<PAGE> 1
As filed with the Securities and Exchange Commission on February 29, 1996
1933 Act Registration No. 33-84186
1940 Act File No. 811-8774
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 2 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 3 /X/
FAIRPORT FUNDS
Formerly known as The Roulston Family of Funds
(Exact Name of Registrant as Specified in Charter)
4000 Chester Avenue, Cleveland, Ohio 44103
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 216/431-3000
Scott D. Roulston, 4000 Chester Avenue, Cleveland, Ohio 44103
(Name and Address of Agent for Service)
Copy to: Charles H. Hire, Esq., Baker & Hostetler
65 East State Street, Columbus, Ohio 43215
Approximate Date of Proposed Public Offering:
Immediately, upon effectiveness
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
X on March 1, 1996 pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(1)
---
on (date) pursuant to paragraph (a)(1)
---
75 days after filing pursuant to paragraph (a)(2)
---
on (date) pursuant to paragraph (a)(2) of Rule 485
---
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Rule 24f-2 under
the Investment Company Act of 1940. The Registrant filed its Rule 24f-2
Notice for its fiscal year ended October 31, 1995, on November 14, 1995.
<PAGE> 2
CROSS REFERENCE SHEET
FAIRPORT MIDWEST GROWTH FUND
FAIRPORT GROWTH AND INCOME FUND
FAIRPORT GOVERNMENT SECURITIES FUND
Three Funds
of
FAIRPORT FUNDS
<TABLE>
<CAPTION>
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
<S> <C> <C>
1. Cover page.................. Cover Page
2. Synopsis.................... Fund Expenses
3. Condensed Financial
Information............... Financial Highlights;
Performance of the Funds
4. General Description of
Registrant................ General Information -- The Trust and
Its Shares; Investment Objectives and
Policies; Investment Limitations of the
Funds; Description of Permitted
Investments and Related Risk Factors
5. Management of the Fund...... Management of the Trust;
General Information
5A. Management's Discussion
of Fund Performance....... Inapplicable
6. Capital Stock and Other
Securities................ How to Purchase Shares; How to Redeem
Shares; How the Funds are Taxed;
Dividends and Shareholder Taxes;
General Information
7. Purchase of Securities
Being Offered............. How Shares are Valued; How to Purchase
Shares; How to Redeem Shares
8. Redemption or Repurchase.... How to Purchase Shares; How to Redeem
Shares
9. Pending Legal Proceedings... Inapplicable
</TABLE>
<PAGE> 3
FAIRPORT FUNDS
===============================================================================
CHARTING A COURSE YOU CAN TRUST
===============================================================================
INVESTMENT ADVISER:
ROULSTON & COMPANY, INC.
Fairport Funds (the "Trust," formerly The Roulston Family of Funds) provides a
convenient and economical means of investing in professionally managed
portfolios of securities. This Prospectus describes the following portfolios of
the Trust (the "Funds"), each of which is a separate diversified portfolio.
FAIRPORT MIDWEST GROWTH FUND
FAIRPORT GROWTH AND INCOME FUND
FAIRPORT GOVERNMENT SECURITIES FUND
This Prospectus provides the information about the Trust and the Funds that a
prospective investor should know before investing. Investors are advised to read
this Prospectus and retain it for future reference. Additional information
regarding the Trust and the Funds is included in a Statement of Additional
Information dated March 1, 1996, which has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference. You
may obtain free copies of the Statement of Additional Information by calling
1-800-332-6459 (1-800-3-FAMILY) or by writing to the Trust at 4000 Chester
Avenue, Cleveland, Ohio 44103.
THE SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, NOR ARE SUCH SHARES FEDERALLY INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN A FUND INVOLVES CERTAIN
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated March 1, 1996
1
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS HIGHLIGHTS.............. 3
FUND EXPENSES...................... 4
FINANCIAL HIGHLIGHTS............... 5
THE TRUST AND ITS FUNDS............ 7
INVESTMENT OBJECTIVES AND
POLICIES......................... 7
INVESTMENT LIMITATIONS OF THE
FUNDS............................ 11
MANAGEMENT OF THE TRUST............ 12
HOW SHARES ARE VALUED.............. 14
HOW TO PURCHASE SHARES............. 15
HOW TO REDEEM SHARES............... 17
EXCHANGES.......................... 19
PERFORMANCE OF THE FUNDS........... 19
HOW THE FUNDS ARE TAXED............ 20
DIVIDENDS AND SHAREHOLDER TAXES.... 21
GENERAL INFORMATION................ 22
DESCRIPTION OF PERMITTED
INVESTMENTS AND RELATED RISK
FACTORS.......................... 23
</TABLE>
2
<PAGE> 5
PROSPECTUS HIGHLIGHTS
The following summary provides basic information about Fairport Midwest Growth
Fund (the "Midwest Growth Fund"), Fairport Growth and Income Fund (the "Growth
and Income Fund") and Fairport Government Securities Fund (the "Government
Fund"), (each, a "Fund" and, collectively, the "Funds"). However, the following
is only a summary, so please review carefully the remainder of the Prospectus
for more information.
INVESTMENT OBJECTIVES OF THE FUNDS
The MIDWEST GROWTH FUND seeks capital appreciation. The Midwest Growth Fund
seeks to achieve its objective by investing primarily in equity securities of
companies headquartered in the Midwest region of the United States.
The GROWTH AND INCOME FUND seeks capital appreciation and current income. The
Growth and Income Fund seeks to achieve its objective by investing primarily in
common stocks or securities convertible into common stocks.
The GOVERNMENT FUND seeks current income consistent with preservation of
capital. The Government Fund seeks to achieve its objectives by investing
primarily in mid- to intermediate-term fixed income securities in the high end
of the credit spectrum. The Government Fund will invest at least 65% of its
total assets in U.S. Government securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS
You should be aware of certain risks and considerations before investing in any
of the Funds. Each Fund invests in securities that fluctuate in value; therefore
you should expect each Fund's net asset value per share to fluctuate. Values of
fixed income securities and, correspondingly, of mutual funds invested in such
securities, such as the Government Fund, generally vary inversely with interest
rates and may be affected by other market and economic factors as well. There is
no assurance that the investment objective of any Fund will be achieved. In
addition, the Funds, to the extent set forth under "INVESTMENT OBJECTIVES AND
POLICIES" and "DESCRIPTION OF PERMITTED INVESTMENTS AND RELATED RISK FACTORS,"
may engage in the following practices: the use of repurchase agreements,
entering into options transactions, purchasing securities on a when-issued or
delayed delivery basis, purchasing noninvestment grade convertible debt
securities, purchasing variable or floating rate securities and purchasing
foreign securities.
THE INVESTMENT ADVISER
Roulston & Company, Inc. ("Roulston") is the Investment Advisor ("Advisor" or
"Investment Advisor") for each Fund.
THE DISTRIBUTOR
Roulston Research Corp., a wholly owned subsidiary of Roulston (the
"Distributor").
PURCHASES AND REDEMPTIONS
Shares of the Funds are sold and redeemed at their net asset value without any
sales load. Each Fund has a minimum initial investment requirement of $250.
Purchases and redemptions may be made on each day the New York Stock Exchange
(the "Exchange") is open for regular business (a "Business Day"). Your purchase
order will be effective as of the Business Day it is received by the Transfer
Agent if the Transfer Agent receives
3
<PAGE> 6
your order and payment by check or by wire transfer of funds prior to the
earlier of 4:00 p.m., Eastern time, or the close of regular trading on the
Exchange (the "Valuation Time") on such Business Day. Redemption orders received
by the Transfer Agent prior to the Valuation Time on any Business Day will be
effective as of that Business Day. The Funds also offer both a Systematic
Investment Plan and a Systematic Withdrawal Plan.
DIVIDENDS AND DISTRIBUTIONS
The Midwest Growth Fund and the Growth and Income Fund intend to declare and pay
dividends of net investment income twice per year. The Government Fund's net
investment income dividends are declared daily and payable monthly. All Funds
will make distributions of capital gains at least annually. You will receive
such dividends and distributions in additional shares unless you otherwise elect
to take those payments in cash.
THE ADMINISTRATOR AND TRANSFER AGENT
Fund/Plan Services, Inc. serves as the Administrator, Transfer Agent and
dividend disbursing agent and provides certain Fund Accounting and Custody
Administrative services for each of the Funds (the "Transfer Agent").
FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
<TABLE>
<S> <C>
Sales Load on
Purchases............. None
Sales Load on Reinvested
Dividends............. None
Deferred Sales Load..... None
Redemption Fee.......... None, although a wire
redemption charge,
currently $9, is
deducted from the amount
of a Federal Reserve
wire redemption payment.
Exchange Fee............ None
</TABLE>
ANNUAL FUND OPERATING EXPENSES AS A (PERCENTAGE OF AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
MIDWEST GROWTH AND GOVERNMENT
GROWTH FUND INCOME FUND SECURITIES FUND
===========================================================
<S> <C> <C> <C>
Management Fees
after Fee
Waiver....... .54%(1) .47%(1) .00%(1)
12b-1 Fees..... .25 .25 .25
Other Expenses
after
Reimbursements(1) .59 .78 .65
---- ---- ----
Total Operating
Expenses
after Fee
Waivers(1)... 1.38% 1.50% 0.90%
---- ---- ----
<FN>
(1) The above table reflects a continuation of the agreement Roulston has made
with the Trust to waive its investment advisory fee, and to reimburse certain
Other Expenses. Such waivers and reimbursements shall continue at least through
October 31, 1996, to the extent necessary to cause Total Operating Expenses not
to exceed: 1.38% for the MIDWEST GROWTH FUND; 1.50% for the GROWTH AND INCOME
FUND; and 0.90% for the GOVERNMENT FUND. Absent such fee waivers and expense
reimbursements, Management Fees, Other Expenses, and Total Operating Expenses
would be: 0.75%, 0.59%, and 1.59%, respectively, for the MIDWEST GROWTH FUND;
0.75%, 0.78%, and 1.78%, respectively, for the GROWTH AND INCOME FUND; and
0.25%, 1.58%, and 2.08%, respectively, for the GOVERNMENT SECURITIES FUND.
</TABLE>
Such expenses are illustrated by the following examples. You would pay the
following expenses on a $1,000 investment (assuming a 5% annual return and
redemption at the end of each period):
<TABLE>
<CAPTION>
MIDWEST GROWTH GOVERNMENT
GROWTH AND INCOME SECURITIES
FUND FUND FUND
======================================================
<S> <C> <C> <C>
One Year............. $ 14 $ 15 $ 9
Three Years.......... $ 43 $ 47 $ 28
Five Years........... $ 75 $ 81 $ 49
Ten Years............ $ 165 $178 $110
</TABLE>
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of these tables is to assist you in understanding the various costs and
expenses that you may bear directly or indirectly when you invest in a Fund. The
above expenses and examples reflect current fees. As the result
4
<PAGE> 7
of the payment of Rule 12b-1 fees, long-term shareholders may pay more than the
maximum front-end sales charge permitted by the Rules of the National
Association of Securities Dealers, Inc. Additional information may be found
under "MANAGEMENT OF THE TRUST" and "HOW TO PURCHASE SHARES" below.
FINANCIAL HIGHLIGHTS
The Financial Highlights with respect to the fiscal year ended October 31, 1995,
have been audited by Ernst & Young LLP, independent auditors of the Funds. The
report of Ernst & Young LLP, together with certain financial statements, are
contained in Appendix "B" to the Trust's Statement of Additional Information and
may be obtained by shareholders and prospective investors at no cost.
On April 29, 1995, pursuant to an Agreement and Plan of Reorganization and
Liquidation, each of the FAIRPORT MIDWEST GROWTH FUND (formerly the Roulston
Midwest Growth Fund), the FAIRPORT GROWTH AND INCOME FUND (formerly the Roulston
Growth and Income Fund) and the FAIRPORT GOVERNMENT SECURITIES FUND (formerly
the Roulston Government Securities Fund) of the Trust acquired in a tax free
reorganization all of the assets of each of the Roulston Midwest Growth Fund,
the Roulston Growth and Income Fund and the Roulston Government Securities Fund
(collectively, the "Acquired Funds") of The Advisors' Inner Circle Fund, a
Massachusetts business trust, respectively, in exchange for the assumption of
such Acquired Fund's liabilities and a number of full and fractional shares of
the corresponding Fund of the Trust having an aggregate net asset value equal to
such Acquired Fund's net assets (the "Reorganization").
The Financial Highlights with respect to the fiscal year ended October 31, 1994
and the period from July 1, 1993 (commencement of operations) through October
31, 1993, were audited by the independent auditors of the Acquired Funds prior
to the Reorganization.
The following tables should be read in conjunction with the financial statements
and related notes also included as Appendix "B" in the Statement of Additional
Information.
5
<PAGE> 8
<TABLE>
<CAPTION>
FAIRPORT
MIDWEST GROWTH FUND
------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93(1)
<S> <C> <C> <C>
======================================================
Net Asset Value,
beginning of
period............... $ 12.27 $ 11.07 $ 10.00
------- ------- -----------
Income from
Investment
Operations:
Net investment
income............. 0.04 0.02 0.01
Net realized and
unrealized
gain/loss
on investments..... 2.04 1.19 1.07
------- ------- -----------
Total from
investment
operations....... 2.08 1.21 1.08
------- ------- -----------
Less Distributions:
From net investment
income............. (0.04) (0.01) (0.01)
From realized capital
gains.............. (0.76) 0.00 0.00
------- ------- -----------
Total
distributions.... (0.80) (0.01) (0.01)
------- ------- -----------
Net Asset Value, end of
period............... $ 13.55 $ 12.27 $ 11.07
======= ======= ==========
Total Return........... 18.17% 10.89% 10.90%**
Ratios/Supplemental
Data:
Net assets, end of
period (in
000's)............. $49,408 $29,688 $ 9,870
Ratio of expenses to
average net assets
before
reimbursement of
expenses by
Adviser............ 1.57% 1.54% 2.89%*
Ratio of expenses to
average net assets
after reimbursement
of expenses by
Adviser............ 1.41% 1.45% 1.50%*
Ratio of net
investment income
to average
net assets before
reimbursement of
expenses by
Adviser............ 0.14% 0.08% (1.11%)*
Ratio of net
investment income
to average
net assets after
reimbursement of
expenses by
Adviser............ 0.29% 0.17% 0.28%*
Portfolio turnover... 46.51% 77.57% 0.00%
=====================================================
<FN>
* Annualized
** Not Annualized
(1) This Fund commenced operations on July 1, 1993.
</TABLE>
<TABLE>
<CAPTION>
FAIRPORT
GROWTH AND INCOME FUND
------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93(1)
<S> <C> <C> <C>
======================================================
Net Asset Value,
beginning of
period............... $ 10.68 $ 10.36 $ 10.00
------- ------- -----------
Income from
Investment
Operations:
Net investment
income............. 0.15 0.14 0.04
Net realized and
unrealized
gain/loss
on investments..... 1.68 0.35 0.36
------- ------- -----------
Total from
investment
operations....... 1.83 0.49 0.40
------- ------- -----------
Less Distributions:
From net investment
income............. (0.12) (0.14) (0.04)
From realized capital
gains.............. (0.10) (0.03) 0.00
------- ------- -----------
Total
distributions.... (0.22) (0.17) (0.04)
------- ------- -----------
Net Asset Value, end of
period............... $ 12.29 $ 10.68 $ 10.36
======= ======= ==========
Total Return........... 17.36% 4.72% 3.98%**
Ratios/Supplemental
Data:
Net assets, end of
period (in
000's)............. $23,082 $18,177 $ 8,716
Ratio of expenses to
average net assets
before
reimbursement of
expenses by
Adviser............ 1.79% 1.72% 2.79%*
Ratio of expenses to
average net assets
after
reimbursement of
expenses by
Adviser............ 1.50% 1.50% 1.50%*
Ratio of net
investment income
to average
net assets before
reimbursement of
expenses by
Adviser............ 0.98% 1.20% 0.10%*
Ratio of net
investment income
to average
net assets after
reimbursement of
expenses by
Adviser............ 1.26% 1.42% 1.39%*
Portfolio turnover... 13.36% 35.16% 4.18%
=====================================================
<FN>
* Annualized
** Not Annualized
(1) This Fund commenced operations on July 1, 1993.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
FAIRPORT
GOVERNMENT SECURITIES FUND
------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93(1)
<S> <C> <C> <C>
======================================================
Net Asset Value,
beginning of
period............... $ 9.03 $ 10.20 $ 10.00
------- ------- -----------
Income from
Investment
Operations:
Net investment
income............. 0.49 0.43 0.15
Net realized and
unrealized
gain/loss
on investments..... 0.81 (1.17) 0.16
------- ------- -----------
Total from
investment
operations....... 1.30 (0.74) 0.31
------- ------- -----------
Less Distributions:
From net investment
income............. (0.49) (0.42) (0.11)
From realized capital
gains.............. 0.00 (0.01) 0.00
------- ------- -----------
Total
distributions.... (0.49) (0.43) (0.11)
------- ------- -----------
Net Asset Value, end of
period............... $ 9.84 $ 9.03 $ 10.20
======= ======= ==========
Total Return........... 14.76% (7.24)% 3.04%**
Ratios/Supplemental
Data:
Net assets, end of
period (in
000's)............. $ 8,647 $ 7,614 $ 5,829
Ratio of expenses to
average net assets
before
reimbursement of
expenses by
Adviser............ 2.16% 1.80% 2.78%*
Ratio of expenses to
average net assets
after reimbursement
of expenses by
Adviser............ 0.90% 0.90% 0.90%*
Ratio of net
investment income
to average
net assets before
reimbursement of
expenses by
Adviser............ 3.89% 3.88% 2.29%*
Ratio of net
investment income
to average
net assets after
reimbursement of
expenses by
Adviser............ 5.16% 4.78% 4.17%*
Portfolio turnover... 1.28% 24.14% 24.53%
=====================================================
<FN>
* Annualized
** Not Annualized
(1) This Fund commenced operations on July 1, 1993.
</TABLE>
THE TRUST AND ITS FUNDS
In order to provide you with a variety of mutual funds with different investment
objectives, the Trust offers shares of the Midwest Growth Fund, the Growth and
Income Fund and the Government Fund, each of which is a diversified Fund of the
Trust, and which may be referred to individually as a "Fund" and collectively as
the "Funds." Of course, there can be no guarantee that any Fund will achieve its
investment objectives.
INVESTMENT OBJECTIVES AND POLICIES
MIDWEST GROWTH FUND
The Midwest Growth Fund seeks, as its investment objective, capital
appreciation.
Under normal circumstances, the Fund will be invested as fully as practicable in
common stocks, but may also invest in rights and debt securities and preferred
stocks convertible into common stocks (together with common stocks, "equity
securities") and in warrants to acquire such equity securities. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
equity securities of companies headquartered in the states or areas bordering
the Great Lakes; that is, Ohio, Michigan, Indiana, Illinois, Western New York,
Western Pennsylvania, Wisconsin and Minnesota (the "Midwest"). Roulston, as the
Fund's investment adviser, will generally select for investment by the Fund
common stocks that Roulston's research indicates represent high investment
potential and/or value for the Fund. Roulston will not necessarily consider
dividend income when selecting common stocks for the Fund.
7
<PAGE> 10
Roulston, as investment adviser to the Midwest Growth Fund, will select
convertible securities primarily upon its evaluation that the underlying common
stocks meet the criteria for selection of common stocks as described above. The
Fund intends to invest in convertible debt securities which are primarily
investment grade (i.e., rated within the four highest rating categories of a
nationally recognized statistical rating organization ("NRSRO"), e.g., Standard
& Poor's Corporation or Moody's Investor Services, Inc., or, if unrated, are
deemed to be of comparable quality to securities so rated). The Fund, however,
may invest up to 10% of its nets assets in noninvestment grade convertible debt
securities rated no lower than B by an appropriate NRSRO or in unrated
securities which are deemed by Roulston to be of comparable quality.
Noninvestment grade securities are commonly referred to as high yield or high
risk securities. High yield, high risk securities generally have more risk than
higher quality securities and are subject to more credit risk, including risk of
default, and volatility than higher quality securities. In addition, such
securities may have less liquidity and experience more price fluctuation than
higher quality securities. For a further discussion of convertible debt
securities rated B by an NRSRO, please see "Risk Factors" below.
================================================================================
THE MIDWEST GROWTH FUND SEEKS
CAPITAL APPRECIATION, PRIMARILY THROUGH
INVESTMENTS IN COMMON STOCKS.
================================================================================
Any of the Midwest Growth Fund's assets not invested in equity securities will
be invested in certain money market instruments ("Money Market Instruments")
which consist of securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; certificates of deposit, time deposits, and
bankers' acceptances issued by domestic and foreign branches of U.S. commercial
banks or savings and loan associations and domestic branches of foreign banks,
having net assets of at least $10 billion as stated on their most recently
published financial statements; commercial paper rated in one of the two highest
rating categories assigned by at least one NRSRO or, if unrated, are of
comparable quality at the time of purchase as determined by Roulston; variable
amount master demand notes; repurchase agreements involving such securities; and
(as permitted by applicable law) shares of other investment companies holding
themselves out as money market funds. Please see the Appendix to the Statement
of Additional Information for a description of the applicable NRSRO ratings.
GROWTH AND INCOME FUND
The Growth and Income Fund seeks, as its investment objectives, capital
appreciation and current income.
Under normal market conditions, the Growth and Income Fund will be invested as
fully as practicable in common stocks of U.S. issuers but may also invest in
warrants, rights and debt securities and preferred stocks convertible into
common stocks, which are rated at the time of purchase in one of the four
highest rating categories by an NRSRO (or if not rated, deemed by Roulston to be
of comparable quality to securities so rated), and U.S. dollar denominated
securities of foreign issuers, including American Depository Receipts ("ADRs").
In addition, up to 10% of the Fund's net assets
8
<PAGE> 11
may be invested in noninvestment grade convertible debt securities rated no
lower than B by an appropriate NRSRO or in unrated securities which are deemed
by Roulston to be of comparable quality. The risks of investment in such
securities are described above under "Midwest Growth Fund."
================================================================================
THE GROWTH AND INCOME FUND SEEKS CAPITAL APPRECIATION AND CURRENT INCOME,
PRIMARILY THROUGH INVESTMENTS IN COMMON STOCKS.
================================================================================
Roulston, as the Growth and Income Fund's investment adviser, will generally
select for investment by the Fund common stocks that pay dividends and that
Roulston's research indicates represent potential value upon consideration of
relative price/earnings multiples, price to book value and/or price/earnings
ratios.
Any of the Growth and Income Fund's assets not invested in the securities listed
above will be invested in Money Market Instruments.
GOVERNMENT FUND
The Government Fund seeks, as its investment objective, current income
consistent with preservation of capital.
The Government Fund will invest at least 65% of its total assets in direct
obligations issued by the U.S. Treasury; separately traded component parts of
U.S. Treasury obligations, transferable only through the Federal book entry
system and which are a part of the U.S. Government's STRIPs program; obligations
issued or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities; and repurchase agreements involving any of the
foregoing securities. The Fund may also invest up to 5% of its net assets in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities which are "mortgage-related" securities, meaning that they
represent an interest in an underlying pool of mortgages.
The remaining assets of the Government Fund will be invested in any of the
following: domestic corporate fixed income securities rated in one of the two
highest rating categories by at least one
NRSRO or, if unrated, are of comparable quality at the time of purchase as
determined by Roulston; variable amount master demand notes; short-term bank
obligations, including certificates of deposit, time deposits and bankers'
acceptances, of domestic and foreign branches of U.S. commercial banks or
savings and loan institutions and domestic branches of foreign banks, with
assets of at least $10 billion as stated on their most recently published
financial statements; U.S. dollar denominated securities issued or guaranteed by
supranational entities, foreign governments, their political subdivisions,
agencies or instrumentalities; and repurchase agreements involving such
securities.
