the Trust or the Custodian
shall be effective without the written consent of the other party hereto.
XI. I. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
- 29 -
<PAGE>
XI. J. Jurisdiction. Any legal action, suit or proceeding to be
instituted by either party with respect to this Agreement shall be brought by
such party exclusively in the courts of the State of Ohio or in the courts of
the United States for the Southern District of Ohio, and each party, by its
execution of this Agreement, irrevocably (i) submits to such jurisdiction and
(ii) consents to the service of any process or pleadings by first class U.S.
mail, postage prepaid and return receipt requested, or by any other means from
time to time authorized by the laws of such jurisdiction.
XI. K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
XI. L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
WITNESS: TRUST:
Veredus Funds
/s/ Charles P. McCurdy By: /s/ B. Anthony Weber
- ---------------------- ------------------------
B. Anthony Weber, President
WITNESS: CUSTODIAN:
Star Bank, N.A.
/s/ Mark J. Dowling By: /s/ Marsha A. Croxton
-------------------------
Title: Sr. Vice President
- 30 -
<PAGE>
<TABLE>
APPENDIX A
Authorized Persons Specimen Signatures
<S> <C> <C>
Chairman: __________________ __________________________________
President: B. Anthony Weber /s/ B. Anthony Weber
----------------------------------
Secretary: Charles P. McCurdy, Jr. /s/ Charles P. McCurdy
----------------------------------
Treasurer: B. Anthony Weber /s/ B. Anthony Weber
----------------------------------
Senior Vice
President: __________________ __________________________________
Assistant
Secretary: Carol Highsmith /s/ Carol J. Highsmith
----------------------------------
Assistant
Treasurer: __________________ __________________________________
Adviser Employees: Kathleen M. Kannapel /s/ Kathleen M. Kannapel
----------------------------------
James R. Jenkins /s/ James R. Jenkins
----------------------------------
Transfer Agent/Fund Accountant
Employees: Linda Lawson /s/ Linda A. Lawson /s/ LALawson
----------------------------------
Mike Durham /s/ Mike Durham
----------------------------------
Stacey Stone /s/ Stacey Stone
----------------------------------
------------------ ----------------------------------
* Authority restricted; does not include: ______________________________________
</TABLE>
- 31 -
<PAGE>
APPENDIX B
Series of the Trust
Veredus Growth Fund
- 32 -
<PAGE>
APPENDIX C
Agents of the Custodian
The following agents are employed currently by Star Bank, N.A. for
securities processing and control ...
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible
Securities)
- 33 -
<PAGE>
APPENDIX D
Standards of Service Guide
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to complete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers
Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal.
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond
Source, Kenny Information Systems, Standard & Poor's Corporation, and DTC
Important Notices. Star Bank will not notify clients of optional put
opportunities.
Any securities delivered free to Star Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Star Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide is subject to
change. Should any changes be made Star Bank will provide you with an updated
copy of its Standards of Service Guide.
- 34 -
<PAGE>
<TABLE>
Star Bank Security Settlement Standards
- -----------------------------------------------------------------------------------------------------------------------------------
Transaction Type Instructions Deadlines* Delivery Instructions
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DTC - Clearing House Funds 11:00 A.M. on Settlement Date DTC Participant #2219
For Account#_____________
DTC - Same Day Funds Settlement 12:30 P.M. on Settlement Date DTC Participant #2219
For Account #____________
Federal Reserve Bank of Cinti/Trust
Federal Reserve Book Entry 1:00 P.M. on Settlement Date for Star Bank, N.A. ABA# 042000013
For Account #_____________
Federal Reserve Bank of Cinti/Spec
Federal Reserve Book Entry 1:00 P.M. on Settlement Date for Star Bank, N.A. ABA# 042000013
(Repurchase Agreement Collateral Only) For Account #_____________
PTC Securities 12:00 P.M. on Settlement Date (for Deliveries PTC For Account BTRST/CUST
(GNMA Book Entry) by 5:00 P.M. on Settlement Date minus 1 Sub Account: Star Bank, N.A. #090334
10:00 A.M. EST on Settlement Date Bankers Trust Company
Physical Securities (for Deliveries, by 4:00 P.M. on Settlement 16 Wall Street 4th Floor, Window 43
Date minus 1) for Star Bank Account #090334
Bankers Trust Company
CEDEL/EURO-CLEAR 4:00 P.M. on Settlement Date minus 3 Euroclear # 91648
For Star Bank Account #090334
Star Bank,N.A. Cinti/Trust ABA#
042000013
Cash Wire Transfer 3:00 P.M. Credit Account #9901877
Further Credit to ___________
Account # _______________
* All times listed are Cincinnati time.