================================================================================
THE GOVERNMENT FUND SEEKS CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF
CAPITAL.
================================================================================
The Government Fund expects to maintain a dollar-weighted average portfolio
maturity of three to ten years. Within this range, Roulston will maintain a
relatively even distribution of maturities among the funds holdings.
IN GENERAL
Each Fund will purchase only those securities that are traded in the United
States or Canada
9
<PAGE> 12
on registered exchanges or the over-the-counter markets, including established
dealer markets.
Each of the Funds may purchase securities on a when-issued or delayed-delivery
basis, may invest in variable and floating rate instruments, may purchase
securities of other investment companies, and may purchase and sell options on
securities or market indices and may write covered-call options (for hedging
purposes only). For more information regarding such investment techniques,
please see "Risk Factors" and "DESCRIPTION OF PERMITTED INVESTMENTS" below.
For temporary defensive purposes, when Roulston determines that market
conditions warrant, each Fund may invest up to 100% of its assets in cash and
Money Market Instruments. To the extent a Fund is so invested, that Fund may not
achieve its investment objective or objectives.
RISK FACTORS
Each Fund's shares will fluctuate in value. An investment in any of the Funds
may be more suitable for long-term investors who can bear the risk of short-term
fluctuations in value.
Investments in common stocks in general are subject to market risks that may
cause their prices to fluctuate over time and therefore the net asset value of a
Fund investing in such securities to fluctuate. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer and any call provisions.
The market value of a Fund's fixed income investments will also change in
response to interest rate changes and other factors. During periods of falling
interest rates, the values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturities
tend to produce higher yields, the price of longer maturity securities are also
subject to greater price fluctuations as a result of changes in interest rates.
Changes by an NRSRO in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and principal also affect the
value of these investments. Changes in the value of portfolio securities will
not necessarily affect cash income derived from these securities but will affect
a Fund's net asset value.
================================================================================
AN INVESTMENT IN ANY OF THE FUNDS MAY BE MORE SUITABLE FOR LONGER-TERM INVESTORS
WHO CAN BEAR THE RISK OF SHORT-TERM FLUCTUATIONS IN VALUE.
================================================================================
Convertible debt securities which are rated B by Moody's Investor Services
generally lack characteristics of a desirable investment, since the assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. Debt rated B by Standard & Poor's
Corporation is regarded, on balance, as predominantly speculative with respect
to capacity to pay interest and repay principal in accordance with the terms of
the obligation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
Investments in securities of foreign issuers by the Growth and Income Fund and
the Government Fund may subject them to risks which differ in some respects from
those associated with invest-
10
<PAGE> 13
ments in securities of U.S. issuers. Such risks include differences in
accounting, auditing and financial reporting standards, trade balances and
imbalances and related economic policies, fluctuations in currency exchange
rates, the possibility of expropriation or confiscatory taxation,
nationalization or expropriation of foreign investments or deposits, less
stringent disclosure requirements, the possible establishment of exchange
controls and political instability. There may also be less publicly available
information with regard to foreign issuers than domestic issuers.
Each of the Funds may purchase put and call options and may write covered call
options for hedging purposes only and will limit its investment in options such
that no more than 5% of such Fund's net assets will be invested in or subject to
such options. Each Fund may also enter into repurchase agreements and may
purchase securities on a when-issued or delayed delivery basis. Although the
Funds will not use any such investment techniques for purposes of leveraging a
Fund's portfolio or for speculative purposes, such investment techniques involve
certain risks of which investors should be aware, including the risk that the
other party to the transaction will default in its obligations.
Each of the Funds may also invest in variable or floating instruments. Such
instruments involve the risk that the interest rate or index on which such
instrument's interest rate is based will not closely follow or match current
interest rates. For additional information regarding additional risks associated
with these permitted investments of the Funds, please see "DESCRIPTION OF
PERMITTED INVESTMENTS AND RELATED RISK FACTORS" below and the Statement of
Additional Information.
INVESTMENT LIMITATIONS OF THE FUNDS
The investment objective or objectives of each Fund described above and the
investment limitations described below and in the Statement of Additional
Information are fundamental policies of that Fund. Fundamental policies cannot
be changed with respect to a Fund without the consent of the holders of a
"majority of the outstanding shares" of that Fund as that term is defined below
under "GENERAL INFORMATION -- Voting Rights."
================================================================================
TO REDUCE RISK, THE FUNDS HAVE ADOPTED
POLICIES LIMITING THEIR EXPOSURE TO ANY ONE
SECURITY OR ONE INDUSTRY.
================================================================================
NO FUND MAY:
1. Purchase securities of any one issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements involving such securities) if as a result more than 5%
of the value of the total assets of the Fund would be invested in the
securities of such issuer or the Fund would hold more than 10% of the
outstanding voting securities of such issuer. This restriction applies to
75% of a Fund's total assets.
2. Purchase any securities which would cause 25% or more of the total assets of
a Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry; provided that this
limitation does not apply
11
<PAGE> 14
to investments in obligations issued or guaranteed by the U.S. Government or
its agencies and instrumentalities and repurchase agreements involving such
securities. For purposes of this limitation, (i) utility companies will be
divided according to their services; for example, gas distribution, gas
transmission, electric and telephone will each be considered a separate
industry, and (ii) financial service companies will be classified according
to the end users of their services; for example, automobile finance, bank
finance and diversified finance will each be considered a separate industry.
3. Borrow money or issue senior securities, except that a Fund may borrow from
banks or enter into reverse repurchase agreements for temporary purposes in
amounts not exceeding 10% of the value of its total assets and except as
permitted by rule, regulation or order of the Securities and Exchange
Commission. A Fund will not purchase securities while its borrowings
(including reverse repurchase agreements) exceed 5% of its total assets.
MANAGEMENT OF THE TRUST
Overall responsibility for the management of the Trust and the Funds is vested
in the Board of Trustees of the Trust, who will manage the Trust in accordance
with the laws of Ohio governing business trusts. Individual Trustees are elected
by the shareholders of the Trust and may be removed by the Board of Trustees or
shareholders in accordance with the provisions of the Declaration of Trust and
By-Laws of the Trust and Ohio law. The Board of Trustees elects officers and
contracts with and provides for the compensation of agents, consultants and
other professionals to assist and advise it in the day-to-day operations of the
Trust and the Funds. See "GENERAL INFORMATION -- The Trust and Its Shares" below
for further information.
THE ADVISER
Roulston, 4000 Chester Avenue, Cleveland, Ohio 44103, which serves as the
investment adviser for each Fund, is a professional investment management firm
and registered investment adviser that was founded in 1963. Roulston is
controlled, directly and indirectly, by Thomas H. Roulston and members of his
immediate family. As of December 31, 1995, Roulston had discretionary management
authority with respect to approximately $520 million of assets. In addition to
advising the Funds, Roulston provides advisory services to pension plans,
corporations, 401(k) plans, profit sharing plans, individual investors, trust
and estates.
Roulston serves as the investment adviser for each Fund under an investment
advisory agreement (the "Advisory Agreement") with the Trust. Under the terms of
the Advisory Agreement, Roulston makes the investment decisions for the assets
of the Funds and continuously reviews, supervises and administers the investment
program of the Funds, subject to the supervision of, and policies established
by, the Trustees of the Trust.
Joseph A. Harrison, C.F.A., Executive Vice President and Director of Investments
for Roulston since 1991, and D. Keith Lockyer, Vice President and Portfolio
Manager for Roulston, manage the portfolio of the Government Fund.
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<PAGE> 15
Prior to 1991, Mr. Harrison was the Director of
Portfolio Management for Roulston. Mr. Harrison
also manages the Growth and Income Fund.
Norman F. Klopp, C.F.A., Executive Vice President of Roulston, manages the
portfolio of the Midwest Growth Fund.
For its services as investment adviser, Roulston receives a fee, which is
calculated daily and paid monthly, at an annual rate of 0.75% of the average
daily net assets of each of the Midwest Growth Fund and the Growth and Income
Fund up to $100 million, and 0.50% of each such Fund's assets of $100 million or
more. With respect to the Government Fund, Roulston receives a fee, which is
calculated daily and paid monthly, at an annual rate of 0.25% of the average
daily net assets of the Government Fund up to $100 million, and .125% of such
assets of $100 million or more.
================================================================================
THE FUNDS' INVESTMENT ADVISER, ROULSTON & COMPANY, INC., IS A PROFESSIONAL
INVESTMENT MANAGEMENT FIRM FOUNDED IN 1963.
================================================================================
The advisory fee with respect to the Midwest Growth Fund and the Growth and
Income Fund is higher, in the opinion of the Securities and Exchange Commission
(the "Commission"), than that paid by most investment companies, but Roulston
believes the fee to be comparable to that paid by investment companies with
similar objectives and policies. Roulston has voluntarily agreed, until October
1996, to waive such portion of its advisory fee from the Funds in order to limit
total operating expenses to an annual rate of 1.38% of the Midwest Growth Fund's
average daily net assets, 1.50% of the Growth and Income Fund's average daily
net assets and .90% of the Government Fund's average daily net assets. Such
voluntary fee waivers will cause the yield and total return of a Fund to be
higher than they otherwise would be absent such waivers.
Mr. Scott D. Roulston, President of the Trust, is the president and a director
of both Roulston and the Distributor. Ms. Michelle R. Fogarty is Treasurer of
the Trust and Director of Finance, Controller and Treasurer of Roulston.
THE DISTRIBUTOR
The Distributor, whose business address is 4000 Chester Avenue, Cleveland, Ohio
44103, is a wholly owned subsidiary of Roulston and has entered into a
distribution agreement with the Trust. Pursuant to the Distribution Agreement,
the Distributor acts as agent for the Funds in the distribution of their shares
on a continuous basis and, in such capacity, solicits orders for the sale of
shares, advertises and pays the costs and expenses associated with such
advertising. The Distributor receives no compensation from the Funds for its
services under the Distribution Agreement, but receives compensation under the
Trust's Distribution and Shareholder Service Plan as described below.
THE DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a Distribution
and Shareholder Service Plan (the "Plan"), under which each Fund is authorized
to pay the Distributor, as the Funds' principal underwriter, a periodic amount
calculated at an annual rate not to exceed .25% of the average daily net asset
value of such Fund. Such amount may be used by the
13
<PAGE> 16
Distributor to pay broker-dealers, banks and other institutions (a
"Participating Organization") for distribution and/or shareholder service
assistance pursuant to an agreement between the Distributor and the
Participating Organization or for distribution assistance and/or shareholder
service provided by the Distributor. Under the Plan, a Participating
Organization may include the Distributor and the Distributor's affiliates.
As authorized by the Plan, the Distributor has agreed to provide certain
shareholder services in connection with shares of the Funds purchased and held
by the Distributor for the accounts of its customers and shares of the Funds
purchased and held by customers of the Distributor directly, including, but not
limited to, answering shareholder questions concerning the Funds, providing
information to shareholders on their investments in the Funds and providing such
personnel and communication equipment as is necessary and appropriate to
accomplish such matters. In consideration of such services the Trust has agreed
to pay the Distributor a monthly fee, computed at the annual rate of .25% of the
average aggregate net asset value of shares held during the period in customer
accounts for which the Distributor has provided services under this Agreement.
Such fees paid by the Trust will be borne solely by the applicable Fund. Such
fee may exceed the actual costs incurred by the Distributor in providing such
services.
In addition, the Distributor may enter into, from time to time, other Rule 12b-1
Agreements with selected dealers pursuant to which such dealers will provide
certain shareholder services such as those described above.
THE ADMINISTRATOR, FUND ACCOUNTANT
AND TRANSFER AGENT
Fund/Plan Services, Inc., #2 West Elm Street, Conshohocken, Pennsylvania 19428
("Fund/Plan"), provides each Fund with administrative services, including
regulatory reporting and all necessary office space, equipment, personnel and
facilities, and serves as the transfer agent and dividend disbursing agent and
provides certain fund accounting and custody administration services for each of
the Funds. For its administrative services, Fund/Plan is entitled to receive a
fee from each Fund calculated at an annual rate of 0.15% of the value of such
Fund's first $50 million of total average net assets, 0.10% of the value of such
Fund's next $50 million of total average net assets and 0.05% of the value of
such Fund's total average net assets in excess of $100 million, subject to an
annual minimum fee of $70,000. For its fund accounting services, Fund/Plan is
entitled to receive an annual fee from each Fund equal to $24,000 for such
Fund's first $20 million of average net assets, .04% on such Fund's next $30
million of average net assets, .03% on such Fund's next $50 million of average
net assets and .01% on such Fund's average net assets in excess of $100 million.
CUSTODIAN
UMB Bank, N.A. (the "Custodian") acts as the custodian for each of the Funds.
The Custodian holds cash, securities and other assets of the Funds as required
by the 1940 Act.
HOW SHARES ARE VALUED
The net asset value per share of each Fund is determined by dividing the total
market value of that Fund's investments and other assets, less any
14
<PAGE> 17
liabilities, by the total outstanding shares of that Fund. Net asset value per
share for each Fund is determined as of the Valuation Time on each Business Day.
The portfolio securities of each Fund will be valued at market value. Each Fund
uses one or more pricing services to provide market quotations for equity, fixed
income and variable income securities. The pricing service may use a matrix
system of valuation which considers factors such as securities prices, yield
features, call features, ratings and developments related to a specific
security. If market quotations are not available, the securities will be valued
by a method which the Board of Trustees believes accurately reflects fair value.
HOW TO PURCHASE SHARES
You may purchase shares of any Fund directly by mail or by wire on any Business
Day. You will buy shares at the next net asset value computed after the Transfer
Agent or a broker-dealer with whom the Distributor has a sales agreement
receives your order in proper form as described below. An Account Application
form may be obtained by calling 1-800-332-6459 (1-800-3-FAMILY). If a
broker-dealer assists you in the purchase of shares of a Fund, they may charge a
fee for this service in addition to a Fund's public offering price.
The minimum initial investment in any Fund is $250, and any subsequent purchase
must be at least $50. No minimum applies to subsequent purchases effected by
dividend reinvestment. The Distributor may waive minimums at its discretion.
================================================================================
THE MINIMAL INITIAL INVESTMENT IS $250, AND ANY SUBSEQUENT PURCHASE MUST BE AT
LEAST $50.
================================================================================
Your purchase order will be effective as of the Business Day received by the
Transfer Agent or a broker-dealer with whom the Distributor has a sales
agreement if the order in proper form and payment is received before the
Valuation Time. Payment may be made by check or readily available funds (e.g.,
by Federal funds wire). Purchases will be made in full and fractional shares of
a Fund calculated to three decimal places. Your account statement from the Trust
will be your record of shares of the Funds owned by you. The Trust will not
issue certificates representing shares of any Fund.
If a check received from you for the purchase of shares does not clear, the
purchase will be canceled, and you could be liable for any losses or fees
incurred, including a $20 returned check fee.
The Trust reserves the right to reject any purchase order when the Trust
determines that it is not in the best interest of the Trust or its shareholders
to accept such order.
PURCHASES BY MAIL
You may open an account by mailing to the Distributor, 4000 Chester Avenue,
Cleveland, Ohio 44103, an account application and a check or other negotiable
bank draft (payable to the name of the appropriate Fund) for $250 or more. For
your initial order to be in good form, your account application must be
completed properly and mailed with your check or other negotiable instrument in
the proper amount.
15
<PAGE> 18
Upon review and approval of your application, the Distributor will then forward
your order to the Transfer Agent. For subsequent investments, you may send by
regular U.S. mail your check or other negotiable bank draft (payable to the name
================================================================================
YOU MAY OPEN AN ACCOUNT AND MAKE
SUBSEQUENT INVESTMENTS BY MAIL.
================================================================================
of the appropriate Fund), along with the subsequent investment stub from your
account statement, to Fairport Funds, c/o Fund/Plan Services, Inc., P.O. Box
412797, Kansas City, Missouri 64141-2797. If you wish to send your subsequent
investments by other than regular U.S. mail (e.g., overnight or certified mail),
please send such items directly to the Transfer Agent at #2 West Elm Street,
Conshohocken, Pennsylvania 19428.
PURCHASES BY WIRE
Initial Purchases: Before making an initial investment by wire and for your
order to be in proper form, you must first telephone the Distributor at
1-800-332-6459 (1-800-3-FAMILY) to give the name(s) under which the account is
to be registered, tax identification number and the name of the bank sending the
wire, and to be assigned an account number. You may then purchase Shares by
requesting your bank to transmit immediately available funds by Federal funds
wire to the Transfer Agent at: UMB Bank, N.A. ABA #10-10-00695/Attention:
Fund/Plan Services, Inc., A/C 98-7037-071-9/FBO [Fund Name], along with your
name and account number as specified on your account registration. In addition,
an Account Application should be completed with such information and promptly
forwarded to the Transfer Agent at its address set forth above under "Purchases
by Mail."
================================================================================
BEFORE MAKING AN INITIAL INVESTMENT BY WIRE,
CALL THE FUND'S DISTRIBUTOR AT 1-800-332-6459.
================================================================================
Subsequent Purchases: You may make additional investments at any time through
the wire procedures described above, which must include your name and account
number, after notifying the Distributor by telephone as noted above. Your bank
may impose a fee for investments by wire.
SYSTEMATIC INVESTMENT PLAN
You may arrange for periodic additional investments in the Funds through
automatic deductions by Automated Clearing House ("ACH") transactions from your
checking or savings account by completing the appropriate section of the Account
Application form. In order to use
================================================================================
YOU MAY ARRANGE TO HAVE ADDITIONAL
INVESTMENTS AUTOMATICALLY DEDUCTED FROM YOUR
CHECKING OR SAVINGS ACCOUNT.
================================================================================
this Systematic Investment Plan, you must still have an initial purchase of $250
but minimum preauthorized subsequent investments may be as low as $50 per month.
The automatic deductions may be made on the 10th, 15th or 20th of the month and
may be made monthly, quarterly, semi-annually or annually.
TAX DEFERRED INVESTMENT
The Funds are eligible for investment by tax-deferred retirement programs such
as 401(k) plans and IRAs. The minimum initial investment amount for an account
established under such programs is $250, and subsequent
16
<PAGE> 19
purchases must be at least $50. All accounts established in a Fund under such
programs must
================================================================================
THE FUNDS ARE ELIGIBLE FOR INVESTMENT BY
TAX-DEFERRED RETIREMENT PROGRAMS SUCH
AS 401(K) PLANS AND IRAS.
================================================================================
elect to have all dividends reinvested in the Fund. For more information about
prototype 401(k) plans and IRAs, please call the Distributor at 1-800-332-6459
(1-800-3-FAMILY).
HOW TO REDEEM SHARES
You may redeem shares by mail by writing to the Transfer Agent at its address
set forth above under "HOW TO PURCHASE SHARES -- Purchases by Mail." You may
also redeem shares by telephone by calling the Distributor at 1-800-332-6459
(1-800-3-FAMILY) or by writing to the Distributor at 4000 Chester Avenue,
Cleveland, Ohio 44103, which redemption request will then be forwarded by the
Distributor to the Transfer Agent. Redemption orders received by the Transfer
Agent prior to the Valuation Time on any Business Day will be effective that
day, and the redemption price of your shares will be the net asset value per
share of that Fund next determined after your redemption order, in proper order,
is received by the Transfer Agent. If a broker-dealer assists you in the
redemption of shares of a Fund, they may charge a fee for this service.
The Trust will make your redemption proceeds available as promptly as possible
and, in any event, within seven days after your redemption order, in proper
order, is received. For your redemption order to be in proper order, your order
must include your name as it appears on your account, your account number and a
signature guarantee as required as described below. However, your redemption
proceeds may be delayed if you purchased the shares to be redeemed by check
(including certified or cashier checks) until such check has cleared and the
Trust has collected good funds for your purchase. Such collection may take 15
days or more. In addition, you may not close your account by telephone. The
Trust intends to pay cash for all shares redeemed, but under abnormal conditions
which make payment in cash unwise, the Trust may make payment wholly or partly
in portfolio securities at their then market value equal to the redemption
price. In such cases, you generally will incur brokerage costs in converting
such securities to cash.
================================================================================
YOU MAY REDEEM SHARES BY MAIL OR BY
TELEPHONE AT 1-800-332-6459.
================================================================================
You may receive your redemption payments in the form of a check, or by Federal
Reserve wire transfer or ACH transfer to the bank account previously designated
by you. Just notify the Transfer Agent in your redemption order of your
preference. There is no charge for having a check for redemption proceeds mailed
or for ACH transfers. The Trust's custodian will deduct a wire charge, currently
$9, from the amount of a Federal Reserve wire redemption payment made at your
request. You will not be able to redeem shares of any Fund by Federal Reserve
wire on federal holidays restricting wire transfers. Payment by ACH transfer
will not be posted to your bank account until at least the second Business Day
following the transaction.
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<PAGE> 20
The Transfer Agent will require a signature guarantee for (1) any written
redemption request of $25,000 or more; (2) a change in address or payee to where
redemption proceeds may be mailed as shown on your account application; or (3) a
change in the bank account to which redemption payments are made by either
Federal Reserve wire transfer or ACH transfer. You may have your signature
guaranteed by any bank, broker, dealer, credit union, savings and loan
association or other eligible institution as may be designated by the Transfer
Agent from time to time. Notarization of your signature does not constitute a
signature guarantee.
Neither the Trust, the Funds nor the Transfer Agent will be responsible for the
authenticity of the redemption instructions received by telephone if it
reasonably believes those instructions to be genuine. The Trust and the Transfer
Agent will each employ reasonable procedures to confirm that telephone
instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures. Such procedures may include taping of telephone conversations and
requesting a shareholder to state correctly his or her Fund account number, the
name in which his or her account is registered, his or her social security
number, banking institution bank account number and the name in which his or her
bank account is registered.
The right of redemption may be suspended or the date of payment of redemption
proceeds postponed by the Trust during certain periods as set forth more fully
in the Statement of Additional Information. In addition, if the balance of your
account in a Fund falls below $250 because of redemptions by you, the Trust
reserves the right to redeem at net asset value your shares. However, before the
Trust exercises this right, you will be given notice that your account has
fallen below this required minimum amount. You will then be given 60 days to
make an additional investment to meet this required minimum.
SYSTEMATIC WITHDRAWAL PLAN
Each Fund offers a Systematic Withdrawal Plan ("SWP") if you wish to receive
regular distributions from your account in that Fund. However, before you can
utilize the SWP, your account in the Fund must have a current value of $10,000
or more, your dividend and distributions must be automatically reinvested and
your requested distribution must be $100 or more made on a monthly, quarterly,
semi-annual or annual basis.
================================================================================
YOU CAN ARRANGE TO RECEIVE REGULAR DISTRIBUTIONS FROM YOUR ACCOUNT, UNDER
CERTAIN CONDITIONS.
================================================================================
Your automatic payments under the SWP will either be made by check mailed to
your address as shown on the books of the Transfer Agent or via ACH to your bank
account designated on your Account Application form. An application form for the
SWP may be obtained by calling the Distributor at 1-800-332-6459
(1-800-3-FAMILY). You may change or cancel the SWP at any time, upon written
notice to the Transfer Agent at least five days prior to SWP withdrawal date for
which you want such change or cancellation.
Please note that if your redemptions from a Fund exceed your income dividends
from that Fund, your invested principal in the account will
18
<PAGE> 21
decrease. Thus depending on the frequency and amounts of the withdrawals and/or
any fluctuations in the net asset value per share, your original investment
could be exhausted entirely using the SWP.
EXCHANGES
You may exchange your shares of any Fund for shares of either of the other Funds
at net asset value without the payment of any fee or charge. You may also
exchange your shares of any Fund for shares of Kemper Cash Account Trust
("Kemper CAT") at net asset value without the payment of any fee or charge. An
exchange is considered, however, a sale of shares and may
================================================================================
YOU MAY EXCHANGE YOUR SHARES OF ANY FUND FOR SHARES OF EITHER OF THE OTHER FUNDS
AT NET ASSET VALUE WITHOUT THE PAYMENT OF ANY FEE OR CHARGE.
================================================================================
result in capital gain or loss for federal income tax purposes. Before an
exchange can be made, you must have received the current prospectus for the Fund
or Kemper CAT into which you wish to exchange, and the exchange privilege may be
exercised only in those states where shares of such Fund or Kemper CAT, as the
case may be, may legally be sold. If the Transfer Agent receives exchange
instructions from you in writing or the Distributor receives such instructions
in writing or by telephone in good order by the Valuation Time on any Business
Day, the exchange will be effected that day. For your exchange request to be in
good order, your request must include your name as it appears on your account,
your account number, the amount to be exchanged, the name of the Funds from
which and to which the exchange is to be made and a signature guarantee as may
be required. A written request by you for an exchange in excess of $25,000 must
be accompanied by a signature guarantee as described above under "HOW TO REDEEM
SHARES."
The liability of the Trust, the Funds or the Transfer Agent for fraudulent or
unauthorized telephone instructions may be limited as described above under "HOW
TO REDEEM SHARES." The Trust reserves the right to modify or terminate this
exchange offer at any time or from time to time on 60 days' notice.
PERFORMANCE OF THE FUNDS
From time to time, each Fund may advertise its yield and total return. THESE
FIGURES WILL BE BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE
FUTURE PERFORMANCE. No representation can be made regarding future yields or
returns. The yield of a Fund refers to the annualized income generated by an
investment in the Fund over a specified 30-day period. The yield is calculated
by assuming that the same amount of income generated by the investment during
that period is generated in each 30-day period over one year and is shown as a
percentage of the investment.
The "total return" or "average annual total return" of a Fund reflects the
change in the value of an investment in a Fund over a stated period of time.
Total returns and average annual returns measure both the net investment income
from and any realized or unrealized appreciation or depreciation of a Fund's
holdings for a stated period and assume that the entire investment is redeemed
at the end of each period and the reinvestment of all dividends and capital gain
distributions.
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<PAGE> 22
================================================================================
FURTHER INFORMATION ABOUT THE PERFORMANCE
OF THE FUNDS MAY BE OBTAINED
BY CALLING THE TRUST AT 1-800-332-6459.
================================================================================
A Fund may periodically compare its performance with that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications and periodicals, of broad groups of
comparable mutual funds or of unmanaged indices, which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs. A Fund may quote Morningstar, Inc., a service that ranks
mutual funds on the basis of risk-adjusted performance, or Ibbotson Associates
of Chicago, Illinois, which provides historical returns of the capital markets
in the United States. A Fund may use the long-term performance of these capital
markets to demonstrate general long-term risk versus reward scenarios and could
include the value of a hypothetical investment in any of the capital markets. A
Fund may also quote financial and business publications and periodicals, such as
SMART MONEY(R), as they relate to Trust management, investment philosophy, and
investment techniques.
A Fund may also quote from time to time various measures of volatility and
benchmark correlations in advertising and may compare these measures with those
of other mutual funds. Measures of volatility attempt to compare historical
share price fluctuations or total returns to a benchmark while measures of
benchmark correlation indicate how valid a comparative benchmark might be.
Measures of volatility and correlation are calculated using averages of
historical data and cannot be calculated precisely.
Further information about the performance of the Funds is contained in the
Funds' Annual Report to Shareholders which may be obtained without charge by
calling the Trust at 1-800-332-6459 (1-800-3-FAMILY).
HOW THE FUNDS ARE TAXED
Each Fund is treated as a separate entity for federal income tax purposes and
intends to qualify for the special tax treatment afforded regulated investment
companies as defined under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), for so long as such qualification is in the best interests
of that Fund's shareholders. Qualification as a regulated investment company
under the Code requires, among other things, that a Fund distribute to its
shareholders at least 90% of its investment company taxable income. Each Fund
contemplates declaring as dividends all or substantially all of that Fund's
investment company taxable income (before deduction of dividends paid).
A nondeductible 4% excise tax is imposed on regulated investment companies that
do not distribute in each calendar year (regardless of whether they otherwise
have a noncalendar taxable year) an amount equal to 98% of their ordinary income
for the calendar year plus 98% of their capital gain net income for the one-year
period ending on October 31 of such calendar year. If distributions during a
calendar year were less than the required amount, that Fund would be subject to
a nondeductible 4% excise tax on the deficiency.
20
<PAGE> 23
DIVIDENDS AND SHAREHOLDER TAXES
DIVIDENDS AND DISTRIBUTIONS
Substantially all of the net investment income (exclusive of capital gains) of
the Midwest Growth Fund and the Growth and Income Fund is distributed in the
form of semi-annual dividends. Net investment income (exclusive of capital
gains) of the Government Fund is declared daily and distributed in the form of
monthly dividends. Shareholders of record on the next-to-last Business Day of
each month in which a dividend is declared will be entitled to receive the
dividend distribution which is generally paid on or about the 1st Business Day
of the following month. If any capital gain is realized by a Fund, substantially
all of it will be distributed at least annually.
================================================================================
YOU WILL AUTOMATICALLY RECEIVE ALL DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS IN
ADDITIONAL SHARES UNLESS YOU ELECT TO TAKE SUCH PAYMENTS IN CASH.
================================================================================
You will automatically receive all dividends and capital gain distributions in
additional shares at the net asset value determined on the next Business Day
after the record date, unless you elected to take such payment in cash. You may
change your election by providing written notice to the Transfer Agent at least
15 days prior to the distribution. You have the option to receive payments for
cash distributions in the form of a check or by Federal Reserve Wire transfer or
ACH.
GENERAL TAX INFORMATION
It is expected that each Fund will distribute annually to shareholders all or
substantially all of that Fund's net ordinary income and net realized capital
gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to you for federal income tax
purposes, even if paid to you in additional shares of the Fund and not in cash.
The dividends received deduction for corporations will apply to the aggregate
of such ordinary income distributions in the same proportion as the aggregate
dividends eligible for the dividends deduction, if any, received by the Fund
bear to its gross income. And, of course, shareholders not subject to tax on
their income will not be required to pay tax on amounts distributed to them.
Since all of the Government Fund's net investment income is expected to be
derived from earned interest and short-term capital gains, it is anticipated
that no part of any distribution from such Fund will be eligible for the
dividends received deduction for corporations.
Distribution by a Fund of the excess of net long-term capital gain over net
short-term capital loss is taxable to you as long-term capital gain in the year
in which it is received, regardless of how long you have held the shares. Such
distributions are not eligible for the dividends-received deduction.
If the net asset value of a share is reduced below your cost of that share by
the distribution of income or gain realized on the sale of securities, the
distribution, from a practical stand point, is a return of invested principal,
although taxable as described above.
Prior to purchasing shares, you should carefully consider the impact of
dividends or capital gains distributions which are expected to be declared or
have been declared, but have not been paid.
21
<PAGE> 24
Any such dividends or capital gains distributions paid shortly after a purchase
of shares prior to the record date will have the effect of reducing the per
share net asset value of the shares purchased by you by the amount of the
dividends or distributions. All or a portion of such dividends or distributions,
although in effect a return of capital, is subject to tax.
================================================================================
PRIOR TO PURCHASING SHARES, CONSIDER THE IMPACT OF DIVIDENDS OR CAPITAL GAINS
DISTRIBUTIONS EXPECTED TO BE DECLARED OR DECLARED BUT NOT YET PAID.
================================================================================
Additional information regarding federal taxes is contained in the Statement of
Additional Information under the heading "TAXES." However, the information
contained in this Prospectus and the additional material in the Statement of
Additional Information are only brief summaries of some of the important tax
considerations generally affecting the Funds and their shareholders.
Accordingly, you are urged to consult your tax adviser concerning the
application of federal, state and local taxes as such laws and regulations
affect your own tax situation.
You will be advised at least annually as to the federal income tax consequences
of distributions made to you during the year.
GENERAL INFORMATION
THE TRUST AND ITS SHARES
The Trust is an open-end management investment company and is organized under
Ohio law as a business trust under a Declaration of Trust dated September 16,
1994. The Trust currently consists of the three Funds, each of which is
diversified and each having its own class of shares. Each share represents an
equal proportional interest in a Fund with other shares of the same Fund, and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to that Fund as are declared at the discretion of the Trustees.
When issued, the shares are fully paid, nonassessable and freely transferable.
VOTING RIGHTS
You, as a shareholder, are entitled to one vote for each dollar of value
invested and a proportionate fractional vote for any fraction of a dollar
invested, and will vote in the aggregate with other shareholders of the Trust
and not by Fund except as otherwise expressly required by law. For example,
shareholders of the Midwest Growth Fund will vote in the aggregate with other
shareholders of the Trust with respect to the election of Trustees and
ratification of the selection of independent accountants. However, shareholders
of a Fund will vote as a portfolio, and not in the aggregate with other
shareholders of the Trust, for purposes of approval of amendments to that Fund's
investment advisory agreement or any of that Fund's fundamental policies.
The Trust does not expect to have an annual or special meeting of shareholders
except, under certain circumstances, when the Declaration of Trust, the 1940 Act
or other authority requires such a meeting, such as the election or removal of
Trustees or certain amendments to the Declaration of Trust or the investment
advisory agreement.
The Trust has represented to the Commission that the Trustees will call a
special meeting of shareholders for purposes of considering the
22
<PAGE> 25
removal of one or more Trustees upon written request thereof from shareholders
holding not less than 10% of the outstanding votes of the Trust and that the
Trust will assist in communications with other shareholders as required by
Section 16(c) of the 1940 Act. At such meeting, a quorum of shareholders
(constituting a majority of votes attributable to all outstanding shares of the
Trust), by majority vote, has the power to remove one or more Trustees.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding shares" of a Fund means the affirmative
vote, at a meeting of shareholders duly called, of the lesser of (a) 67% or more
of the votes of shareholders of that Fund present at a meeting at which the
holders of more than 50% of the votes attributable to shareholders of record of
that Fund are represented in person or by proxy, or (b) the holders of more than
50% of the outstanding votes of shareholders of that Fund.
REPORTING
The Trust issues unaudited financial information semi-annually and audited
financial statements annually for each Fund. The Trust also furnishes periodic
reports and, as necessary, proxy statements to shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Trust, 4000 Chester Avenue,
Cleveland, Ohio 44103 or by calling 1-800-332-6459 (1-800-3-FAMILY).
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Baker & Hostetler serves as counsel to the Trust. Ernst & Young LLP serves as
the independent public accountants of the Trust.
DESCRIPTION OF PERMITTED INVESTMENTS
AND RELATED RISK FACTORS
The following is a description of permitted investments for the Funds:
AMERICAN DEPOSITORY RECEIPTS ("ADRS") -- ADRs are typically issued by a U.S.
financial institution and evidence ownership of underlying securities issued by
a foreign issuer. Sponsored ADRs are a joint arrangement between the foreign
issuer and the depositary. The Growth and Income Fund is permitted to invest in
sponsored ADRs.
COMMERCIAL PAPER -- Unsecured short-term promissory notes issued by corporations
and other entities. Maturities on these issues typically vary from a few days to
nine months. All Funds are permitted to invest in commercial paper.
CONVERTIBLE SECURITIES -- Securities such as rights, bonds, notes and preferred
stocks which are convertible into or exchangeable for common stocks. Convertible
securities have characteristics similar to both fixed income and equity
securities. Because of the conversion feature, the market value of convertible
securities tends to move together with the market value of the underlying common
stock. As a result, a Fund's selection of convertible securities is based, to a
great extent, on the potential for capital appreciation that may exist in the
underlying stock. The value of convertible securities is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions. The Midwest
23
<PAGE> 26
Growth and the Growth and Income Funds are permitted to invest in convertible
securities. As described above, such Funds will invest in convertible securities
based primarily upon Roulston's evaluation of the underlying common stocks.
Roulston may invest up to 10% of such a Fund's net assets in convertible debt
securities which are not investment grade but are rated not lower than B by an
NRSRO. Such noninvestment grade securities are considered to be high risk
securities.
================================================================================
THE FUNDS MAY INVEST IN A NUMBER OF DIFFERENT TYPES OF SECURITIES, OPTIONS AND
OTHER INVESTMENTS.
================================================================================
OPTIONS -- Each Fund may invest in put and call options for various securities
and securities indices that are traded on national securities exchanges, from
time to time as Roulston deems to be appropriate. Each of the Funds may also
engage in writing call options from time to time as Roulston deems appropriate.
A Fund will write only covered call options (options on securities owned by that
Fund). A put option gives the purchaser of the option the right to sell, and the
writer the obligation to buy, the underlying security at any time during the
option period. A call option gives the purchaser of the option the right to buy,
and the writer of the option the obligation to sell, the underlying security at
any time during the option period. The premium paid to the writer is the
consideration for undertaking the obligations under the option contract.
The Midwest Growth and Growth and Income Funds may invest in options on stocks
and stock indices, while the Government Fund may invest in options on fixed
income securities and fixed income indices. OPTIONS WILL BE USED ONLY FOR
HEDGING PURPOSES AND WILL NOT BE ENGAGED IN FOR SPECULATIVE PURPOSES. Currently,
no Fund anticipates entering into options transactions to the extent that the
aggregate value of portfolio securities subject to options or invested in
options positions will exceed 5% of a Fund's net assets as of the time the Fund
purchases or enters into such options.
For further information regarding a Fund's investment in options, see the
Statement of Additional Information.
REPURCHASE AGREEMENTS -- Agreements by which a Fund obtains securities from an
established financial institution and simultaneously commits to return the
securities to the seller at an agreed upon price and date. The agreed upon price
of the securities reflects the purchase price plus an agreed upon market rate of
interest which is unrelated to the coupon rate or maturity of the underlying
securities. The Custodian or its agent will hold the security as collateral for
the repurchase agreement. Such collateral must be maintained at all times at a
value at least equal to 102% of the purchase price. A Fund bears a risk of loss
in the event the other party defaults on its obligations and the Fund is delayed
or prevented from exercising its rights with respect to the underlying
securities or if the Fund realizes a loss on the sale of the underlying
securities. Roulston will enter into repurchase agreements on behalf of a Fund
only with financial institutions, including banks and broker-dealers, deemed to
be creditworthy and present minimal risk of bankruptcy during the term of the
agreement based on guidelines established and periodically reviewed by the
24
<PAGE> 27
Trustees. Repurchase agreements are considered loans by a Fund under the 1940
Act. All Funds are permitted to invest in repurchase agreements.
U.S. GOVERNMENT SECURITIES -- U.S. Government direct obligations consist of
bills, notes and bonds issued by the U.S. Treasury and separately traded
interest and principal component parts of such obligations that are transferable
only through the Federal book entry system known as Separately Traded Registered
Interest and Principal Securities ("STRIPs"). All Funds are permitted to invest
in U.S. Government direct obligations, including STRIPs. The Funds intend to
invest in STRIPs that are only traded through the U.S. Government-sponsored
program.
STRIPS are sold as zero coupon securities, that is, fixed income securities that
have been stripped of their unmatured interest coupons. Zero coupon securities
are sold at a (usually substantial) discount and redeemed at face value at their
maturity date without interim cash payments of interest or principal. The amount
of this discount is accreted over the life of the security, and the accretion
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, the market prices of zero coupon securities
are generally more volatile than the market prices of securities that have a
similar maturity but pay interest periodically. Zero coupon securities are
likely to respond to a greater degree to interest rate changes than are nonzero
coupon securities with similar maturity and credit qualities.
U.S. Government agency securities are issued by certain federal agencies that
have been established as instrumentalities of the U.S. Government to supervise
and finance certain types of activities. Issues of these agencies, while not
direct obligations of the U.S. Government, are either backed by the full faith
and credit of the United States, guaranteed by the Treasury or supported by the
issuing agency's right to borrow from the Treasury or supported only by the
credit of the instrumentality. All Funds are permitted to invest in U.S.
Government agency securities.
VARIABLE AMOUNT MASTER DEMAND NOTES -- Variable amount master demand notes in
which the Funds may invest are unsecured demand notes that permit the
indebtedness thereunder to vary and that provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they are
not normally traded. Although there is no secondary market in the notes, a Fund
may demand payment of principal and accrued interest at any time. While the
notes are not typically rated by NRSROs, issuers of variable amount master
demand notes (which are normally manufacturing, retail, financial, and other
business concerns) must satisfy the same criteria as set forth above for
commercial paper. Roulston will consider the earning power, cash flow, and other
liquidity ratios of the issuers of such notes and will continuously monitor
their financial status and ability to meet payment on demand. In determining
average weighted portfolio maturity, a variable amount master demand note will
be deemed to have a maturity equal to the period of time remaining until the
principal amount can be recovered from the issuer through demand. In the event
that the period of time remaining until the principal amount can be
25
<PAGE> 28
recovered under a variable master demand note exceeds seven days, a Fund will
treat such note as illiquid for purposes of its limitations on investments in
illiquid securities.
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain of the obligations purchased
by the Funds may carry variable or floating rates of interest and may involve a
conditional or unconditional demand feature. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market rates
or indices, such as a Federal Reserve composite index. The interest rates on
these securities may be reset daily, weekly, quarterly or some other reset
period. The Funds intend to invest in variable and floating rate instruments
whose market value upon reset of the interest rate will approximate par value
because their interest rates will be tied to short-term rates. However, there is
a risk that the current interest rate on such obligations may not accurately
reflect existing market rates, and therefore that upon such interest rate reset,
the instrument may decline in value. All Funds are permitted to invest in
variable and floating rate instruments. A demand instrument with a demand notice
exceeding seven days will be considered illiquid if there is no secondary market
for such securities.
WARRANTS -- These instruments give holders the right, but not the obligation, to
buy shares of a company at a given price during a specified period. The Midwest
Growth Fund and Growth and Income Fund are permitted to invest in warrants.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS -- These transactions involve the
purchase of securities subject to settlement and delivery beyond the normal
settlement date. The price and yield on these securities is fixed as of the
purchase date, and no interest accrues to the Fund before settlement. These
securities are therefore subject to market fluctuation due to changes in market
interest rates, and, although the purchase of securities on a when-issued basis
is not considered leveraging, it has the effect of leveraging a Fund's assets.
Segregated accounts will be established with the Custodian, and a Fund will
maintain in such account, high quality liquid assets in an amount at least equal
in value to that Fund's commitments to purchase when-issued securities.
The purchase of securities on a when-issued or delayed delivery basis involves a
risk of loss if the value of the security to be purchased declines prior to the
settlement date or if the seller fails to complete the transaction and the Fund,
as a result, misses a price or yield considered to be advantageous. Although
each Fund will purchase securities on a when-issued or delayed delivery basis
only with the intention of actually acquiring securities for its portfolio, a
Fund may dispose of a when-issued security prior to settlement if Roulston deems
it appropriate to do so. No Fund's commitments to purchase when-issued or
delayed delivery securities will exceed 25% of the value of its total assets.
All Funds may purchase securities on a when-issued or delayed-delivery basis for
investment purposes only and not for leveraging purposes.
26
<PAGE> 29
INVESTMENT COMPANY SECURITIES -- Each Fund may also invest up to 10% of the
value of its total assets in the securities of other investment companies
subject to the limitations set forth in the 1940 Act. Each Fund intends to
invest in the securities of other investment companies to the extent that
Roulston believes that such investment will assist that Fund in meeting its
investment objectives and in money market mutual funds for purposes of
short-term cash management. A Fund's investment in such other investment
companies will result in the duplication of fees and expenses, particularly
investment advisory fees. For a further discussion of the limitations on the
Funds' investments in other investment companies, see "INVESTMENT OBJECTIVES AND
POLICIES -- Additional Information on Portfolio Instruments -- Securities of
Other Investment Companies" in the Trust's Statement of Additional Information.
27
<PAGE> 30
---------------------
PAGE INTENTIONALLY LEFT BLANK
28
<PAGE> 31
[logo] FAIRPORT
FUNDS
CHARTING A COURSE YOU CAN TRUST
<TABLE>
<CAPTION>
1-800-332-6459
(1-800-3-FAMILY)
==========================================================================================================
ACCOUNT APPLICATION FORM
==========================================================================================================
<S> <C> <C> <C> <C>
A. Indicate Amount of Investment (The minimum initial investment is $250)
- -- / / FAIRPORT GROWTH AND INCOME FUND (#133580) __________ % and $____________
INITIAL / / FAIRPORT GOVERNMENT SECURITIES FUND (#133581) __________ % and $____________
INVESTMENT / / FAIRPORT MIDWEST GROWTH FUND (#133582) __________ % and $____________
& FUND / / CASH ACCOUNT TRUST MONEY MARKET PORTFOLIO __________ % and $____________
SELECTION (#133583)
A prospectus must be obtained from Roulston Research
Corp. before you can purchase this fund.
/ / Check here if you have already received a prospectus.
TOTAL 100 % $____________
/ / BY CHECK: Please make payable to appropriate Fund Name
/ / BY WIRE: An initial purchase of $_________ was wired on __________ by
Date
________________________ to account #______________________________________
Name of your Bank or Broker Number assigned by F/P S
========================================================================================
FAIRPORT FUNDS PREFERS TO SEND ONE CONSOLIDATED STATEMENT PER HOUSEHOLD.
PLEASE LIST YOUR ACCOUNT NUMBERS TO BE PRINTED ON THE CONSOLIDATED STATEMENT:
A/C # ________________ A/C # _______________ A/C # ________________
A/C # ________________ A/C # _______________ A/C # ________________
- -----------------------------------------------------------------------------------------------------------
B. INDIVIDUAL
- -- ----------
------------------------------------------------------ -----------------------
First Name Middle Initial Last Name Social Security Number
------------------------------------------------------ -----------------------
REGISTRATION Jt. Owner First Name* Middle Initial Last Name Social Security Number
*(Joint ownership with rights of survivorship unless otherwise noted)
========================================================================================
(PLEASE PRINT) GIFT TO MINORS
--------------
---------------------------------------------------------------------------------
Name of Custodian (name one only) As Custodian for (name one only)
Under the _____________________________ (VGMA/UTMA) ________________________
State Minors Social Security #
========================================================================================
CORPORATION, PARTNERSHIP, OR TRUST
----------------------------------
---------------------------------------------------------------------------------
Name of Corporation, Partnership or Trust
-
------------------------- ----------------------------------------------------
Tax I.D. # Name of Trustee(s) Date of Trust
- -----------------------------------------------------------------------------------------------------------
C.
- -- ---------------------------------------------------------------------------------
MAILING Street Address & Apt #. or P.O. Box
ADDRESS & ---------------------------------------------------------------------------------
TELEPHONE City State Zip Code + 4
NUMBER(S) ( ) ( )
--------------------------------------------- --------------------------------
Home Phone Number Business Phone Number
- -----------------------------------------------------------------------------------------------------------
D. Check one box only for each; if none are checked all dividend income and capital
- -- gains, if any, will be reinvested. If money is to be reinvested in a different
DISTRIBUTION Fairport Fund, please indicate in space provided.