</TABLE>
<PAGE>
<TABLE>
Star Bank Payment Standards
- -------------------------------------------------------------------------------------------------------------
Security Type Income Principal
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equities Payable Date + 1
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date + 1 Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
CMOs *
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 2 Payable Date + 2
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date + 1 Payable Date + 1
Certificates of Deposit* Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 2 Payable Date + 2
NOTE: If a payable date falls on a weekend or bank holiday, payment will be made on the
immediately following business day.
</TABLE>
<PAGE>
<TABLE>
Star Bank Corporate Reorganization Standards
- -----------------------------------------------------------------------------------------------------------------------------------
Deadline for Client Transaction
Type of Action Notification to Client Instructions
to Star Bank Posting
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rights, Warrants, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
and Optional Mergers expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Option to Retain expiration or receipt of notice
Class Actions 10 business days prior to expiration 5 business days prior to expiration Upon receipt
date
Voluntary Tenders,
Exchanges, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
and Conversions expiration or receipt of notice
Mandatory Puts, Defaults,
Liquidations, Bankruptcies, At posting of funds or securities
Stock Splits, Mandatory received None Upon receipt
Exchanges
Full and Partial Calls Later of 10 business days prior to None Upon receipt
expiration or receipt of notice
NOTE: Fractional shares/par amounts resulting from any of the above will be sold.
</TABLE>
<PAGE>
APPENDIX E
Schedule of Compensation
Star Bank, N.A.
Domestic Custody Fee Schedule for Veredus Growth Fund
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $9.00
(c) For each portfolio transaction processed through
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $16.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales $8.00
(f) For each option/future contract written, exercised
or expired $40.00
(g) For each Cedel/Euro clear transaction $80.00
(h) For each Disbursement (Fund expenses only) $5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. Market Value Fee
Based upon an annual rate of: Million
.0003 (3 Basis Points) on First $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee-Per Fund $400.00
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be
shipping fees or transfer fees.
V. Earnings Credits
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against any cash management service
fees generated. Earnings credits are based on a Cost of Funds Tiered
Earnings Credit Rate.
<PAGE>
<TABLE>
Star Bank
Cash Management Fee Schedule for Veredus Growth Fund
Services Unit Cost ($) Monthly Cost ($)
-------- ------------- ----------------
<S> <C> <C>
D.D.A. Account Maintenance 14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00
ACH Transaction .105
ACH Monthly Maintenance 40.00
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture* .10
Drafts Cleared .179
Lockbox Maintenance** 55.00
Lockbox items Processed
with copy of check .32
without copy of check .26
Checks Printed .20
Positive Pay .06
Issued Items .015
Wires Incoming
Domestic 10.00
International 10.00
Wires Outgoing
Domestic
Repetitive 12.00
Non-Repetitive 13.00
International
Repetitive 35.00
Non-Repetitive 40.00
PC - Initiated Wires:
Domestic
Repetitive 9.00
Non-Repetitive 9.00
International
Repetitive 25.00
Non-Repetitive 25.00
*** Uncollected Charge Star Bank Prime Rate as of first of month plus 4% * Price
can vary depending upon what information needs to be captured ** With the use of
lockbox, the collected balance in the demand deposit account will be
significantly increased and therefore
earnings to offset cash management service fees will be maximized.
*** Fees for uncollected balances are figured on the monthly average of all combined accounts.
**** Other available cash management services are priced separately.
</TABLE>
Revised October, 1997
June 16th, 1998
Veredus Funds
6900 Bowling Blvd., Suite 250
Louisville, KY 40206
Gentlemen:
The undersigned hereby purchases 10,000 shares of Veredus Growth Fund
at $10.00 per share, representing a total investment of $100,000 in the shares
of the series of Veredus Funds. The undersigned hereby represents that (i) such
purchase is for investment purposes, and (ii) the undersigned has no present
intention of redeeming or selling said shares.