OPTIONS
Income Dividends / / Cash / / Reinvest / / Cash Account Trust ________________
/ / Other Fairport Fund Money Market Portfolio name / account #
Capital Gains / / Cash / / Reinvest / / Cash Account Trust ________________
Distributions / / Other Fairport Fund Money Market Portfolio name / account #
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 32
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
E. / / Check box if you want this service.
- -- To establish a Systematic Withdrawal Plan (SWP), an
account must have a current market value of $10,000 or
more. Additionally, an account must elect to have
SYSTEMATIC dividends automatically reinvested.
WITHDRAWAL / / Check box if you want withdrawal sent to address of
PLAN record.
/ / Check box if you want withdrawal sent VIA ACH as
instructions indicate in section G.
Amount and Frequency of Payments:
---------------------------------
Beginning in , 19 , Please make payments in the amount of $
--------- --- ---------
Month Amount $100 minimum
Payments will be processed on the 25th day of the month frequency indicated below:
/ / Monthly / / Quarterly / / Semi-annually / / Annually
- ---------------------------------------------------------------------------------------------------------------------------------
F. / / Check box if you want this service.
- -- I (We) authorize Fund/Plan Services and/or Fairport Funds to act
upon instructions received by telephone from me (us) to redeem
shares or to exchange for shares of other Fairport Funds. I (we)
understand an exchange is made by redeeming shares of one
TELEPHONE portfolio and using the proceeds to buy shares of another
PRIVILEGE portfolio. Exchanges must be made into identically registered
REDEMPTIONS; accounts. Redemption proceeds will be sent as indicated in
EXCHANGES BETWEEN Section G.
PORTFOLIOS * If not otherwise indicated below, only exchanges will be allowed.
/ / Redemptions / / Exchanges / / Both
- ---------------------------------------------------------------------------------------------------------------------------------
G. / / All redemption proceeds will be executed BY
- -- Check one only, if none are AN ACH TRANSACTION unless Fund/Plan Services
REDEMPTION checked all redemptions will is notified otherwise in writing. There is no
& ACH be sent by check. charge for ACH transactions. Allow 3 business days.
INFORMATION / / All redemption proceeds will be executed BY A
FED WIRE TRANSACTION unless Fund/Plan
Services is notified otherwise in writing.
There is a $9 charge for FED Wire transactions.
VOIDED PERSONAL / / All redemption proceeds will be sent BY CHECK
CHECK OR DEPOSIT TO THE MAILING ADDRESS STATED IN SECTION C
SLIP MUST BE ABOVE unless Fund/Plan Services is notified
ATTACHED otherwise in writing.
All FED Wire and ACH transactions will be sent as indicated below. There will be
no charge for ACH transactions. Any changes in ACH transactions must be made in
writing to Fund/Plan Services, Inc., P.O. Box 874, Conshohocken, PA 19428.
Please allow one month for ACH instructions to be effective.
(Notify your bank of your intent to establish this option on your bank account.)
--------------------------------------------------------------------------------------------------
Bank Name Branch Office (if applicable)
--------------------------------------------------------------------------------------------------
Bank Address (Do not use P.O. Box) City State Zip Code
--------------------------------------------------------------------------------------------------
Bank Wire Routing Number Name(s) on Your Bank Account Your Bank Account Number
- ---------------------------------------------------------------------------------------------------------------------------------
H.
- -- SIGNATURE TAXPAYER IDENTIFICATION NUMBER CERTIFICATION. UNDER THE PENALTIES OF PERJURY,
& I (WE) CERTIFY THE FOLLOWING:
CERTIFICATION 1. I (WE) CERTIFY THAT THE NUMBER SHOWN ON THIS FORM IS MY (OUR)
CORRECT TAX IDENTIFICATION NUMBER.
2. I (WE) AM NOT (ARE NOT) SUBJECT TO BACKUP WITHHOLDING AS A
AND BACK-UP RESULT OF A FAILURE TO REPORT ALL INTEREST AND DIVIDENDS, OR
WITHHOLDING THE INTERNAL REVENUE SERVICE HAS NOTIFIED ME (US) THAT I (WE)
CERTIFICATION AM (ARE) NO LONGER SUBJECT TO BACKUP WITHHOLDING.
CITIZEN OF: / / UNITED STATES / / OTHER (PLEASE INDICATE)
---------------
"THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT
TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING".
------------------------------------------------------------------ --------------------
SIGNATURE OWNER CUSTODIAN TRUSTEE DATE
----------------------------------------------------------------- ---------------------
SIGNATURE JOINT OWNER (IF APPLICABLE) DATE
/ / CHECK BOX IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT
TO BACKUP WITHHOLDING.
- ---------------------------------------------------------------------------------------------------------------------------------
FOR INVESTMENT DEALER ONLY
- --------------------------
/
------------------------------------------------------------------------------------- ---------------------------
Firm Name / Dealer # Branch/Branch #
---------------------------------------------------------------------------------------------------
Branch Address
------------------------------------------------------------ --------------- -----------------------
City State Zip Code
-------------------- ---------------------------------------
Rep # Rep's Last Name
=================================================================================================================================
MAIL COMPLETED APPLICATION TO: ROULSTON RESEARCH CORP., 4000 CHESTER AVENUE, CLEVELAND, OH 44103
=================================================================================================================================
</TABLE>
<PAGE> 33
[LOGO} FAIRPORT
FUNDS 1-800-332-6459
CHARTING A COURSE YOU CAN TRUST (1-800-3-FAMILY)
================================================================================
AUTOMATIC INVESTMENT PLAN APPLICATION
================================================================================
RETURN TO:
Fund/Plan Services, Inc. Roulston Research Corp.
P.O. Box 874 OR 4000 Chester Ave.
Conshohocken, PA 19428 Cleveland OH 44103
================================================================================
INSTRUCTIONS:
================================================================================
================================================================================
HOW DOES IT WORK?
================================================================================
1. Fund/Plan Services, Inc., through our bank, UMB Bank, N.A., draws
an automatic clearing house (ACH) debit against your personal
checking/savings account each month.
2. Choose any amount (over the minimum $50 subsequent payment amount)
that you would like to invest regularly and your debit will be
processed by Fund/Plan Services, Inc.
3. Shares will be purchased and a confirmation sent to you.
================================================================================
HOW DO I SET IT UP?
================================================================================
MUST MEET MINIMUM INVESTMENT REQUIREMENT OF $250.
--------------------------------------------------
1. Complete the form (and a fund application if you are establishing a new
account).
2. If you are using a Credit Union, please have your financial institution
complete the form.
3. This option is not available on Cash Account Trust Money Market Portfolio.
4. Attach a VOIDED check to the Automatic Investment Plan application.
5. Mail form to Fund/Plan Services, Inc. or Roulston Research Corp. at the
address above.
6. As soon as your bank accepts your authorization, debits will be generated
and your Automatic Investment Plan started. In order for you to have
Automatic Clearing House (ACH) debits from your account, your bank must
be able to accept ACH transactions and/or be a member of an ACH
association. We cannot guarantee acceptance by your bank.
7. Please allow one month for processing before the first debit occurs.
8. Returned items will result in a $20.00 fee being deducted from your
account.
================================================================================
ACCOUNT INFORMATION
================================================================================
REGISTRATION:
================================================================================
Check One: / / I am in the process of establishing a new account.
/ / My account number is #
-----------------------------
Deposit my automatic investments in (check one):
/ / Fairport Government / / Fairport Growth and
Securities Fund (#133581) Income Fund (#133580)
/ / Fairport Midwest Growth Fund (#133582)
Shareholder Name:
- --------------------------------------------------------------------------------
Joint Owner:
- --------------------------------------------------------------------------------
Street Address:
- --------------------------------------------------------------------------------
City: State: ZIP Code:
- --------------------------------------------------------------------------------
Phone Number: [daytime] ( ) [evening] ( )
================================================================================
<PAGE> 34
===============================================================================
AUTHORIZATION
===============================================================================
I authorize the fund to establish an Automatic Investment Plan for me and
invest $ ________________________ on the [ ] 10th, [ ] 15th, [ ] 20th of each
[$100.00 MINIMUM]
month in the fund.
I understand that my ACH debit will be dated on the day of each month as
indicated above. I agree that if such a debit is not honored upon
presentation, Fund/Plan Services, Inc. may discontinue this service and
any share purchase made upon deposit of such debit may be cancelled. I
further agree that if the net asset value of the shares purchased with
such debit is less when said purchase is cancelled than when the
purchase was made, Fund/Plan Services, Inc. shall be authorized to
liquidate other shares or fractions thereof held in my account to make
up the deficiency. This Automatic Investment Plan may be discontinued by
Fund/Plan Services, Inc. upon 30 days written notice or at any time by
the investor by written notice to Fund/Plan Services, Inc. which is
received no later than five (5) business days prior to the above
designated investment date.
SIGNATURE OF ACCOUNT OWNER DATE:
- --------------------------------------------------------------------------------
SIGNATURE OF JOINT ACCOUNT OWNER DATE:
- --------------------------------------------------------------------------------
===============================================================================
BANK INFORMATION AND AUTHORIZATION
===============================================================================
BANK ACCOUNT OWNER
- --------------------------------------------------------------------------------
BANK ACCOUNT JOINT OWNER
- --------------------------------------------------------------------------------
BANK NAME
- --------------------------------------------------------------------------------
BANK BRANCH STREET ADDRESS
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
ABA NUMBER (9 DIGITS) ACCOUNT NUMBER
- --------------------------------------------------------------------------------
CHECK ONE: Checking [ ] Savings [ ]
As a convenience to me, please honor ACH debits on my account drawn by
Fund/Plan Services, Inc., UMB Bank, N.A. and payable to the FUND.
I agree that your rights with respect to such debit shall be the same as
if it were a check drawn upon you and signed personally by me. This
authority shall remain in effect until you receive notice to the
contrary. I agree that you shall be fully protected in honoring any such
debit.
I further agree that if any debit is dishonored, whether with or without
cause or whether intentionally or inadvertently, you shall be under no
liability whatsoever.
SIGNATURE OF BANK ACCOUNT OWNER DATE:
- --------------------------------------------------------------------------------
SIGNATURE OF JOINT ACCOUNT OWNER DATE:
- --------------------------------------------------------------------------------
===============================================================================
INDEMNIFICATION AGREEMENT
===============================================================================
TO: THE BANK NAMED ABOVE:
So that you may comply with your Depositor's request and authorization,
Fund agrees as follows:
1. To indemnify and hold you harmless from any loss you may suffer
arising from or in connection with the payment of a debit drawn by
Fund/Plan Services, Inc. to the order of the fund, designated on the
account of your depositor's executing the authorization including
any costs or expenses reasonably incurred in connection with such
loss. Fund will not, however, indemnify you against any loss due to
your payment of any debit generated against insufficient funds.
2. To refund to you any amount erroneously paid by you to Fund/Plan
Services, Inc. on any such debit if claim for the amount of such
debit on which erroneous payment was made.
===============================================================================
<PAGE> 35
STATEMENT OF ADDITIONAL INFORMATION
FAIRPORT MIDWEST GROWTH FUND
(formerly known as Roulston Midwest Growth Fund)
FAIRPORT GROWTH AND INCOME FUND (formerly
known as Roulston Growth and Income Fund)
FAIRPORT GOVERNMENT SECURITIES FUND
(formerly known as Roulston Government Securities Fund)
Three Funds of
FAIRPORT FUNDS
Investment Adviser:
ROULSTON & COMPANY, INC.
This Statement of Additional Information is not a prospectus and
relates to the FAIRPORT MIDWEST GROWTH FUND (the "MIDWEST GROWTH FUND"),
FAIRPORT GROWTH AND INCOME FUND (the "GROWTH AND INCOME FUND"), and FAIRPORT
GOVERNMENT SECURITIES FUND (the "GOVERNMENT FUND"). The MIDWEST GROWTH FUND,
GROWTH AND INCOME FUND, and GOVERNMENT FUND are sometimes referred to
individually as a "Fund" and collectively as the "Funds".
The name changes for the Trust and its Funds as noted above were
approved by unanimous vote of the Board of Trustees, in accordance with the
Trust's By-Laws, on February 22, 1996 and will become effective as of the date
hereof.
This Statement of Additional Information is intended to provide
additional information regarding the activities and operations of FAIRPORT FUNDS
(the "Trust") and should be read in conjunction with the Funds' Prospectus dated
February 28, 1996. The Prospectus may be obtained through the Trust's
Distributor, Roulston Research Corp., 4000 Chester Avenue, Cleveland, Ohio 44103
(the "Distributor").
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION OR IN
THE PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THE PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE> 36
MARCH 1, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST................................................................. B-2
ADDITIONAL INFORMATION ON
PERMITTED INVESTMENTS AND RELATED RISK FACTORS......................... B-2
ADDITIONAL INVESTMENT LIMITATIONS......................................... B-9
MANAGEMENT OF THE TRUST................................................... B-12
PRINCIPAL HOLDERS OF SECURITIES........................................... B-22
INVESTMENT ADVISORY AND OTHER SERVICES.................................... B-12
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS.......................... B-22
NET ASSET VALUE........................................................... B-23
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................ B-23
TAXES..................................................................... B-23
PERFORMANCE INFORMATION................................................... B-23
OTHER INFORMATION......................................................... B-26
</TABLE>
APPENDIX "A"
DESCRIPTIONS OF SECURITIES RATINGS
APPENDIX "B"
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 1995
<PAGE> 37
THE TRUST
FAIRPORT FUNDS (formerly THE ROULSTON FAMILY OF FUNDS) (the "Trust") is
a diversified, open-end management investment company established under Ohio law
as an Ohio business trust under a Declaration of Trust dated September 16, 1994.
On April 28, 1995, pursuant to an Agreement and Plan of Reorganization
and Liquidation with The Advisors' Inner Circle Fund, a Massachusetts business
trust ("Advisors"), FAIRPORT MIDWEST GROWTH FUND (formerly Roulston Midwest
Growth Fund), FAIRPORT GROWTH AND INCOME FUND, (formerly Roulston Growth and
Income Fund) and FAIRPORT GOVERNMENT SECURITIES FUND (formerly Roulston
Government Securities Fund) of the Trust acquired all of the assets of each of
the Roulston Midwest Growth Fund, the Roulston Growth and Income Fund, and the
Roulston Government Securities Fund of Advisors (collectively, the "Acquired
Funds"), respectively, in exchange for the assumption of such Acquired Fund's
liabilities and a number of full and fractional shares of the corresponding Fund
of the Trust having an aggregate net asset value equal to such Acquired Fund's
net assets (the "Reorganization"). The performance and financial information
included in this Statement of Additional Information relates to both the
operations of the Acquired Funds prior to the Reorganization and to the Funds of
the Trust since the Reorganization.
The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest ("shares"). Each share of each Fund represents an
equal proportionate interest in that Fund. See "ADDITIONAL
INFORMATION--Description of Shares" below. This Statement of Additional
Information relates to the Trust's FAIRPORT MIDWEST GROWTH FUND (the "MIDWEST
GROWTH FUND"), FAIRPORT GROWTH AND INCOME FUND (the "GROWTH AND INCOME FUND"),
and FAIRPORT GOVERNMENT SECURITIES FUND (the "GOVERNMENT FUND"). The MIDWEST
GROWTH FUND, GROWTH AND INCOME FUND, and GOVERNMENT FUND are sometimes referred
to individually as a "Fund" and collectively as the "Funds".
Much of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus of the Funds.
Capitalized terms not defined herein are defined in the Prospectus. No
investment in shares of a Fund should be made without first reading the
Prospectus.
ADDITIONAL INFORMATION ON PERMITTED INVESTMENTS
AND RELATED RISK FACTORS
BANKERS' ACCEPTANCES
Negotiable bills of exchange or time drafts drawn on and accepted by a
commercial bank, meaning, in effect, that the bank unconditionally agrees to pay
the face value of the instrument on maturity. Banker's acceptances are used by
corporations to finance the shipment and storage of goods and to furnish dollar
exchanges. Maturities are generally six months or less. All Funds
<PAGE> 38
are permitted to invest in bankers' acceptances.
CERTIFICATES OF DEPOSIT
A negotiable interest bearing instrument with a specific maturity.
Certificates of deposit are issued by U.S. commercial banks and savings and loan
institutions in exchange for the deposit of funds and normally can be traded in
the secondary market prior to maturity. Certificates of deposit generally carry
penalties for early withdrawal. All Funds are permitted to invest in
certificates of deposit.
TIME DEPOSITS
A non-negotiable receipt issued by a bank in exchange for the deposit
of funds. Like a certificate of deposit, it earns a specified rate of interest
over a definite period of time; however, it cannot be traded in the secondary
market. Time deposits in excess of seven days with a withdrawal penalty are
considered to be illiquid securities; a Fund will not invest more than 15% of
its net assets in illiquid securities, including such time deposits. All Funds
are permitted to invest in time deposits.
U.S. GOVERNMENT SECURITIES
The GOVERNMENT FUND may invest in securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. Such agencies and
instrumentalities include the Government National Mortgage Association ("GNMA"),
the Federal National Mortgage Association ("FNMA"), the Federal Home Loan
Mortgage Corporation ("FHLMC"), and the Student Loan Marketing Association
("SLMA"). Obligations of agencies such as GNMA are backed by the full faith and
credit of the U.S. Government. Others, such as the obligations of FNMA, are not
backed by the full faith and credit of the U.S. Government but are supported by
the right of the issuer to borrow from the U.S. Treasury; others, such as those
of SLMA, are supported by the discretionary authority of the U.S. Government to
purchase the agency's obligations; and still others, such as the Federal Farm
Credit Banks, are supported only by the credit of the agency. No assurance can
be given that the U.S. Government would provide financial assistance to U.S.
Government-sponsored agencies or instrumentalities if it is not obligated to do
so by law.
Some of these securities are considered to be "mortgage-related
securities" because they represent ownership in a pool of federally insured
mortgage loans with maturities of up to 30 years. However, due to scheduled and
unscheduled principal payments, such securities have a shorter average maturity
and, therefore, less principal volatility than a bond with a comparable
<PAGE> 39
maturity. Since prepayment rates vary widely, it is not possible to accurately
predict the average maturity of a particular pool of mortgages. The scheduled
monthly interest and principal payments relating to mortgages in the pool will
be "passed through" to investors. Such mortgage-related securities differ from
conventional bonds in that principal is paid back to the certificate holders
over the life of the loan rather than at maturity. As a result, there will be
monthly scheduled payments of principal and interest. In addition, there may be
unscheduled principal payments representing prepayments on the underlying
mortgages. Although mortgage-related securities may offer yields higher than
those available from other types of U.S. Government securities, such securities
may be less effective than other types of securities as a means of "locking in"
attractive long-term rates because of the prepayment feature. For instance, when
interest rates decline, the value of a mortgage-related security likely will not
rise as much as comparable debt securities due to the prepayment feature. In
addition, these prepayments can cause the price of a mortgage-related security
originally purchased at a premium to decline in price to its par value, which
may result in a loss. The market value and interest yield of these securities
can vary due to market interest rate fluctuations and early prepayments of
underlying mortgages.
Each Fund may invest in Separately Traded Interest and Principal
Securities ("STRIPs"), which are component parts of U.S. Treasury securities
traded through the Federal Book-Entry System. Roulston will purchase only those
STRIPs that it determines are liquid or, if illiquid, do not violate the Fund's
investment policy concerning investments in illiquid securities. While there is
no limitation on the percentage of a Fund's assets that may be comprised of
STRIPs, Roulston will monitor the level of such holdings to avoid the risk of
impairing shareholders' redemption rights.
VARIABLE AMOUNT MASTER DEMAND NOTES
Variable amount master demand notes, in which the Funds may invest, are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. Because master demand notes are direct lending arrangements
between a Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, a Fund may demand payment of principal and
accrued interest at any time within 30 days. While such notes are not typically
rated by credit rating agencies, issuers of variable amount master demand notes
(which are normally manufacturing, retail, financial and other business
concerns), must satisfy, for purchase by a Fund, the same criteria as set forth
above for commercial paper for such Fund. Roulston will consider the earning
power, cash flow, and other liquidity ratios of the issuers of such notes and
will continuously monitor their financial status and ability to meet payment on
demand. In determining average weighted portfolio maturity, a variable amount
master demand note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next interest rate adjustment or the period
of time remaining until the principal amount can be recovered from the issuer
through demand.
VARIABLE AND FLOATING RATE NOTES
<PAGE> 40
Each Fund may acquire variable and floating rate notes, subject to such
Fund's investment objectives, policies and restrictions. A variable rate note is
one whose terms provide for the adjustment of its interest rate on set dates and
which, upon such adjustment, can reasonably be expected to have a market value
that approximates its par value. A floating rate note is one whose terms provide
for the adjustment of its interest rate whenever a specified interest rate
changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Such notes are frequently not rated by
credit rating agencies; however, unrated variable and floating rate notes
purchased by a Fund will be determined by Roulston to be of comparable quality
at the time of purchase to rated instruments eligible for purchase under that
Fund's investment policies. In making such determinations, Roulston will
consider the earning power, cash flow and other liquidity ratios of the issuers
of such notes (such issuers include governmental agencies, and financial,
merchandising, bank holding and other companies) and will continuously monitor
their financial condition. Although there may be no active secondary market with
respect to a particular variable or floating rate note purchased by a Fund, the
Fund may resell the note at any time to a third party. The absence of an active
secondary market, however, could make it difficult for the Fund to dispose of a
variable or floating rate note in the event the issuer of the note defaulted on
its payment obligations and the Fund could, as a result or for other reasons,
suffer a loss to the extent of the default. To the extent that a Fund is not
entitled to receive the principal amount of a note within seven days and there
is no established market for such note, such a note will be treated as an
illiquid security for purposes of calculation of the 15% limitation on such
Fund's investment in illiquid securities.
REPURCHASE AGREEMENTS
Securities held by each of the Funds may be subject to repurchase
agreements. Under the terms of a repurchase agreement, a Fund would acquire
securities from member banks of the Federal Reserve System and registered
broker-dealers which Roulston deems creditworthy under guidelines approved by
the Trust's Board of Trustees, subject to the seller's agreement to repurchase
such securities at a mutually agreed-upon date and price. The repurchase price
would generally equal the price paid by the Fund plus interest negotiated on the
basis of current short-term rates, which may be more or less than the rate on
the underlying portfolio securities. The seller under a repurchase agreement
will be required to maintain at all times the value of collateral held pursuant
to the agreement at not less than the repurchase price (including accrued
interest). If the seller were to default on its repurchase obligation or become
insolvent, the Fund would suffer a loss to the extent that the proceeds from a
sale of the underlying portfolio securities were less than the repurchase price
under the agreement, or to the extent that the disposition of such securities by
the Fund were delayed pending court action. Additionally, there is no
controlling legal precedent confirming that the Fund would be entitled, as
against a claim by such seller or its receiver or trustee in bankruptcy, to
retain the underlying securities, although the Board of Trustees of the Trust
believes that, under the regular procedures normally in effect for custody of
the Fund's securities subject to repurchase agreements and under Federal laws, a
<PAGE> 41
court of competent jurisdiction would rule in favor of the Trust if presented
with the question. Securities subject to repurchase agreements will be held by
the Trust's Custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to be
loans by a Fund under the 1940 Act.
FOREIGN INVESTMENT
Investment in foreign securities is subject to special investment risks
that differ in some respects from those related to investments in securities of
U.S. domestic issuers. Since investments in the securities of foreign issuers
may involve currencies of foreign countries, the Fund may be affected favorably
or unfavorably by changes in currency rates and in exchange control regulations
and may incur costs in connection with conversions between various currencies.
Since foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to U.S. companies, there may be less publicly available
information about a foreign company than about a U.S. company. Securities of
many foreign companies are less liquid and more volatile than securities of
comparable U.S. companies.
In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect a Fund's investments
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
The Fund will acquire such securities only when Roulston believes the
risks associated with such investments are minimal.
OPTIONS TRADING
Each of the Funds may purchase put and call options. A call option
gives the purchaser of the option the right to buy, and a writer has the
obligation to sell, the underlying security at the stated exercise price at any
time prior to the expiration of the option, regardless of the market price of
the security. The premium paid to the writer is consideration for undertaking
the obligations under the option contract. A put option gives the purchaser the
right to sell the underlying security at the stated exercise price at any time
prior to the expiration date of the option, regardless of the market price of
the security. Put and call options purchased by the
<PAGE> 42
Funds will be valued at the last sale price, or in the absence of such a price,
at the mean between bid and asked price.
When a Fund writes a call option, an amount equal to the net premium
(the premium less the commission) received by the Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The current
value of the traded option is the last sale price or, in the absence of a sale,
the average of the closing bid and asked prices. If an option expires on the
stipulated expiration date or if the Fund enters into a closing purchase
transaction, it will realize a gain (or a loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold) and the
deferred credit related to such option will be eliminated. If an option is
exercised, the Fund may deliver the underlying security in the open market. In
either event, the proceeds of the sale will be increased by the net premium
originally received and the Fund will realize a gain or loss.
In addition, when a Fund writes a covered call option and such option
is exercised, that Fund will forego the appreciation, if any, on the underlying
security in excess of the exercise price. In order to close out a call option it
has written, a Fund will enter into a "closing purchase transaction" -- the
purchase of a call option on the same security with the same exercise price and
expiration date as the call option which that Fund previously wrote on any
particular securities. When a portfolio security subject to a call option is
sold, the Fund which wrote the call will effect a closing purchase transaction
to close out any existing call option on that security. There is no assurance of
liquidity in the secondary market for purposes of closing out options positions.
If that Fund is unable to effect a closing purchase transaction, it will not be
able to sell the underlying security until the option expires or such Fund
delivers the underlying security upon exercise.
Although a Fund will engage in option transactions only as hedging
transactions and not for speculative purposes, there are risks associated with
such investment including the following: (i) the success of a hedging strategy
may depend on the ability of the Adviser to predict movements in the prices of
the individual securities, fluctuations in markets and movements in interest
rates; (ii) there may be an imperfect correlation between the changes in market
value of the stocks held by the Fund and the prices of options; (iii) there may
not be a liquid secondary market for options; and (iv) while a Fund will receive
a premium when it writes covered call options, it may not participate fully in a
rise in the market value of the underlying security.
The Funds may also purchase or sell index options. Index options (or
options on securities indices) are similar in many respects to options on
securities except that an index option gives the holder the right to receive,
upon exercise, cash instead of securities, if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
<PAGE> 43
As discussed in the Prospectus, each Fund may purchase securities on a
"when-issued" or "delayed- delivery" basis (i.e., for delivery beyond the normal
settlement date at a stated price and yield). When a Fund agrees to purchase
securities on a "when-issued" or "delayed-delivery" basis, such Fund's Custodian
will set aside in a separate account cash or high quality liquid debt securities
equal to the amount of the commitment. Normally, the Custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of such Fund's commitment. It may be expected that a Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash. In addition,
because the Fund will set aside cash or high quality liquid debt securities to
satisfy its purchase commitments in the manner described above, such Fund's
liquidity and the ability of Roulston to manage it might be affected in the
event its commitments to purchase "when-issued" or "delayed-delivery" securities
ever exceeded 25% of the value of its assets. Under normal market conditions,
however, a Fund's commitments to purchase "when-issued" or "delayed-delivery"
securities will not exceed 25% of the value of its assets.
When a Fund engages in "when-issued" or "delayed-delivery"
transactions, it relies on the seller to consummate the trade. Failure of the
seller to do so may result in such Fund's incurring a loss or missing the
opportunity to obtain a price considered to be advantageous. A Fund will engage
in "when-issued" or "delayed-delivery" transactions only for the purpose of
acquiring portfolio securities consistent with such Fund's investment objectives
and policies and not for investment leverage.
INVESTMENT COMPANY SHARES
Each Fund may invest in securities of other investment companies,
including shares of money market mutual funds. Since such funds pay management
fees and other expenses, shareholders of a Fund would indirectly pay both Fund
expenses and the expenses of underlying funds with respect to Fund assets
invested therein. Applicable regulations prohibit a Fund from acquiring the
securities of other investment companies if, as a result of such acquisition,
the Fund owns more than 3% of the total voting stock of the acquired investment
company; more than 5% of the Fund's total assets are invested in securities
issued by any one investment company; or more than 10% of the total assets of
the Fund in the aggregate are invested in securities of investment companies as
a group.
ADDITIONAL INVESTMENT LIMITATIONS
Each Fund's investment objective is a fundamental policy and may not be
changed without a vote of the holders of a majority of such Fund's outstanding
shares.
FUNDAMENTAL RESTRICTIONS
The following investment restrictions may be changed with respect to a
Fund only by a
<PAGE> 44
vote of the majority of the outstanding Shares of that Fund (as defined below
under "ADDITIONAL INFORMATION - Vote of a Majority of the Outstanding Shares").
In addition to the investment restrictions set forth in the Prospectus, each
Fund may not:
1. Make loans, except that the Fund may purchase or hold debt instruments
and make time deposits with financial institutions in accordance with
its investment objectives and policies, and the Fund may enter into
repurchase agreements and engage in securities lending, as described in
the Prospectus and this Statement of Additional Information;
2. Purchase or sell real estate (although investment in marketable
securities of issuers which can invest in real estate or engage in such
activities, securities backed or secured by interests in real estate,
institutions that issue mortgages, or real estate investment trusts
which deal in real estate or interests therein are not prohibited by
this restriction);
3. Purchase securities on margin, except that a Fund may obtain short-term
credit as necessary for the clearance of securities transactions and
except as may be necessary to make margin payments in connection with
derivative securities transactions;
4. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter under Federal securities laws in selling a
portfolio security; and
5. Purchase or sell commodities or commodities contracts (including future
contracts), except to the extent disclosed in the current Prospectus of
the Fund.
NON-FUNDAMENTAL RESTRICTIONS
The following additional investment restrictions of the Funds are
non-fundamental and may be changed by the Trust's Board of Trustees without
shareholder approval. A Fund may not:
1. Purchase or otherwise acquire any securities, if as a result, more than
15% of that Fund's net assets would be invested in securities that are
illiquid;
2. Engage in any short sales;
3. Invest more than 10% of its total assets in the securities of issuers
which, together with any predecessors, have a record of less than three
years of continuous operation;
4. Purchase or retain securities of an issuer if an officer, trustee,
partner or director of the Trust or of any investment adviser of the
Fund owns beneficially more than 1/2 of 1% of the shares or securities
of such issuer and all such officers, trustees, partners and directors
owning more than 1/2 of 1% of such shares or securities together own
more than 5% of such shares or securities;
<PAGE> 45
5. Pledge, mortgage or hypothecate assets in excess of one third of the
Fund's total assets;
6. Purchase securities of other investment companies except (a) in
connection with a merger, consolidation, acquisition or reorganization,
and (b) to the extent permitted by the 1940 Act and the rules and
regulations thereunder or pursuant to any exemptions therefrom;
7. Invest in interests in oil, gas or other mineral exploration or
development programs or in oil, gas or mineral leases; and
8. Invest more than 5% of its net assets in warrants valued at the lower
of cost or market, provided, that included within that amount, but not
to exceed 2% of net assets, may be warrants which are not listed on the
New York or American Stock Exchanges. For purposes of this restriction,
warrants acquired in units or attached to securities are deemed to be
without value.
If any percentage restriction or requirement described above is
satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in asset value will not constitute a
violation of such restriction or requirement. However, should a change in net
asset value or other external events cause a Fund's investments in illiquid
securities, including repurchase agreements with maturities in excess of seven
days, to exceed the limit set forth above for such Fund's investment in illiquid
securities, the Fund will act to cause the aggregate amount of such securities
to come within such limit as soon as reasonably practicable. In such an event,
however, such Fund would not be required to liquidate any portfolio securities
where the Fund would suffer a loss on the sale of such securities.
None of the Funds currently intends to enter into reverse repurchase
agreements during the current fiscal year.
CALIFORNIA LIMITATIONS
The Trust, on behalf of each Fund, has also represented to the
California Department of Corporations that (1) in order to comply with
applicable regulations, each Fund will acquire or retain securities of other
open-end management investment companies if such investments are made in
open-end management investment companies sold with no sales commission and such
Fund's Investment Adviser waives its management fee with respect to such
investments, and (2) it will hold a special meeting of shareholders if such
meeting is called by holders of not less than 10% of the shares of the Trust
entitled to vote at such meeting. The Trust intends to comply with these
undertakings for so long as the Funds have their shares registered for sale in
the State of California or such representation is required by the California
Department of Corporations.
OHIO LIMITATIONS
<PAGE> 46
The Trust, on behalf of each Fund, has represented to the Ohio Division
of Securities that each Fund will (1) not invest any of its assets in the
securities of other investment companies, except by purchase in the open market
where no commission or profit to a sponsor or dealer results from the purchase
other than the customary broker's commission, or except when the purchase is
part of a plan of merger, consolidation, reorganization, or acquisition; and (2)
limit its investments to 15% of its total assets in securities of any issuer (a)
which, together with any predecessors, have a record of less than three years
continuous operation or (b) which are restricted as to disposition, including
securities eligible for resale under Rule 144A of the Securities Act of 1933, as
amended (the "Securities Act"). The Trust intends to comply with these
representations with respect to each Fund for so long as the Shares of such Fund
are registered for sale in the State of Ohio.
NEW MEXICO LIMITATIONS
The Trust has represented to the Regulation and Licensing Department of
the New Mexico Securities Division that the Trust, on behalf of the MIDWEST
GROWTH FUND and the GROWTH AND INCOME FUND, will acquire and retain the
securities of other open-end investment companies only if such securities are
sold with no sales commission and the Trust's Investment Adviser waives its
investment advisory fee with respect to such investment. The Trust intends to
comply with this undertaking for so long as such Funds have their shares
registered for sale in the State of New Mexico or such representation is
required by the New Mexico Securities Division.
SOUTH DAKOTA LIMITATIONS
The Trust has represented to the South Dakota Department of Commerce
and Regulation, Division of Securities, that the Trust, on behalf of each Fund,
will not invest more than 5% of a Fund's total assets in securities of issuers,
which together with any predecessors, have a record of less than three years of
continuous operation.
WISCONSIN LIMITATIONS
The Trust has represented to the Wisconsin Securities Bureau on behalf
of the MIDWEST GROWTH FUND and the GROWTH AND INCOME FUND that each such Fund
(1) will limit to 10% of its total assets its investments in securities of
issuers that the Fund is restricted from selling to the public without
registration under the Securities Act (excluding restricted securities eligible
for resale pursuant to Rule 144A under the Securities Act that have been
determined to be liquid by the Trust's Board of Trustees based upon the trading
markets for such securities), and securities of unseasoned issuers, including
their predecessors and any unconditional guarantor of such issuer, which have
been in operation for less than three years and illiquid equity securities of
issuers, including those securities that are subject to legal or contractual
restrictions on disposition; provided however, that upon appropriately amending
the Funds' prospectus, the Trust reserves the right to increase the 10%
limitation described in this paragraph to 15%; and (2) will limit to 10% of its
total assets its investments in securities of one or more real estate investment
trusts.
<PAGE> 47
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees
under the laws of the State of Ohio. The Trustees and executive officers of the
Trust and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Each Trustee who is an "interested person" of the Trust, as that term is
defined in the 1940 Act, is indicated by an asterisk. Certain officers of the
Trust also serve as Directors and/or officers of Roulston or the Distributor.
<PAGE> 48
<TABLE>
<CAPTION>
NAME, BUSINESS POSITIONS(S) HELD PRINCIPAL OCCUPATION(S)
ADDRESS AND AGE WITH THE TRUST DURING PAST FIVE YEARS
=================================================================================================================
<S> <C> <C>
* Scott D. Roulston Trustee President and Director of
4000 Chester Avenue and President Roulston & Company, Inc.
Cleveland, Ohio 44103 And Roulston Research Corp.
Age: 38
- -----------------------------------------------------------------------------------------------------------------
Thomas V. Chema Trustee Partner, Arter & Hadden
1100 Huntington Building (law firm) since April, 1989;
Cleveland, Ohio 44115 since June 1995, President,
Gateway Consultants Group,
Age: 49 Inc. (sports and related public
facilities consulting); from June
1990,to June, 1995, Executive
Director of Gateway Economic
Development Corp. of Greater
Cleveland (sports and related
facilities public development
company).
- -----------------------------------------------------------------------------------------------------------------
David H. Gunning Trustee Chairman, President and
1001 Lakeside Avenue Chief Executive Officer of
Cleveland, Ohio 44114 Capitol American Financial
Corporation (insurance
Age: 53 company) since February, 1993;
prior thereto, partner of
Jones, Day, Reavis & Pogue
(law firm).
- -----------------------------------------------------------------------------------------------------------------
Ivan J. Winfield Trustee Retired since October, 1994;
30901 Ainsworth Drive prior thereto, Managing
Pepperpike, Ohio 44124 Partner, Coopers & Lybrand,
Northeast Ohio (certified
Age: 61 public accounting firm).
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
NAME, BUSINESS POSITIONS(S) HELD PRINCIPAL OCCUPATION(S)
ADDRESS AND AGE WITH THE TRUST DURING PAST FIVE YEARS
=================================================================================================================
<S> <C> <C>
James A. Yockey Vice President Director of Distribution of
4000 Chester Avenue Roulston & Company, Inc.
Cleveland, Ohio 44103 since January, 1996; From
September, 1988 to January,
Age: 49 1995, Regional Vice
President/Senior Vice
President, Alliance Capital
Management (mutual funds).
- -----------------------------------------------------------------------------------------------------------------
Michele R. Fogarty Treasurer Since February 1996, Director
4000 Chester Avenue of Finance, Controller and
Cleveland, Ohio 44103 Treasurer of Roulston &
Company, Inc; January, 1994
Age: 35 to February, 1996, Vice-
President-Accounting &
Operations, Controller for
Carnegie Capital Management
Co. and Treasurer of Carnegie
Funds Group; prior thereto,
Assistant Vice President and
Assistant Treasurer for
Carnegie Capital Management
Co. (financial services/mutual
fund companies).
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 50
<TABLE>
<S> <C> <C>
Kathryn G. Balazs Secretary Since August, 1994, Senior
4000 Chester Avenue Vice President and Director of
Cleveland, Ohio 44103 Mutual Funds Administrations
, Roulston & Company, Inc.; from
Age: 49 February, 1992 to August,
1994, Independent Brokerage
and Insurance Consultant; from
July, 1991, to February, 1992,
Administrative Manager for
Birchfield Homes, Inc.
(residential home builders);
prior thereto, Vice President of
American Express Information
Services/The Shareholder
Services Group, Inc.
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
NAME, BUSINESS POSITIONS(S) HELD PRINCIPAL OCCUPATION(S)
ADDRESS AND AGE WITH THE TRUST DURING PAST FIVE YEARS
=================================================================================================================
<S> <C> <C>
John P. Norton Assistant Treasurer Since September, 1986,
4000 Chester Avenue Vice President and Assistant
Cleveland, Ohio 44103 Secretary of Roulston &
Company, Inc.
Age: 30
- -----------------------------------------------------------------------------------------------------------------
Kristin Hay Ives, Esq. Assistant Secretary Partner of the law firm of
Capitol Square, Suite 2110 Baker & Hostetler, counsel
65 East State Street to the Trust
Columbus, Ohio 43215
Age: 35
</TABLE>
The Trust pays the fees for unaffiliated Trustees (currently $1,000 per
Board meeting attended and $4,000 per year retainer). The officers and
affiliated Trustee of the Trust receive no compensation for such services, but
as employees of Roulston receive compensation from Roulston.
The following table sets forth information regarding the total
compensation paid by the Trust to its Trustees for their services as Trustees
during the fiscal year ended October 31, 1995. The Trust has no pension or
retirement plans.
COMPENSATION TABLE:
<TABLE>
<CAPTION>
NAME AND POSITION AGGREGATE ESTIMATED TOTAL COMPENSATION
WITH THE TRUST COMPENSATION FROM THE TRUST AND
FROM THE TRUST THE FUND COMPLEX *
============================================================================================================
<S> <C> <C>
Scott D. Roulston,
Chairman $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------
Thomas V. Chema,
Trustee $10,000 $10,000
- ------------------------------------------------------------------------------------------------------------
David H. Gunning,
Trustee $10,000 $10,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
NAME AND POSITION AGGREGATE ESTIMATED TOTAL COMPENSATION
WITH THE TRUST COMPENSATION FROM THE TRUST AND
FROM THE TRUST THE FUND COMPLEX *
============================================================================================================
<S> <C> <C>
Ivan J. Winfield,
Trustee $10,000 $10,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* For purposes of this Table, Fund Complex means one or more mutual
funds, including the Funds, which have a common investment adviser or affiliated
investment advisers or which hold themselves out to the public as being related.
The Funds are currently the only members of their Fund Complex.
As of the date hereof, all Trustees and Officers of the Trust, as a
group, owned fewer than one percent of the shares of each of the Funds.
PRINCIPAL HOLDERS OF SECURITIES
Listed below are the names and addresses of those shareholders and
accounts who, as of February 1, 1996, owned 5% or more of the shares of each
Fund.
FAIRPORT MIDWEST GROWTH FUND:
<TABLE>
<CAPTION>
SHAREHOLDER(S) PERCENTAGE OWNED
<S> <C>
National City Bank, N.A. 5.28%
TRST Akron Porcelain & Plastics
Profit Sharing Plan
P.O. Box 94777
Cleveland, Ohio 44101
FAIRPORT GROWTH AND INCOME FUND:
<CAPTION>
SHAREHOLDER(S) PERCENTAGE OWNED
<S> <C>
Thomas H. Roulston II 10.95%
TRST Martha M. Barr Trust
2627 Fairmont Blvd.
Cleveland, Ohio 44106
</TABLE>
<PAGE> 53
<TABLE>
<S> <C>
Liqui Box Corp. EMP PSP 5.29%
William McBee Trustee
c/o The Hampton Company
320 Springside Drive
Suite 350
Akron, Ohio 44333
FAIRPORT GOVERNMENT SECURITIES FUND:
<CAPTION>
SHAREHOLDER(S) PERCENTAGE OWNED
<S> <C>
Thomas H. Roulston II 23.64%
TRST Martha M. Barr Trust
2627 Fairmont Blvd.
Cleveland, Ohio 44106
Liqui Box Corp. EMP PSP 12.68%
William McBee Trustee
c/o The Hampton Company
320 Springside Drive
Suite 350
Akron, Ohio 44333
Charles Schwab & Co., Inc. 6.58%
Special Custody A/C for BNFT CUST
101 Montgomery Street
San Francisco, CA 94104
National City Bank, N.A. 5.83%
TRST Akron Porcelain & Plastics
Profit Sharing Plan
P.O. Box 94777
Cleveland, Ohio 44101
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
THE INVESTMENT ADVISER
The Trust and Roulston have entered into an Investment Advisory
Agreement (the "Advisory Agreement") dated as of January 20, 1995. Pursuant to
the Advisory Agreement, Roulston has agreed to provide investment advisory
services to the Funds as described in the Prospectus. Prior subsequent to the
effective date of the Reorganization, the Advisory Agreement will be approved by
the initial shareholder of each Fund.
The Advisory Agreement provides that if, for any fiscal year, the ratio
of expenses of any
<PAGE> 54
Fund (including amounts payable to Roulston but excluding interest, taxes,
brokerage, litigation, and other extraordinary expenses) exceeds limitations
established by any state in which the shares of such Fund are registered,
Roulston will bear the amount of such excess. Roulston will not be required to
bear expenses of the Fund to an extent which would result in a Fund's inability
to qualify as a regulated investment company under provisions of the Internal
Revenue Code of 1986, as amended (the "Code").
Unless sooner terminated, the Advisory Agreement with respect to a Fund
continues in effect until January 20, 1997, and thereafter continues for
successive one-year periods ending January 20 of each year if such continuance
is approved at least annually by the Trust's Board of Trustees or by vote of a
majority
of the outstanding shares of that Fund (as defined under "ADDITIONAL INFORMATION
- -- Vote of a Majority of the Outstanding Shares" below), and a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons (as
defined in the 1940 Act) of any party to the Advisory Agreement by votes cast in
person at a meeting called for such purpose. The Advisory Agreement is
terminable as to a Fund at any time on 60 days' written notice without penalty
by the Trustees, by vote of a majority of the outstanding shares of that Fund,
or by Roulston. The Advisory Agreement also terminates automatically in the
event of any assignment, as defined in the 1940 Act.
The Advisory Agreement provides that Roulston 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 performance by Roulston of its obligations under the
Advisory Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith, or negligence on the part of Roulston in the
performance of its duties, or from negligent disregard by Roulston of its duties
and obligations thereunder. Roulston from time to time may defray certain of the
administrative costs of retirement accounts in connection with such accounts'
investment in the Funds and may also pay certain costs associated with the
distribution of the Funds' shares. Such costs will not be borne by the Funds.
For the fiscal period of November 1, 1994 through October 31, 1995,
Roulston earned and voluntarily waived the amounts indicated below with respect
to its investment advisory services to the Funds, including advisory services
provided to the Acquired Funds during the first six months of such period.
<TABLE>
<CAPTION>
GROSS ADVISORY NET
FUND ADVISORY FEES ADVISORY
FEES EARNED WAIVED FEES RECEIVED
=============================================================================================
<S> <C> <C> <C>
MIDWEST GROWTH FUND $341,934 $ 61,126 $280,808
- -------------------------------------------------------------------------------------------
GROWTH & INCOME FUND $175,714 $ 58,630 $117,084
- -------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND $ 29,634 $ 29,634 $ 0
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 55
<TABLE>
<S> <C> <C> <C>
TOTALS $547,282 $149,390 $397,892
- -------------------------------------------------------------------------------------------
</TABLE>
Roulston earned the following fees for investment advisory services
provided to the Acquired Funds during the fiscal period of November 1, 1993 to
October 31, 1994 and July 1, 1993 to October 31, 1993:
(11/01/93 to 10/31/94)
<TABLE>
<CAPTION>
GROSS ADVISORY NET
FUND ADVISORY FEES ADVISORY
FEES EARNED WAIVED FEES RECEIVED
================================================================================================
<S> <C> <C> <C>
MIDWEST GROWTH FUND $188,000 $16,000 $172,000
- ------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND $127,000 $28,000 $ 99,000
- ------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND $ 32,000 $32,000 $ 0
- ------------------------------------------------------------------------------------------------
TOTALS $347,000 $76,000 $271,000
- ------------------------------------------------------------------------------------------------
</TABLE>
(7/01/93 to 10/31/93)
<TABLE>
<CAPTION>
GROSS ADVISORY NET
FUND ADVISORY FEES ADVISORY
FEES EARNED WAIVED FEES RECEIVED
================================================================================================
<S> <C> <C> <C>
MIDWEST GROWTH FUND $23,000 $23,000 $0
- ------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND $24,000 $24,000 $0
- ------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND $ 9,000 $9,000 $0
- ------------------------------------------------------------------------------------------------
TOTALS $56,000 $56,000 $0
- ------------------------------------------------------------------------------------------------
</TABLE>
THE ADMINISTRATOR
The Trust and Fund/Plan Services, Inc. ("Fund/Plan"), the
Administrator, #2 West Elm Street, Conshohocken, Pennsylvania 19428, have
entered into an administration agreement dated January 20, 1995 (the
"Administration Agreement"). The Administration Agreement provides that the
Administrator 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 the
Administration Agreement
<PAGE> 56
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder. The
Administration Agreement shall remain in effect for a period of two years after
its effective date and shall continue in effect for successive periods of two
years unless terminated by either party on not less than 180 days' prior written
notice to the other party.