Veredus Asset Management LLC Profit
Sharing Plan And Trust For The Benefit Of
B. Anthony Weber
By: /s/ B. Anthony Weber
Its: Trustee
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use in this
Pre-Effective Amendment No. 1 of our report dated June 18, 1998 and to all
references to our Firm included in or made a part of this Pre-Effective
Amendment.
ARTHUR ANDERSEN LLP
Louisville, Kentucky
June 18, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Veredus Growth Fund
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> May-31-1999
<PERIOD-START> Jun-18-1998
<PERIOD-END> Jun-18-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 124000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 124000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24000
<TOTAL-LIABILITIES> 24000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100000
<SHARES-COMMON-STOCK> 10000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100000
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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,
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, its attorneys for it and
in its name, place and stead, to execute and file any Amendment or Amendments to
the Trust's Registration Statement, hereby giving and granting to said attorneys
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused it names to be subscribed
hereto by the President this 10th day of June, 1998.
ATTEST: Veredus Funds
/s/ Charles P. McCurdy, Jr. /s/ B. Anthony Weber
- --------------------------- --------------------
CHARLES P. McCURDY, JR., Secretary B. ANTHONY WEBER, President
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared B. ANTHONY WEBER, President and CHARLES P. McCURDY,
Secretary, who represented that they are duly authorized in the premises, and
who are known to me to be the person described in and who executed the foregoing
instrument, and they duly acknowledged to me that they executed and delivered
the same for the purposes therein expressed.
WITNESS my hand and official seal this 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
<PAGE>
CERTIFICATE
The undersigned, Secretary of Veredus Funds, hereby certifies that the
following resolution was duly adopted by a majority of the Board of Trustees by
Action by Unanimous Consent of Trustees dated June 10, 1998, and is in full
force and effect:
"WHEREAS, Veredus 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.
NOW, THEREFORE, the Trust hereby constitutes and appoints
JAMES R. CUMMINS and DONALD S. MENDELSOHN, and each of them,
its attorneys for it and in its name, place and stead, to
execute and file any Amendment or Amendments to the Trust's
Registration Statement, hereby giving and granting to said
attorneys full power and authority to do and perform all and
every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully to all intents and
purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do or cause to be done by
virtue hereof.
Dated: June 10, 1998 /s/ Charles P. McCurdy, Jr.
---------------------------
Charles P. McCurdy, Jr., Secretary
Veredus Funds
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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 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, its attorneys for it and
in its name, place and stead, to execute and file such any Amendment or
Amendments to the Trust's Registration Statement, hereby giving and granting to
said attorneys full power and authority to do and perform all and every act and
thing whatsoever requisite and necessary to be done in and about the premises as
fully to all intents and purposes as it might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of June, 1998.
/s/ B. Anthony Weber
--------------------
B. ANTHONY WEBER, Trustee,
President and Treasurer
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared B. ANTHONY WEBER, 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 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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, its attorneys for it and
in its name, place and stead, 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 it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of June, 1998.
/s/ Charles P. McCurdy, Jr.
---------------------------
CHARLES P. McCURDY, JR. Trustee
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared CHARLES P. McCURDY, JR. 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 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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, its attorneys for it and
in its name, place and stead, 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 it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of June, 1998.
/s/ Michael J. Kelley
---------------------
MICHAEL J. KELLEY, Trustee
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared MICHAEL J. KELLEY, 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 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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, its attorneys for it and
in its name, place and stead, 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 it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of June, 1998.
/s/ Michael B. Mountjoy
-----------------------
MICHAEL B. MOUNTJOY, Trustee
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared MICHAEL B. MOUNTJOY, 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 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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, its attorneys for it and
in its name, place and stead, 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 it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of June, 1998.
/s/ Sherman Henderson, III
--------------------------
SHERMAN HENDERSON, III, Trustee
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared SHERMAN HENDERSON, 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 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Veredus 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, its attorneys for it and
in its name, place and stead, 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 it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of June, 1998.
/s/ James R. Jenkins
--------------------
JAMES R. JENKINS, Chief Financial
Officer
STATE OF KENTUCKY )
) ss:
COUNTY OF JEFFERSON )
Before me, a Notary Public, in and for said county and state,
personally appeared JAMES R. JENKINS, 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 10th day of June, 1998
/s/ Barbara C. Brooks
---------------------
Notary Public
My commission expires: May 1, 2002