The Administrator assists in supervising all operations of each Fund
(other than those performed by Roulston under the Advisory Agreement, by UMB
Bank, N.A. under the Custodian Agreement and by the Administrator under the
Accounting Services Agreement, the Transfer Agent Services Agreement and the
Custody Administration and Agency Agreement).
Under the Administration Agreement, the Administrator has agreed to
furnish statistical and research data, clerical, and certain bookkeeping
services; prepare the periodic reports to the Securities and Exchange Commission
(the "Commission") on Form N-SAR or any replacement forms therefor; prepare
compliance filings pursuant to state securities laws with the advice of the
Trust's counsel; assist to the extent requested by the Trust with the Trust's
preparation of its Annual and Semi-Annual Reports to
Shareholders and its Registration Statement (on Form N-1A or any replacement
therefor); compile data for, prepare and file timely Notices to the Commission
required pursuant to Rule 24f-2 under the 1940 Act; keep and maintain the
financial accounts and records of each Fund, including calculation of daily
expense accruals; and generally assist in all aspects of the Funds' operations
other than those performed by Roulston under the Advisory Agreement, by UMB
Bank, N.A. under the Custodian Agreement and by the Administrator under the
Accounting Services Agreement, the Transfer Agent Services Agreement and the
Custody Administration and Agency Agreement.
The Administrator receives a fee from each Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement
equal to a fee, calculated daily and paid monthly, at the annual rate, subject
to a $70,000 minimum annual fee, calculated as follows:
.15% On the First $50 Million of Total Average Net Assets; .10% On the
Next $50 Million of Total Average Net Assets; and .05% Of Total Average
Net Assets in Excess of $100 Million of Average Net Assets.
The Administrator also receives certain out-of-pocket expenses.
Since the Reorganization, for the fiscal period of May 1, 1995 through
October 31, 1995, the Administrator earned the following amounts with respect to
administrative services provided to the Funds:
<TABLE>
<CAPTION>
ADMINISTRATIVE
FUND FEES PAID
TO FUND/PLAN
=======================================================
<S> <C>
MIDWEST GROWTH FUND $33,600
</TABLE>
<PAGE> 57
<TABLE>
<S> <C>
GROWTH AND INCOME FUND $16,895
GOVERNMENT SECURITIES FUND $ 7,516
TOTAL $58,011
</TABLE>
TRANSFER AGENT AND FUND ACCOUNTANT
The Trust has entered into a Transfer Agent Services Agreement dated as
of January 20, 1995 (the "Transfer Agent Agreement"), with Fund/Plan (the
"Transfer Agent"), pursuant to which Fund/Plan has agreed to act as the transfer
and dividend disbursing agent for each Fund. Pursuant to the Transfer Agent
Agreement, the Transfer Agent, among other things, performs the following
services in connection with each Fund's shareholders of record: maintenance of
shareholder records for each of the Trust's shareholders of record; processing
shareholder purchase, redemption and exchange orders; processing transfers of
shares of the Trust on the shareholder files and records; processing dividend
payments and reinvestments; generating account statements; and assistance in the
mailing of shareholder reports and proxy solicitation materials.
In addition, the Transfer Agent provides certain fund accounting
services to each of the Funds pursuant to an Accounting Services Agreement dated
as of January 20, 1995. Such services include maintaining the accounting books
and records for each Fund, including journals containing an itemized daily
record of all purchases and sales of portfolio securities, all receipts and
disbursements of cash and all other debits and credits, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital, income and expense
accounts, including interest accrued and interest received, and other required
separate ledger accounts; maintaining a monthly trial balance of all ledger
accounts; performing certain accounting services for each Fund, including
calculation of the net asset value per share, calculation of the dividend and
capital gain distributions, if any, and of yield, reconciliation of cash
movements with such Fund's Custodian, affirmation to that Fund's Custodian of
all portfolio trades and cash settlements, verification and reconciliation with
that Fund's Custodian of all daily trade activity; providing certain reports;
obtaining dealer quotations, prices from a pricing service or matrix prices on
all portfolio securities in order to mark the portfolio to the market; and
preparing an interim balance sheet, statement of income and expense, and
statement of changes in net assets for each Fund. In consideration for such
services, each Fund has agreed to pay the Transfer Agent a fee, computed daily
and paid periodically, at an annual rate calculated as follows:
$24,000 Minimum to $20 Million of Average Net Assets; .04% On the Next
$30 Million of Average Net Assets; .03% On the Next $50 Million of
Average Net Assets; .01% Over $100 Million of Average Net Assets.
THE DISTRIBUTOR
Roulston Research Corp. (the "Distributor"), a wholly owned subsidiary
of Roulston, and the Trust are parties to a distribution agreement dated January
20, 1995 (the "Distribution
<PAGE> 58
Agreement"). The Distributor will receive no compensation under the Distribution
Agreement for distribution of shares of the Funds, but will receive payments
under the Trust's Distribution and Shareholder Service Plan and Agreement
described below.
The Distribution Agreement shall remain in effect until January 20,
1997, and thereafter continues for successive one-year periods if approved at
least annually (i) by the Trust's Board of Trustees or by the vote of a majority
of the outstanding shares of the Trust, and (ii) by the vote of a majority of
the Trustees of the Trust who are not parties to the Distribution Agreement or
interested persons (as defined in the 1940 Act) of any party to the Distribution
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated in the event of any
assignment, as defined in the 1940 Act.
In its capacity as Distributor, the Distributor solicits orders for the
sale of shares, advertises and pays the costs of advertising, office space and
the personnel involved in such activities.
DISTRIBUTION AND SHAREHOLDERS SERVICE PLAN
As described in the Prospectus, the Trust has adopted a Distribution
and Shareholder Service Plan and Agreement (the "Plan") pursuant to Rule 12b-1
under the 1940 Act under which each Fund is authorized to pay the Distributor
for payments it makes to broker-dealers, banks and other institutions
(collectively, "Participating Organizations") for providing distribution or
shareholder service assistance or for distribution assistance and/or shareholder
service provided by the Distributor. Payments to such Participating
Organizations may be made pursuant to agreements entered into with the
Distributor. The Plan authorizes each Fund to make payments to the Distributor
in an amount not in excess, on an annual basis, of 0.25% of the average daily
net asset value of that Fund.
As required by Rule 12b-1, the Plan was approved by the initial sole
shareholder of each Fund and by the Board of Trustees, including a majority of
the Trustees who are not interested persons of that Fund and who have no direct
or indirect financial interest in the operation of the Plan (the "Independent
Trustees"). The Plan may be terminated as to a Fund by vote of a majority of the
Independent Trustees, or by vote of majority of the outstanding shares of that
Fund. Any change in the Plan that would materially increase the distribution
cost to a Fund requires shareholder approval. The Trustees review quarterly a
written report of such costs and the purposes for which such costs have been
incurred. The Plan may be amended by vote of the Trustees, including a majority
of the Independent Trustees, cast in person at a meeting called for that
purpose. For so long as the Plan is in effect, selection and nomination of those
Trustees who are not interested persons of the Trust shall be committed to the
discretion of such disinterested persons. All agreements with any person
relating to the implementation of the Plan with respect to a Fund may be
terminated at any time on 60 days' written notice without payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of the
majority of the outstanding shares of such Fund.
The Plan will continue in effect for successive one-year periods,
provided that each such
<PAGE> 59
continuance is specifically approved (i) by the vote of a majority of the
Independent Trustees, and (ii) by a vote of a majority of the entire Board of
Trustees cast in person at a meeting called for that purpose. The Board of
Trustees has a duty to request and evaluate such information as may be
reasonably necessary for them to make an informed determination of whether the
Plan should be implemented or continued. In addition the Trustees in approving
the Plan must determine that there is a reasonable likelihood that the Plan will
benefit the Funds and their shareholders.
The Board of Trustees of the Trust believes that the Plan is in the
best interests of the Funds since it encourages Fund growth and retention of
Fund assets. As a Fund grows in size, certain expenses, and therefore total
expenses per share, may be reduced and overall performance per share may be
improved.
As authorized by the Plan, the Distributor has agreed to provide
certain shareholder services in connection with shares purchased and held by the
Distributor for the accounts of its customers and shares purchased and held by
customers of the Distributor directly, including, but not limited to, answering
shareholder questions concerning the Funds, providing information to
shareholders on their investments in the Funds and providing such personnel and
communication equipment as is necessary and appropriate to accomplish such
matters. In consideration of such services the Trust, on behalf of each Fund,
has agreed to pay the Distributor a monthly fee, computed at the annual rate of
.25% of the average aggregate net asset value of shares of that Fund held during
the period in customer accounts for which the Distributor has provided services
under the Plan. For the fiscal period from May 1, 1995 through October 31, 1995,
such fees totaled $ 96,650 . The amounts incurred with respect to each Fund
during such period are set forth below:
<PAGE> 60
<TABLE>
<CAPTION>
AMOUNTS
FUND INCURRED
PURSUANT
TO 12B-1 PLAN
==================================================================
<S> <C>
MIDWEST GROWTH FUND $58,561
GROWTH AND INCOME FUND $27,717
GOVERNMENT SECURITIES FUND $10,372
TOTAL $96,650
</TABLE>
In addition, the Distributor may enter into, from time to time, Rule
12b-1 Agreements with selected dealers pursuant to which such dealers will
provide certain shareholder services including, but not limited to, those
discussed above.
THE CUSTODIAN
UMB Bank, N.A., 928 Grand Avenue, Kansas City, Missouri 64141, has been
selected to serve as the Funds' Custodian pursuant to the Custody Agreement
dated January 20, 1995. In such capacity the Custodian will hold or arrange for
the holding of all portfolio securities and other assets of the Funds.
LEGAL COUNSEL AND INDEPENDENT AUDITORS
Baker & Hostetler, 65 East State Street, Columbus, Ohio 43215, is
counsel to the Trust and will pass upon the legality of the shares offered
thereby. The Trust has selected Ernst & Young LLP, 1300 Huntington Building, 925
Euclid Avenue, Cleveland, Ohio 44115-1405, as independent auditors for the
Funds. The financial statements for the Funds at and for the fiscal year ended
October 31, 1995, appearing as Appendix "B" in this Statement of Additional
Information have been audited by Ernst & Young LLP as set forth in their report
attached thereto and are included in reliance upon such report and on the
authority of such firm as experts in auditing and accounting.
EXPENSES
If total expenses borne by any of the Funds in any fiscal year exceed
expense limitations imposed by applicable state securities regulations, Roulston
will reimburse that Fund by the amount of such excess. As of the date of this
Statement of Additional Information, the most restrictive expense limitation
applicable to the Funds limits each Fund's aggregate annual expenses, including
management and advisory fees but excluding interest, taxes, brokerage
commissions and certain other expenses, to 2 1/2% of the first $30 million of a
Fund's average net assets, 2% of the next $70 million of such Fund's average net
assets, and 1 1/2% of such Fund's remaining average net assets. Any expense
reimbursements will be estimated daily and reconciled and paid on a monthly
basis. Fees imposed upon customer accounts by Roulston or
<PAGE> 61
its affiliates for brokerage or other cash management services would not be
included within Fund expenses for purposes of any such expense limitation.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
PORTFOLIO TRANSACTIONS
Roulston is authorized to select brokers and dealers to effect
securities transactions for the Funds. Roulston will seek to obtain the most
favorable net results by taking into account various factors, including price,
commission, if any, size of the transactions and difficulty of executions, the
firm's general execution and operational facilities and the firm's risk in
positioning the securities involved. While Roulston generally seeks reasonably
competitive spreads or commissions, a Fund will not necessarily be paying the
lowest spread or commission available. Roulston seeks to select brokers or
dealers that offer a Fund best price and execution or other services which are
of benefit to the Fund.
BROKERAGE COMMISSIONS
Roulston may, consistent with the interests of the Funds, select
brokers on the basis of the research services they provide to Roulston. Such
services may include analyses of the business or prospects of a company,
industry or economic sector, or statistical and pricing services. Information so
received by Roulston will be in addition to and not in lieu of the services
required to be performed by Roulston under the Advisory Agreement. If, in the
judgment of Roulston, a Fund or other accounts managed by Roulston will be
benefitted by supplemental research services, Roulston is authorized to pay
brokerage commissions to a broker furnishing such services which are in excess
of commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing portfolio
performance evaluation and technical market analyses. The expenses of Roulston
will not necessarily be reduced as a result of the receipt of such supplemental
information, such services may not be used exclusively, or at all, with respect
to the Fund or account generating the brokerage, and there can be no guarantee
that Roulston will find all of such services of value in advising the Funds.
It is expected that the Funds may execute brokerage or other agency
transactions through the Distributor which is a registered broker/dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934
and rules promulgated by the Commission.
Under these provisions, the Distributor is permitted to receive and
retain compensation for effecting portfolio transactions for a Fund on an
exchange if written procedures approved by
<PAGE> 62
the Trust's Board of Trustees are in effect expressly permitting the Distributor
to receive and retain such compensation. The rules of the Commission and such
procedures further require that commissions paid to the Distributor by a Fund
for exchange transactions not exceed "usual and customary" brokerage
commissions. "Usual and customary" commissions are defined to include amounts
which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." In addition, a Fund
may direct commission business to one or more designated broker/dealers,
including the Distributor, in connection with such broker/dealer's payment of
certain of a Fund's or the Trust's expenses. The Trustees, including those who
are not "interested persons" of the Trust, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically.
Since the Reorganization, for the fiscal period of May 1, 1995 through
October 31, 1995, brokerage commissions paid by the Trust on behalf of the Funds
amounted to $ 71,140 . The total brokerage commissions attributable to each Fund
are set forth below.
<TABLE>
<CAPTION>
5/01/95
FUND TO
10/31/95
=============================================================
<S> <C>
MIDWEST GROWTH FUND $63,257
GROWTH & INCOME FUND $ 7,883
GOVERNMENT SECURITIES FUND $ 0,000
TOTALS $71,140*
</TABLE>
* Of this amount, $68,731 was paid to Roulston Research Corp. ("RRC"), an
affiliate of Roulston, which represents 97% of the total commissions paid by the
Trust to all brokers through whom trades were placed during the period.
Prior to the Reorganization, the Trust paid the following brokerage
commissions on behalf of the Funds during the period shown:
<TABLE>
<CAPTION>
11/01/94
FUND TO
4/30/95
===============================================================
<S> <C>
MIDWEST GROWTH FUND $78,378
GROWTH & INCOME FUND $ 6,877
</TABLE>
<PAGE> 63
<TABLE>
<S> <C>
GOVERNMENT SECURITIES FUND $ 0,000
TOTALS $85,255
</TABLE>
It is not the Funds' practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, Roulston may place portfolio orders with qualified
broker/dealers who recommend such Funds' shares to clients, and may, when a
number of brokers and dealers can provide best net results on a particular
transaction, consider such recommendations by a broker or dealer in selecting
among broker/dealers.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Trust is calculated by dividing
the lesser of that Fund's purchases or sales of portfolio securities for the
year by the monthly average value of the portfolio securities. The calculation
excludes all securities whose remaining maturities at the time of acquisition
were one year or less.
The portfolio turnover rates for the fiscal years ended October 31,
1995 and 1994, for the MIDWEST GROWTH FUND were 46.51% and 77.57%, respectively;
for the GROWTH AND INCOME FUND were 13.36% and 35.16%, respectively; and for the
GOVERNMENT FUND were 1.28% and 24.14%, respectively. The portfolio turnover rate
for a Fund may vary greatly from year to year as well as within a particular
year, and may also be affected by cash requirements for redemptions of Shares.
Portfolio turnover will not be a limiting factor in making investment decisions.
NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund is
determined and the shares of each Fund are priced as of the earlier of 4:00
p.m., Eastern Time, or the time the New York Stock Exchange (the "Exchange")
closes, on each Business Day. A "Business Day" is any day the Exchange is open
for business. Currently the Exchange is closed in observance of the following
holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
Equity securities which are listed or admitted to trading on a national
securities exchange will be valued at the last sales price on the exchange on
which the security is principally traded. Equity securities for which there is
no sale on that day and equity securities traded only in the over-the-counter
market will be valued at their closing bid prices obtained from one or more
<PAGE> 64
dealers making markets for such securities or, if market quotations are not
readily available, at their fair values a determined in good faith by the Board
of Trustees.
Valuations of fixed and variable income securities ("debt securities")
are supplied by independent pricing services used by Fund/Plan, as
administrator, which have been approved by the Trustees of the Trust. Valuations
are based upon a consideration of yields or prices of obligations of comparable
quality, coupon, maturity and type, indications at to value from recognized
dealers, and general market conditions. The pricing services may use electronic
data processing techniques and/or a computerized matrix system to determine
valuations. Debt securities for which market quotations are readily available
are valued based upon those quotations. The procedures used by the pricing
service are reviewed by the officers of the Trust under the general supervision
of the Trustees. The Trustees may deviate from the valuation provided by the
pricing service whenever, in their judgment, such valuation is not indicative of
the fair value of the debt security. In such instances the debt security will be
valued at fair value as determined in good faith by or under the direction of
the Trustees.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Funds' shares may be purchased at the public offering price, which
is the net asset value next computed, and are sold on a continuous basis through
the Distributor, principal underwriter of the Funds' shares, at its address and
number set forth above, and through other broker-dealers who are members of the
National Association of Securities Dealers, Inc.
The Trust may suspend the right of redemption or postpone the date of
payment for shares during any period when (a) trading on the Exchange is
restricted by applicable rules and regulations of the Commission, (b) the
Exchange is closed for other than customary weekend and holiday closings, (c)
the Commission has by order permitted such suspension, or (d) an emergency
exists as a result of which (i) disposal by the Trust of securities owned by it
is not reasonably practical or (ii) it is not reasonably practical for the Trust
to determine the fair value of its net assets.
TAXES
Each Fund intends to qualify as a "regulated investment company" under
the Code for so long as such qualification is in the best interest of that
Fund's shareholders. In order to qualify as a regulated investment company, a
Fund must, among other things: derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other dispo sition of securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies; derive less than 30% of its gross income from the
sale or other disposition of stock, securities, options, future contracts or
foreign currencies held less than three months; and diversify its investments
within certain prescribed limits. In addition, to utilize the tax provisions
specially applicable to regulated
<PAGE> 65
investment companies, a Fund must distribute to its shareholders at least 90% of
its investment company taxable income for the year. In general, a Fund's
investment company taxable income will be its taxable income subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
ordinary income for the calendar year plus 98% of their capital gain net income
for the one-year period ending on October 31 of such calendar year. The balance
of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, such
Fund would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although each Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located, or in which it is otherwise deemed to be conducting business, a Fund
may be subject to the tax laws of such states or localities. In addition, if for
any taxable year a Fund does not qualify for the special tax treatment afford ed
regulated investment companies, all of its taxable income will be subject to
Federal tax at regular corporate rates (without any deduction for distributions
to its shareholders). In such event, dividend distributions would be taxable to
shareholders to the extent of earnings and profits, and would be eligible for
the dividends received deduction for corporations.
It is expected that each Fund will distribute annually to shareholders
all or substantially all of that Fund's net ordinary income and net realized
capital gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to shareholders for Federal income
tax purposes, even if paid in additional shares of the Fund and not in cash.
Distribution by a Fund of the excess of net long-term capital gain over
net short-term capital loss is taxable to shareholders as long-term capital gain
in the year in which it is received, regardless of how long the shareholder has
held the shares. Such distributions are not eligible for the dividends-received
deduction.
Federal taxable income of individuals is subject to graduated tax rates
of 15%, 28%, 31%, 36% and 39.6%. Further, the marginal tax rate may be in excess
of 39.6%, because adjustments reduce or eliminate the benefit of the personal
exemption and itemized deductions for individuals with gross income in excess of
certain threshold amounts.
Capital gains of individuals are subject to tax at the same rates
applicable to ordinary income; however, the tax rate on long-term capital gains
of individuals cannot exceed 28%. Capital losses may be used to offset capital
gains. In addition, individuals may deduct up to $3,000 of net capital loss each
year to offset ordinary income. Excess net capital loss may be carried forward
to future years.
<PAGE> 66
Federal taxable income of corporations in excess of $75,000 up to $10
million is subject to a 34% tax rate; however, because the benefit of lower tax
rates on a corporation's taxable income of less than $75,000 is phased out for
corporations with income in excess of $100,000 but lower than $335,000, a
maximum marginal tax rate of 39% may result. Federal taxable income of
corporations in excess of $10 million is subject to a tax rate of 35%. Further,
a corporation's Federal taxable income in excess of $15 million is subject to an
additional tax equal to 3% of taxable income over $15 million, but not more than
$100,000.
Capital gains of corporations are subject to tax at the same rates
applicable to ordinary income. Capital losses may be used only to offset capital
gains and excess net capital loss may be carried back three years and forward
five years.
Certain corporations are entitled to a 70% dividends received deduction
for distributions from certain domestic corporations. Each Fund will designate
the portion of any distributions which qualify for the 70% dividends received
deduction. The amount so designated may not exceed the amount received by that
Fund for its taxable year that qualifies for the dividends received deduction.
Foreign taxes may be imposed on a Fund by foreign countries with
respect to its income from foreign securities. Since less than 50% in value of
any one Fund's total assets at the end of its fiscal year are expected to be
invested in stocks or securities of foreign corporations, such Fund will not be
entitled under the Code to pass through to its shareholders their pro-rata share
of the foreign taxes paid by the Fund. These taxes will be taken as a deduction
by such Fund.
Each Fund may be required by Federal law to withhold and remit to the
U.S. Treasury 31% of taxable dividends, if any, and capital gain distributions
paid to any shareholder, and the proceeds of redemption or the values of any
exchanges of shares of a Fund, if such shareholder (1) fails to furnish the
Trust with a correct tax identification number, (2) under-reports dividend or
interest income, or (3) fails to certify to the Fund that he or she is not
subject to such withholding. An individual's taxpayer identification number is
his or her Social Security Number.
Information set forth in the Prospectus and this Statement of
Additional Information which relates to Federal taxation is only a summary of
some of the important Federal tax considerations generally affecting purchasers
of shares of a Fund. No attempt has been made to present a detailed explanation
of the Federal income tax treatment of a Fund or its shareholders and this
discussion is not intended as a sub stitute for careful tax planning.
Accordingly, potential purchasers of shares of a Fund are urged to consult their
tax advisers with specific reference to their own tax situation. In addition,
the tax discussion in the Prospectus and this Statement of Additional
Information is based on tax laws and regulations which are in effect on the date
of the Prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action. As of the
date hereof, several proposals have
<PAGE> 67
been introduced by the 104th Congress which, if enacted, could affect much of
the information contained in this section. However, it is not possible at this
time to assess which, if any, of such proposals will be acted upon and the
effect thereof, if any, on this information.
PERFORMANCE INFORMATION
YIELD
As summarized in the Prospectus under the heading "PERFORMANCE OF THE
FUNDS," the yield of a Fund will be computed by annualizing net investment
income per share for a recent 30-day period and dividing that amount by a
share's maximum offering price (reduced by any undeclared earned income expected
to be paid shortly as a dividend) on the last trading day of that period. Net
investment income will reflect amortization of any market value premium or
discount of fixed income securities (except for obligations backed by mortgages
or other assets) and may include recognition of a pro rata portion of the stated
dividend rate of dividend paying portfolio securities. The yield of a Fund will
vary from time to time depending upon market conditions, the composition of the
Fund's portfolio and operating expenses of the Trust allocated to the Fund.
These factors and possible differences in the methods used in calculating yield
should be considered when comparing a Fund's yield to yields published for other
investment companies and other investment vehicles. Yield should also be
considered relative to changes in the value of a Fund's shares and to the
relative risks associated with the investment objective and policies of such
Fund.
For the 30-day period ended October 31, 1995, the yields for FAIRPORT
MIDWEST GROWTH FUND, FAIRPORT GROWTH AND INCOME FUND and FAIRPORT GOVERNMENT
SECURITIES FUND were 0.21%, 1.19% and 4.99%, respectively.
CALCULATION OF TOTAL RETURN
Each quotation of average annual total return will be computed by
finding the average annual com pounded rate of return over that period which
would equate the value of an initial amount of $1,000 invested in a Fund equal
to the ending redeemable value, according to the following formula:
P((T + 1)to the Nth power)= ERV
Where: P = a hypothetical initial payment of $1,000, T = average annual
total return, n = number of years, and ERV = ending redeemable value of a
hypothetical $1,000 payment at the beginning of the period at the end of the
period for which average annual total return is being calculated assuming a
complete redemption. The calculation of average annual total return assumes the
deduction of the maximum sales charge, if any, from the initial investment of
$1,000, assumes the reinvestment of all
<PAGE> 68
dividends and distributions at the price stated in the then effective Prospectus
on the reinvestment dates during the period and includes all recurring fees that
are charged to all Shareholder accounts assuming such Fund's average account
size. Aggregate total return is a measure of change in value of an investment in
a Fund over the relevant period and is calculated similarly to average annual
total return except that the result is not annualized.
For the one year period ended October 31, 1995, and the period from
July 1, 1993 (commencement of operations) through October 31, 1995, the average
annual total returns for the Funds were as follows:
<TABLE>
<CAPTION>
7/01/93 11/01/94
FUND TO TO
10/31/95 10/31/95
===================================================================================
<S> <C> <C>
MIDWEST GROWTH FUND 17.34% 18.17%
GROWTH & INCOME FUND 11.07% 17.36%
GOVERNMENT SECURITIES FUND 4.03% 14.76%
</TABLE>
At any time in the future, yields and total return may be higher or
lower than past yields and total return and there can be no assurance that any
historical results will continue. Investors in the Funds are specifically
advised that Share prices, expressed as the net asset values per share, will
vary just as yields and total return will vary.
PERFORMANCE COMPARISONS
Investors may also judge the performance of a Fund by comparing its
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices and to data prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc. and Ibbotson Associates of Chicago, Illinois. Comparison may
also be made to indices or data published in various financial and business
publications and periodicals. In addition to performance information, general
information about the Funds that appears in a publication such as those
mentioned above may be included in advertisements and in reports to
shareholders.
OTHER INFORMATION
DESCRIPTION OF SHARES
The Trust is an Ohio business trust. The Trust was organized on
September 16, 1994, and the Trust's Declaration of Trust was filed with the
Secretary of State of Ohio on September 19, 1994. The Declaration of Trust
authorizes the Board of Trustees to issue an unlimited
<PAGE> 69
number of shares, which are units of beneficial interest, without par value. The
Trust presently has three series of shares, which represent interests in the
Funds. The Trust's Declaration of Trust authorizes the Board of Trustees to
divide or redivide any unissued shares of the Trust into one or more additional
series by setting or changing in any one or more respects their respective
preferences, conversion or other rights, voting power, restrictions, limitations
as to dividends, qualifications, and terms and conditions of redemption.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectus and this
Statement of Additional Information, a Fund's shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Fund, of any general assets not
belonging to any particular Fund which are available for distribution. As used
in the Prospectus and in this Statement of Additional Information, "assets
belonging to a Fund" means the consideration received by a Fund upon the
issuance or sale of shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale, exchange, or liquidation of such investments, and any
funds or amounts derived from any reinvestment of such proceeds, and any general
asset of the Trust not readily identified as belonging to a particular Fund that
is allocated to the Fund by the Trust's Board of Trustees. The Board of Trustees
may allocate such general assets in any manner it deems fair and equitable.
Determinations by the Board of Trustees of the Trust as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to the Funds are
conclusive.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each series affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding shares of a series will be required in
connection with a matter, a series will be deemed to be affected by a matter
unless it is clear that the interests of each series in the matter are
identical, or that the matter does not affect any interest of the series. Under
Rule 18f-2, the approval of any amendment to the Advisory Agreement or any
change in investment policy submitted to shareholders would be effectively acted
upon with respect to a series only if approved by a majority of the outstanding
shares of such series. However, Rule 18f-2 also provides that the ratification
of independent public accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Trust voting without regard to series.
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES
As used in the Prospectus and this Statement of Additional Information,
"vote of a majority of the outstanding shares" of the Trust or a Fund, means the
affirmative vote, at an
<PAGE> 70
annual or special meeting of shareholders duly called, of the lesser of (a) 67%
or more of the votes of shareholders of the Trust or that Fund present at such
meeting at which the holders of more than 50% of the votes attributable to the
shareholders of record of the Trust or that Fund are represented in person or by
proxy, or (b) the holders of more than 50% of the outstanding votes of
shareholders of the Trust or such Fund.
MISCELLANEOUS
Individual Trustees are elected by the shareholders and, subject to
removal by the vote of two-thirds of the Board of Trustees, serve for a term
lasting until the next meeting of shareholders at which Trustees are elected.
Such meetings are not required to be held at any specific intervals. Generally,
shareholders owning not less than 20% of the outstanding shares of the Trust
entitled to vote may cause the Trustees to call a special meeting. However, the
Trust has represented to the Commission that the Trustees will call a special
meeting for the purpose of considering the removal of one or more Trustees upon
written request therefor from shareholders owning not less than 10% of the
outstanding votes of the Trust entitled to vote and that the Trust will assist
in communications with other shareholders as required by ss.16(c) of the 1940
Act. At such a meeting, a quorum of shareholders (constituting a majority of
votes attributable to all outstanding shares of the Trust), by majority vote,
has the power to remove one or more Trustees.
The Trust is registered with the Commission as a management investment
company. Such registration does not involve supervision by the Commission of the
management or policies of the Trust.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer, or other person is authorized to
give any information or make any representation other than those contained in
the Prospectus and this Statement of Additional Information.
<PAGE> 71
APPENDIX "A"
RATINGS OF SECURITIES
COMMERCIAL PAPER RATINGS
STANDARD & POOR'S CORPORATION:
Commercial paper ratings of Standard & Poor's Corporation ("S&P") are current
assessments of the likelihood of timely payment of debts having original
maturities of no more than 365 days. Commercial paper rated "A-1" by S&P
indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to possess overwhelming
safety characteristics are denoted "A-1+." Commercial paper rated "A-2" by S&P
indicates that capacity for timely payment on issues is strong. However, the
relative degree of safety is not as high as for issues designated "A-1."
MOODY'S INVESTORS SERVICE, INC.:
The rating "Prime-1" is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Issuers rated Prime-1 (or related
supporting institutions) are considered to have a superior capacity for
repayment of short-term promissory obligations. Issuers rated "Prime-2" (or
related supporting institutions) have a strong capacity for repayment of
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of "Prime-1" rated issuers, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variations.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
FITCH INVESTORS SERVICE, INC.:
Commercial paper rated "F-1" by Fitch Investors Service, Inc. ("Fitch") is
regarded as having the strongest degree of assurance for timely payments.
Commercial paper rated "F-2" by Fitch is regarded as having an assurance of
timely payment only slightly less than the strongest rating, i.e., "F-1." The
plus (+) sign is used after a rating symbol to designate the relative position
of an issuer within the rating category.
CORPORATE DEBT RATINGS
STANDARD & POOR'S CORPORATION:
An S&P corporate debt rating is a current assessment of the creditworthiness of
an obligor with respect to a specific obligation. Debt rated "AAA" has the
highest rating assigned by S&P. Capacity to pay interest and repay principal is
extremely strong. Debt rated "AA" has a very strong capacity to pay interest and
to repay principal and differs from the highest rated issues
Appendix A-1
<PAGE> 72
only in small degree. Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories. Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories. Debt rated "BB" and "B"
is regarded as having predominantly speculative characteristics with respect to
capacity to pay interest and repay principal. "BB" indicates the least degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major exposures
to adverse conditions. Debt rated "BB" has less near-term vulnerability to
default than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic conditions
which could lead to inadequate capacity to meet timely interest and principal
payments. The "BB" rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BBB" rating. Debt rated "B" has a
greater vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The "B" rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB" or "BB-" rating.
MOODY'S INVESTORS SERVICE, INC.:
The following summarizes the six highest ratings used by Moody's for corporate
debt. Bonds that are rated "Aaa" by Moody's are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues. Bonds
that are rated "Aa" are judged to be of high quality by all standards. Together
with the "Aaa" group, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in "Aaa" securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in "Aaa" securities. Bonds that
are rated "A" by Moody's possess many favorable investment attributes and are to
be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future. Bonds that
are rated "Baa" by Moody's are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds that are rated "Ba" are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of
Appendix A-2
<PAGE> 73
position characterizes bonds in this class. Bond which are rated "B" generally
lack characteristics of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the contract over any
long period of time may be small. Moody's applies numerical modifiers (1, 2, and
3) with respect to bonds rated "Aa" through "B." The modifier 1 indicates that
the bond being rated ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
bond ranks in the lower end of its generic rating category.
Appendix A-3
<PAGE> 74
DUFF:
The following summarizes the six highest long-term debt ratings by Duff. Debt
rated "AAA" has the highest credit quality. The risk factors are negligible
being only slightly more than for risk-free U.S. Treasury debt. Debt rated "AA"
has a high credit quality and protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions. Debt rated
"A" has protection factors that are average but adequate. However, risk factors
are more variable and greater in periods of economic stress. Debt rated "BBB"
has below average protection factors but is still considered sufficient for
prudent investment. However, there is considerable variability in risk during
economic cycles. Debt rated "BB" is below investment-grade but deemed likely to
meet obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category. Debt rated "B" is below
investment-grade and possesses risk that obligations will not be met when due.
Financial protection factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists for frequent
changes in the rating within this category or into a higher or lower rating
grade. To provide more detailed indications of credit quality, the ratings from
"AA" to "B" may be modified by the addition of a plus (+) or minus (-) sign to
show relative standing within this major rating category.
FITCH:
The following summarizes the six highest long-term debt ratings by Fitch (except
for "AAA" ratings, plus(+) or minus (-) signs are used with a rating symbol to
indicate the relative position of the credit within the rating category). Bonds
rated "AAA" are considered to be investment-grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events. Bonds rated "AA" are considered to be investment-grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated "F-1+." Bonds rated as "A" are considered to be investment-grade and of
high credit quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Bonds
rated "BBB" are considered to be investment-grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings for these bonds will fall
below investment-grade is higher than for bonds with higher ratings. Bonds rated
"BB" are considered speculative. The obligor's ability to pay interest and repay
principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements. Bonds rated "B" are
considered highly speculative. While bonds in this class are currently meeting
debt service requirements, the probability of continued timely payment of
principal and interest reflects the obligor's limited margin of safety
Appendix A-4
<PAGE> 75
and the need for reasonable business and economic activity throughout the life
of the issue.
Appendix A-5
<PAGE> 76
IBCA:
The following summarizes IBCA's six highest long-term debt ratings. Obligations
rated "AAA" are those for which there is the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations rated "AA" are
those for which there is a very low expectation of investment risk. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic, or financial conditions may increase investment risk albeit
not very significantly. Obligations rated "A" are those for which there is a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk. Obligations rated "BBB" are
those for which there is currently a low expectation of investment risk.
Capacity for timely repayment of principal and interest is adequate, although
adverse changes in business, economic, or financial conditions are more likely
to lead to increased investment risk than for obligations in other categories.
Obligations rated "BB" are those for which there is a possibility of investment
risk developing. Capacity for timely repayment of principal and interest exists,
but is susceptible over time to adverse changes in business, economic or
financial conditions. Obligations rated "B" are those for which investment risk
exists. Timely repayment of principal and interest is not sufficiently protected
against adverse changes in business, economic or financial conditions.
THOMPSON:
The following summarizes Thomson's description of its six highest long-term debt
ratings (Thomson may include a plus (+) or minus (-) designation to indicate
where within the respective category the issue is placed). "AAA" is the highest
category and indicates that the ability to repay principal and interest on a
timely basis is very high. "AA" is the second highest category and indicates a
superior ability to repay principal and interest on a timely basis with limited
incremental risk versus issues rated in the highest category. "A" is the third
highest category and indicates the ability to repay principal and interest is
strong. Issues rated "A" could be more vulnerable to adverse developments (both
internal and external) than obligations with higher ratings. "BBB" is the lowest
investment-grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings. While not investment-grade, the "BB" rating suggests that the
likelihood of default is considerably less than for lower-rated issues. However,
there are significant uncertainties that could affect the ability to adequately
service debt obligations. Issuer rated "B" show a higher degree of uncertainty
and therefore greater likelihood of default that higher rated issuers. Adverse
developments could well negatively affect the payment of interest and principal
on a timely basis.
Appendix A-6
<PAGE> 77
APPENDIX "B"
~~~~~~
ANNUAL REPORT TO SHAREHOLDERS
~~~~~~
FISCAL YEAR ENDED
OCTOBER 31, 1995
Appendix B-1
<PAGE> 78
THE ROULSTON FAMILY OF FUNDS
ANNUAL REPORT
November 27, 1995
Dear Shareholder,
We are pleased to issue the financial report on The Roulston Family of Funds
for the year ended October 31, 1995.
During this fiscal year, both equity funds, the Roulston Midwest Growth Fund
and the Roulston Growth and Income Fund, as well as the Roulston Government
Securities Fund provided positive returns. The Roulston Midwest Growth Fund
gained 18.17% during the period and the Roulston Growth and Income Fund gained
17.36%. These returns were earned during a period when the market, as measured
by the Standard & Poor's 500 Stock Index, gained by 26.38%. The Roulston
Government Securities Fund gained 14.76% during the period while the Lehman
Brothers Intermediate Treasury Bond Index increased by 11.75%.
In the commentary that follows on each of the Funds, you will note a common
theme that has long been a landmark of our investment management. Research is
the cornerstone of our investment process. Our research efforts for The Roulston
Family of Funds gives us confidence in the future of the economy and the
portfolios we manage on your behalf.
Sincerely,
/s/ Scott D. Roulston /s/ Joseph A. Harrison
-------------------------- ---------------------------
Scott D. Roulston Joseph A. Harrison
President Director of Investments
<PAGE> 79
THE ROULSTON FAMILY OF FUNDS -- INVESTMENT ADVISERS REPORT
- --------------------------------------------------------------------------------
ECONOMIC TRENDS AND OUTLOOK
During the year ended October 31, 1995, economic activity slowed in response
to the monetary restraint imposed by the Federal Reserve during the preceding
year. Most measures of economic activity are posting slower growth rates than
the year before, but are continuing to grow. Capital spending and export growth
remain the driving engines of this expansion.
Continued efforts to reduce costs, bolstered by strong profits, inject this
capital spending cycle with an element of stability and longevity that is
reassuring. Slower growth overseas has put some pressure on our exports, but
growth remains strong reflecting the favorable competitive position of U.S.
manufacturing and service industries. Continued efforts to improve productivity
offer the promise that export growth will remain a driver for the domestic
economy.
Consumer and public sector spending will remain the restraining elements on
the economy. Overall economic growth approaching 3% with inflation under control
should provide a favorable setting for both the bond and stock markets.
ROULSTON MIDWEST GROWTH FUND
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
The graph below compares the increase in value of a $10,000 investment in
Roulston Midwest Growth Fund with the performance of the Standard & Poor's 500
Stock and Lipper Growth Fund Indices.
<TABLE>
ROULSTON MIDWEST GROWTH FUND
(Assuming $10,000 invested at inception)
Past performance is not indicative of future results.
<CAPTION>
Period
7/1/93 7/93 10/93 1/94 4/94 7/94 10/94 1/95 4/95 7/95 10/95
------ ---- ----- ---- ---- ---- ----- ---- ---- ---- -----
VALUE (In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Roulston Midwest Growth Fund $10,000 $10,200 $11,090 $11,730 $11,847 $11,796 $12,298 $12,222 $13,327 $14,950 $14,532
Standard & Poor's 500 Stock Index 10,000 9,970 10,480 10,862 10,241 10,482 10,880 10,914 12,019 13,207 13,750
Lipper Growth Fund Index 10,000 9,988 10,653 11,088 10,479 10,457 10,871 10,587 11,631 13,127 13,478
</TABLE>
<TABLE>
<CAPTION>
Average Annual
Total Return
- ---------------------
Since
One Year Inception
- -------- ---------
<S> <C>
18.17% 17.34%
</TABLE>
2
<PAGE> 80
THE ROULSTON FAMILY OF FUNDS -- INVESTMENT ADVISERS REPORT
- --------------------------------------------------------------------------------
The Fund was established to achieve capital appreciation through the
investment in equity securities of companies that are headquartered in the eight
state area contiguous to the Great Lakes.
Investment decisions are driven by intense and continuous fundamental
research. This research focus attempts to uncover a combination of internal and
external change at a company that presents an unusual appreciation potential.
While the Fund's objective is growth, investments are not limited to growth
stocks. We seek opportunities in a broad spectrum of investments from
traditional growth companies to highly cyclical companies.
Some examples include:
R.G. BARRY
This highly successful consumer marketing company known primarily for its
Dearfoam slippers, is developing a variety of new products such as Pyrex
Portables using its new proprietary heat retention technology.
NATIONAL AUTO CREDIT
The company is undergoing a complete change from an insurance car rental
company (Agency Rent-A-Car) to a used car finance company.
ACME CLEVELAND
The sale of the traditional machine and cutting tool business combined with
an aggressive expansion of the telecommunications and industrial test and
control equipment businesses are drastically changing the nature of this
company.
Divergent demand trends and margin pressures should put even greater
emphasis on a research driven stock selection process in the year ahead. The
Midwest secular trends of increased productivity, global competitiveness and
strong demand, and continuing manufacturing and service diversity should
continue to present investment opportunities.
3
<PAGE> 81
THE ROULSTON FAMILY OF FUNDS -- INVESTMENT ADVISERS REPORT
- --------------------------------------------------------------------------------
ROULSTON GROWTH AND INCOME FUND
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
The graph below compares the increase in value of a $10,000 investment in
Roulston Growth and Income Fund with the performance of the Standard & Poor's
500 Stock and Lipper Growth & Income Fund Indices.
<TABLE>
ROULSTON GROWTH AND INCOME FUND
(Assuming $10,000 invested at inception)
Past performance is not indicative of future results.
<CAPTION>
Period
7/1/93 7/93 10/93 1/94 4/94 7/94 10/94 1/95 4/95 7/95 10/95
------ ---- ----- ---- ---- ---- ----- ---- ---- ---- -----
VALUE (In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Roulston Growth & Income Fund $10,000 $10,030 $10,398 $10,894 $10,682 $10,900 $10,889 $10,940 $11,746 $12,541 $12,780
Standard & Poor's 500 Stock Index 10,000 9,970 10,480 10,862 10,241 10,482 10,880 10,914 12,019 13,207 13,750
Lipper Growth & Income Fund Index 10,000 10,054 10,606 11,051 10,478 10,677 10,941 10,778 11,759 12,799 13,125
</TABLE>
<TABLE>
<CAPTION>
Average Annual
Total Return
- -----------------------
Since
One Year Inception
- ------------------------
<S> <C>
17.36% 11.07%
</TABLE>
The Fund was established to achieve capital appreciation and current income
primarily through investment in common stocks or securities convertible into
common stocks.
The investment policy is to invest in a diversified portfolio of dividend
paying common stocks which have been researched by our own staff and offer
reasonable valuation based on the ratio of price to earnings, book value and
cash flow.
Our investment strategy is to seek out companies that meet the demanding
fundamental analysis of our research staff. Visits with management, suppliers,
customers, distributors and unions are among the sources utilized by our
analysts to form judgments about the outlook for each company. The results of
this analysis are joined with rigorous valuation for each investment in the
portfolio.
Two industrial companies that typify our investment approach are TRW and
Johnson Controls. Both companies are reasonably valued by the marketplace,
reflecting their reliance on the automotive industry
4
<PAGE> 82
THE ROULSTON FAMILY OF FUNDS -- INVESTMENT ADVISERS REPORT
- --------------------------------------------------------------------------------
for a substantial portion of their earnings. Yet, each company has established
itself as an innovative low cost producer able to sustain strong earnings in a
difficult automotive environment.
Currently the Fund is diversified among thirty-seven investments
representing most sectors of our economy. Based on our broad based research
effort we continue to be impressed with the favorable outlook for well-managed
companies that have taken the requisite action to improve profitability.
Conversations with a broad cross section of managements point to continued
strong earnings domestically. A strong relative competitive position for U.S.
manufacturers enhance the earnings outlook for many companies. We will continue
to seek out those companies that present a favorable earnings outlook at prices
that offer a good value.
ROULSTON GOVERNMENT SECURITIES FUND
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
The graph below compares the increase in value of a $10,000 investment in
Roulston Government Securities Fund with the performance of the Lehman Brothers
Intermediate Treasury Bond Index.
<TABLE>
ROULSTON GOVERNMENT SECURITIES FUND
(Assuming $10,000 invested at inception)
Past performance is not indicative of future results.
<CAPTION>
Period
7/1/93 7/93 10/93 1/94 4/94 7/94 10/94 1/95 4/95 7/95 10/95
------ ---- ----- ---- ---- ---- ----- ---- ---- ---- -----
VALUE (In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Roulston Government Securities Fund 10,000 10,000 10,304 10,346 9,649 9,748 9,558 9,733 10,170 10,628 10,968
Lehman Brothers Intermediate Treasury 10,000 10,019 10,236 10,328 9,972 10,118 10,067 10,215 10,588 10,963 11,249
Bond Index
</TABLE>
<TABLE>
<CAPTION>
Average Annual
Total Return
- -----------------------
Since
One Year Inception
- ------------------------
<S> <C>
14.76% 4.03%
</TABLE>
<PAGE> 83
THE ROULSTON FAMILY OF FUNDS -- INVESTMENT ADVISERS REPORT
- --------------------------------------------------------------------------------
In order to meet its objective of current income with preservation of
capital, the Fund seeks to minimize credit risk by investment in securities
issued directly by the U.S. Government. Because changes in interest rates affect
the value of the Fund's holdings, investment in issues maturing in less than ten
years are the primary focus of the portfolio.
During this past year bond prices recovered from the violent reaction of the
preceding year. This return to lower interest rates was occasioned by slower
economic growth and a calming of inflation fears. It has been nearly thirty
years since we have enjoyed four consecutive years with inflation at 3.0% or
less. Our outlook calls for continued moderate growth and low inflation. This
should provide a favorable environment for the bond market.
REORGANIZATION
On April 29, 1995, pursuant to an Agreement and Plan of Reorganization and
Liquidation, the Midwest Growth Fund, the Growth and Income Fund and the
Government Fund of The Roulston Family of Funds (the "Trust") acquired in a tax
free reorganization, all of the assets of each of the Midwest Growth Fund, the
Growth and Income Fund and the Government Fund (collectively, the "Acquired
Funds") of the Advisors' Inner Circle Fund, a Massachusetts business trust,
respectively, in exchange for the assumption of such Acquired Fund's liabilities
and a number of full and fractional shares of the corresponding Fund of the
Trust having an aggregate net asset value equal to such Acquired Fund's net
assets (the "Reorganization"). The Reorganization was approved by the
shareholders of the Acquired Funds in a Special Meeting held on March 24, 1995.
The results of the vote were as follows:
<TABLE>
<CAPTION>
BROKER
FOR (000) AGAINST (000) ABSTAIN (000) NON-VOTES (000)
--------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Midwest Growth Fund........... 1,506 41 42 0
Growth and Income Fund........ 1,279 13 25 0
Government Fund............... 715 4 2 0
</TABLE>
6
<PAGE> 84
THE ROULSTON FAMILY OF FUNDS -- SCHEDULE OF INVESTMENTS October 31, 1995
- --------------------------------------------------------------------------------
ROULSTON MIDWEST GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE (000)
-------------- --------------
<S> <C> <C>
COMMON STOCKS - 93.97%
CAPITAL GOODS - 15.09%
Acme-Cleveland Corp. .......................................... 91,300 $ 1,997
AMP, Inc. ..................................................... 36,700 1,440
Nordson Corp. ................................................. 24,700 1,426
Park Ohio Industries, Inc. *................................... 100,509 1,382
Trinova Corp. ................................................. 43,000 1,209
--------------
7,454
--------------
CONSUMER DURABLES - 14.15%
Cooper Tire & Rubber Co. ...................................... 55,000 1,272
Federal-Mogul Corp. ........................................... 67,000 1,198
Masco Corp. ................................................... 42,000 1,181
Owens-Corning Fiberglas Corp.*................................. 29,700 1,259
Royal Appliance Manufacturing Co.*............................. 300,000 937
Varity Corp. New*.............................................. 31,600 1,146
--------------
6,993
--------------
CONSUMER NON-DURABLES - 24.05%
American Greetings Corp. Class A............................... 42,000 1,323
Barry (R.G.) Corp.*............................................ 106,667 2,027
Consolidated Stores Corp.*..................................... 54,700 1,265
Dean Foods Co. ................................................ 44,000 1,227
Fays Drug, Inc. ............................................... 175,400 1,403
Revco D.S., Inc. New*.......................................... 66,600 1,582
Rite Aid Corp. ................................................ 55,000 1,485
Universal Foods Corp. ......................................... 40,500 1,387
Worthington Foods, Inc. ....................................... 11,000 184
--------------
11,883
--------------
ENERGY - 2.85%
Belden & Blake Corp.*.......................................... 97,100 1,409
--------------
FINANCE - 9.35%
National Auto Credit, Inc.*.................................... 120,000 1,950
Norwest Corp. ................................................. 39,800 1,174
Star Banc Corp. ............................................... 27,000 1,495
--------------
4,619
--------------
MATERIALS/SERVICES - 22.10%
Armco, Inc. ................................................... 188,000 1,152
Bearings, Inc. Ohio............................................ 52,500 1,903
Duriron Co., Inc. ............................................. 55,800 1,493
Figgie International, Inc. Class A*............................ 180,000 2,160
Libbey, Inc. .................................................. 48,100 986
OHM Corp.*..................................................... 140,000 1,138
Premier Industrial Corp. ...................................... 37,000 920
Worthington Industries, Inc. .................................. 70,083 1,165
--------------
10,917
--------------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 85
THE ROULSTON FAMILY OF FUNDS -- SCHEDULE OF INVESTMENTS October 31, 1995
- --------------------------------------------------------------------------------
ROULSTON MIDWEST GROWTH FUND (continued)
<TABLE>
<CAPTION>
SHARES VALUE (000)
-------------- --------------
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
TECHNOLOGY - 6.38%
Diebold, Inc. ................................................. 27,000 $ 1,431
Telxon Corp. .................................................. 74,400 1,721
--------------
3,152
--------------
TOTAL COMMON STOCKS - (COST $40,091,616)....................... 46,427
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT - 6.40% AMOUNT
--------------
<S> <C> <C>
United Missouri Bank, U.S. Treasury Note, $3,202,000 par, 7.50%
coupon, due 02/29/96, dated 10/31/95, to be sold on 11/01/95
at $3,166,466................................................ $3,166,000 3,166
--------------
TOTAL INVESTMENTS - 100.37% (COST $43,257,616#)................ 49,593
--------------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS - (0.37%)....... (185)
--------------
NET ASSETS - 100.00%........................................... $ 49,408
==============
<FN>
- ---------------
* Non-income producing security.
# Also represents cost for Federal income tax purposes.
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 86
THE ROULSTON FAMILY OF FUNDS -- SCHEDULE OF INVESTMENTS October 31, 1995
- --------------------------------------------------------------------------------
ROULSTON GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
SHARES VALUE (000)
-------------- --------------
<S> <C> <C>
COMMON STOCKS - 97.87%
CAPITAL GOODS - 11.12%
Boeing Co. .................................................... 7,000 $ 459
Emerson Electric Co. .......................................... 10,000 713
General Electric Co. .......................................... 11,000 696
Johnson Controls, Inc. ........................................ 12,000 699
--------------
2,567
--------------
CONSUMER DURABLES - 13.96%
Cooper Tire & Rubber Co. ...................................... 25,000 578
Leggett & Platt, Inc. ......................................... 28,000 672
Masco Corp. ................................................... 24,000 675
Sherwin-Williams Co. .......................................... 17,000 640
TRW, Inc. ..................................................... 10,000 657
--------------
3,222
--------------
CONSUMER NON-DURABLES - 34.97%
American Greetings Corp. Class A............................... 22,000 693
Banta Corp. ................................................... 18,000 779
Baxter International, Inc. .................................... 10,000 386
Beckman Instruments, Inc. ..................................... 20,000 663
Dean Foods Co. ................................................ 20,000 557
Dial Corp. .................................................... 26,000 634
Hanson PLC ADR................................................. 25,000 388
Mallinckrodt Group, Inc. ...................................... 18,000 625
McGraw-Hill, Inc. ............................................. 3,700 303
Melville Corp. ................................................ 18,000 576
Proctor & Gamble Co. .......................................... 8,000 648
Rite Aid Corp. ................................................ 26,000 702
Sara Lee Corp. ................................................ 24,000 705
Universal Foods Corp. ......................................... 12,000 411
--------------
8,070
--------------
ENERGY - 8.46%
Exxon Corp. ................................................... 8,000 611
Royal Dutch Petroleum Co. ..................................... 4,000 492
Williams Companies, Inc. ...................................... 22,000 850
--------------
1,953
--------------
FINANCE - 7.72%
American International Group, Inc. ............................ 6,750 569
Keycorp........................................................ 15,000 506
Norwest Corp. ................................................. 24,000 708
--------------
1,783
--------------
MATERIALS/SERVICES - 11.58%
Great Lakes Chemical Corp. .................................... 10,000 671
Hanna (M.A.) Co. .............................................. 13,500 346
Ogden Corp. ................................................... 20,000 455
Teleflex, Inc. ................................................ 15,000 636
Worthington Industries, Inc. .................................. 34,000 565
--------------
2,673
--------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 87
THE ROULSTON FAMILY OF FUNDS -- SCHEDULE OF INVESTMENTS October 31, 1995
- --------------------------------------------------------------------------------
ROULSTON GROWTH AND INCOME FUND (continued)
<TABLE>
<CAPTION>
SHARES VALUE (000)
-------------- --------------
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
TECHNOLOGY - 3.52%
Harris Corp. .................................................. 14,000 $ 813
--------------
UTILITIES - 6.54%
AT & T Corp. .................................................. 12,000 768
GTE Corp. ..................................................... 18,000 742
--------------
1,510
--------------
TOTAL COMMON STOCKS - (COST $19,389,312)....................... 22,591
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENT - 2.73% AMOUNT
--------------
<S> <C> <C>
United Missouri Bank, U.S. Treasury Note, $636,000 par, 7.50%
coupon, due 02/29/96, dated 10/31/95, to be sold on 11/01/95
at $629,093.................................................. $ 629,000 629
--------------
TOTAL INVESTMENTS - 100.60% (COST $20,018,312#)................ 23,220
--------------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS - (0.60%)....... (138)
--------------
NET ASSETS - 100.00%........................................... $ 23,082
============
- ---------------
<FN>
# Also represents cost for Federal income tax purposes.
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 88
THE ROULSTON FAMILY OF FUNDS -- SCHEDULE OF INVESTMENTS October 31, 1995
- --------------------------------------------------------------------------------
ROULSTON GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE (000)
---------- -----------
<S> <C> <C>
U.S. TREASURY NOTES - 98.20%
U.S. TREASURY NOTES
5.500%, 09/30/97............................................ $ 550,000 $ 549
5.125%, 06/30/98............................................ 750,000 740
6.875%, 08/31/99............................................ 1,800,000 1,866
5.500%, 04/15/00............................................ 2,000,000 1,979
6.250%, 02/15/03............................................ 1,450,000 1,475
5.750%, 08/15/03............................................ 700,000 691
5.875%, 02/15/04............................................ 1,200,000 1,191
-----------
TOTAL U.S. TREASURY NOTES - (COST $8,487,061)................... 8,491
-----------
REPURCHASE AGREEMENT - 0.58%
United Missouri Bank, U.S. Treasury Note, $51,000 par, 7.50%
coupon, due 02/29/96, dated 10/31/95, to be sold on 11/01/95
at $50,007.................................................. 50,000 50
-----------
TOTAL INVESTMENTS - 98.78% (COST $8,537,061#)................... 8,541
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES - 1.22%................ 106
-----------
NET ASSETS - 100.00%............................................ $ 8,647
===========
- ---------------
<FN>
# Also represents cost for Federal income tax purposes.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 89
THE ROULSTON FAMILY OF FUNDS --
STATEMENTS OF ASSETS AND LIABILITIES October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ROULSTON ROULSTON ROULSTON
MIDWEST GROWTH AND GOVERNMENT
GROWTH FUND INCOME FUND SECURITIES FUND
(000) (000) (000)
----------- ----------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments in securities at value (cost
$43,257,616, $20,018,312 and $8,537,061
respectively)........................... $49,593 $23,220 $ 8,541
Cash...................................... 1 1 0
Receivable for capital stock sold......... 32 24 6
Dividends and interest receivable......... 8 22 84
Reimbursement due from adviser............ 0 0 14
Deferred organization costs (Note A)...... 14 14 14
Other assets.............................. 5 5 5
----------- ----------- ---------------
Total assets....................... 49,653 23,286 8,664
----------- ----------- ---------------
LIABILITIES:
Payable for capital stock redeemed........ 144 151 1
Accrued expenses.......................... 96 48 11
Payable to adviser........................ 5 5 5
----------- ----------- ---------------
Total liabilities.................. 245 204 17
----------- ----------- ---------------
NET ASSETS:
Applicable to 3,647,473, 1,877,974 and
879,015 shares outstanding,
respectively............................ $49,408 $23,082 $ 8,647
=========== =========== =============
NET ASSETS CONSIST OF:
Capital paid-in........................... $42,554 $19,634 $ 8,617
Undistributed net investment income
(loss).................................. (2) 66 37
Accumulated net realized gain (loss) on
investments............................. 521 180 (11)
Net unrealized appreciation on
investments............................. 6,335 3,202 4
----------- ----------- ---------------
$49,408 $23,082 $ 8,647
=========== =========== =============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE........................... $ 13.55 $ 12.29 $ 9.84
=========== =========== =============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 90
THE ROULSTON FAMILY OF FUNDS -- STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ROULSTON ROULSTON ROULSTON
MIDWEST GROWTH AND GOVERNMENT
GROWTH FUND INCOME FUND SECURITIES FUND
(000) (000) (000)
----------- ----------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................. $ 510 $ 522 $ 0
Interest.................................. 173 40 484
----------- ----------- ---------------
Total investment income............ 683 562 484
----------- ----------- ---------------
EXPENSES:
Investment advisory fees (Note B)......... 342 176 30
Transfer agent fees....................... 37 25 21
Administration fees....................... 67 42 32
Distribution expenses (Note B)............ 59 28 10
Pricing fees.............................. 20 15 15
Printing fees............................. 5 4 4
Custodian fees............................ 18 11 8
Insurance fees............................ 14 13 12
Legal fees................................ 14 11 8
Amortization of organization costs (Note
A)...................................... 12 12 12
Registration expenses..................... 9 8 8
Trustees fees............................. 12 10 9
Auditing fees............................. 16 8 3
Miscellaneous expenses.................... 2 1 1
----------- ----------- ---------------
Total expenses..................... 627 364 173
Expenses reimbursed (Note B).............. (61) (59) (101)
----------- ----------- ---------------
Net expenses....................... 566 305 72
----------- ----------- ---------------
NET INVESTMENT INCOME....................... 117 257 412
----------- ----------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments... 1,330 279 (2)
Net change in unrealized appreciation on
investments............................. 5,113 2,752 699
----------- ----------- ---------------
Net realized and unrealized gain on
investments............................. 6,443 3,031 697
----------- ----------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS...... $ 6,560 $ 3,288 $ 1,109
=========== =========== =============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 91
THE ROULSTON FAMILY OF FUNDS -- STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ROULSTON MIDWEST ROULSTON GROWTH AND
GROWTH FUND INCOME FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
(000) (000) (000) (000)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................ $ 117 $ 31 $ 257 $ 182
Net realized gain (loss) on
investments........................ 1,330 1,268 279 77
Net change in unrealized appreciation
(depreciation) on investments...... 5,113 525 2,752 220
----------- ----------- ----------- -----------
Increase (decrease) in net assets.... 6,560 1,824 3,288 479
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income........... (130) (19) (207) (170)
From net realized gains.............. (2,077) 0 (167) (29)
----------- ----------- ----------- -----------
Total Distributions.................. (2,207) (19) (374) (199)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold............ 17,023 20,028 5,620 10,447
Reinvestment of dividends............ 2,182 17 309 163
Amount paid for repurchase
of shares.......................... (3,838) (2,032) (3,938) (1,429)
----------- ----------- ----------- -----------
Net increase from capital
transactions....................... 15,367 18,013 1,991 9,181
----------- ----------- ----------- -----------
Total increase in net assets......... 19,720 19,818 4,905 9,461
NET ASSETS:
Beginning of year.................... 29,688 9,870 18,177 8,716
----------- ----------- ----------- -----------
End of year.......................... $49,408 $29,688 $23,082 $18,177
=========== =========== =========== ===========
Accumulated undistributed
(overdistributed) net investment
income included in net assets at
end of year........................ $ (2) $ 11 $ 66 $ 16
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................... 1,340 1,699 503 980
Shares issued on reinvestment of
dividends.......................... 187 2 28 15
Shares repurchased................... (300) (172) (355) (134)
----------- ----------- ----------- -----------
Net increase from capital
transactions....................... 1,227 1,529 176 861
=========== =========== =========== ===========
<CAPTION>
ROULSTON GOVERNMENT
SECURITIES FUND
-------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
(000) (000)
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income................ $ 412 $ 306
Net realized gain (loss) on
investments........................ (2) (11)
Net change in unrealized appreciation
(depreciation) on investments...... 699 (770)
----------- -----------
Increase (decrease) in net assets.... 1,109 (475)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income........... (411) (289)
From net realized gains.............. 0 (5)
----------- -----------
Total Distributions.................. (411) (294)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold............ 1,562 5,264
Reinvestment of dividends............ 266 191
Amount paid for repurchase
of shares.......................... (1,493) (2,901)
----------- -----------
Net increase from capital
transactions....................... 335 2,554
----------- -----------
Total increase in net assets......... 1,033 1,785
NET ASSETS:
Beginning of year.................... 7,614 5,829
----------- -----------
End of year.......................... $ 8,647 $ 7,614
=========== ===========
Accumulated undistributed
(overdistributed) net investment
income included in net assets at
end of year........................ $ 37 $ 36
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold.......................... 167 545
Shares issued on reinvestment of
dividends.......................... 29 20
Shares repurchased................... (160) (293)
----------- -----------
Net increase from capital
transactions....................... 36 272
=========== ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 92
THE ROULSTON FAMILY OF FUNDS -- FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial
interest outstanding throughout the periods presented.
<TABLE>
<CAPTION>
ROULSTON MIDWEST ROULSTON GROWTH AND ROULSTON GOVERNMENT
GROWTH FUND INCOME FUND SECURITIES FUND
----------------------------------- ----------------------------------- -----------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/95 10/31/94 10/31/93(1) 10/31/95 10/31/94 10/31/93(1) 10/31/95 10/31/94 10/31/93(1)
-------- -------- ----------- -------- -------- ----------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD......... $ 12.27 $ 11.07 $ 10.00 $ 10.68 $ 10.36 $ 10.00 $ 9.03 $10.20 $ 10.00
-------- -------- ----------- -------- -------- ----------- -------- -------- -----------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income....... 0.04 0.02 0.01 0.15 0.14 0.04 0.49 0.43 0.15
Net realized
and
unrealized
gain (loss)
on
investments... 2.04 1.19 1.07 1.68 0.35 0.36 0.81 (1.17) 0.16
-------- -------- ----------- -------- -------- ----------- -------- -------- -----------
Total from
investment
operations... 2.08 1.21 1.08 1.83 0.49 0.40 1.30 (0.74) 0.31
-------- -------- ----------- -------- -------- ----------- -------- -------- -----------
LESS
DISTRIBUTIONS:
From net
investment
income....... (0.04) (0.01) (0.01) (0.12) (0.14) (0.04) (0.49) (0.42) (0.11)
From realized
capital
gains........ (0.76) 0.00 0.00 (0.10) (0.03) 0.00 0.00 (0.01) 0.00
-------- -------- ----------- -------- -------- ----------- -------- -------- -----------
Total
distributions... (0.80) (0.01) (0.01) (0.22) (0.17) (0.04) (0.49) (0.43) (0.11)
NET ASSET VALUE,
END OF
PERIOD......... $ 13.55 $ 12.27 $ 11.07 $ 12.29 $ 10.68 $ 10.36 $ 9.84 $ 9.03 $ 10.20
========= ========= ============ ========= ========= ============ ========= ========= ============
TOTAL RETURN.... 18.17% 10.89% 10.90%** 17.36% 4.72% 3.98%** 14.76% (7.24%) 3.04%**
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of period
(000)........ $49,408 $29,688 $ 9,870 $23,082 $18,177 $ 8,716 $8,647 $7,614 $ 5,829
Ratio of
expenses to
average net
assets before
reimbursement
of expenses
by Adviser... 1.57% 1.54% 2.89%* 1.79% 1.72% 2.79%* 2.16% 1.80% 2.78%*
after
reimbursement
of expenses
by
Adviser.... 1.41% 1.45% 1.50%* 1.50% 1.50% 1.50%* 0.90% 0.90% 0.90%*
Ratio of net
investment
income to
average net
assets before
reimbursement
of expenses
by Adviser... 0.14% 0.08% (1.11%)* 0.98% 1.20% 0.10%* 3.89% 3.88% 2.29%*
after
reimbursement
of expenses
by
Adviser.... 0.29% 0.17% 0.28%* 1.26% 1.42% 1.39%* 5.16% 4.78% 4.17%*
Portfolio
turnover..... 46.51% 77.57% 0.00% 13.36% 35.16% 4.18% 1.28% 24.14% 24.53%
- ---------------
<FN>
* Annualized
** Not Annualized
(1) The Roulston Midwest Growth Fund, Roulston Growth and Income Fund and the
Roulston Government Securities Fund commenced operations on July 1, 1993.
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 93
THE ROULSTON FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS October 31, 1995
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES: The Roulston Family of Funds (the
"Trust") is an open-end management investment company and is organized under
Ohio law as a business trust under a Declaration of Trust dated September 16,
1994. The Trust currently consists of three Funds (the "Funds"): Roulston
Midwest Growth Fund (the "Midwest Growth Fund"), Roulston Growth and Income Fund
(the "Growth and Income Fund") and Roulston Government Securities Fund (the
"Government Fund"). The Trust is registered under the Investment Company Act of
1940, as amended (the "Act"). On April 29, 1995, pursuant to an Agreement and
Plan of Reorganization and Liquidation, the Midwest Growth Fund, the Growth and
Income Fund and the Government Fund of the Trust acquired in a tax free
reorganization, all of the assets of each of the Midwest Growth Fund, the Growth
and Income Fund and the Government Fund (collectively, the "Acquired Funds") of
the Advisors' Inner Circle Fund, a Massachusetts business trust, respectively,
in exchange for the assumption of such Acquired Fund's liabilities and a number
of full and fractional shares of the corresponding Fund of the Trust having an
aggregate net asset value equal to such Acquired Fund's net assets (the
"Reorganization"). The Reorganization was approved by the shareholders of the
Acquired Funds in a Special Meeting held on March 24, 1995. For accounting
purposes, the Reorganization was accounted for in a manner similar to a pooling
of interest and the financial highlights have been presented since the Funds'
inception, July 1, 1993. The following is a summary of significant accounting
policies consistently followed by the Trust.
(1) SECURITY VALUATION: Equity securities which are listed or admitted
to trading on a national securities exchange will be valued at the last
sales price on the exchange on which the security is principally traded.
Equity securities for which there is no sale on that day and equity
securities traded only in the over-the-counter market will be valued at
their closing bid prices obtained from one or more dealers making markets
for such securities or, if market quotations are not readily available, at
their fair values as determined in good faith by the Board of Trustees.
Valuations of fixed and variable income securities ("debt securities")
are supplied by independent pricing services used by Fund/Plan Services,
Inc., as administrator, which have been approved by the Trustees of the
Trust. Valuations are based upon a consideration of yields or prices of
obligations of comparable quality, coupon, maturity and type, indications as
to value from recognized dealers, and general market conditions. Debt
securities for which market quotations are readily available are valued
based upon these quotations. The Trustees may deviate from the valuation
provided by the pricing service whenever, in their judgment, such valuation
is not indicative of the fair value of the debt security. Short-term
investments with a maturity of 60 days or less are valued at amortized cost,
which approximates market value.
(2) REPURCHASE AGREEMENTS: All Funds may enter into repurchase
agreements with financial institutions deemed to be credit worthy by
Roulston & Company, Inc. ("Roulston"), the Funds' investment adviser, under
guidelines approved by the Trust's Board of Trustees, subject to the
seller's agreement to repurchase and the Funds' agreement to resell such
securities at a mutually agreed-upon date and price. Securities purchased
subject to repurchase agreements are deposited with the Funds' custodian
and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. If the seller were to default on its
repurchase obligation or become insolvent, the Fund would suffer a loss to
the extent that the proceeds from a sale of the underlying portfolio
securities were
16
<PAGE> 94
THE ROULSTON FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued) October 31, 1995
- --------------------------------------------------------------------------------
less than the repurchase price under the agreement, or to the extent that
the disposition of such securities by the Fund was delayed pending court
action.
(3) FEDERAL INCOME TAXES: The Funds intend to be treated as "regulated
investment companies" under Sub-chapter M of the Internal Revenue Code and
to distribute substantially all of their net taxable income. Accordingly, no
provisions for Federal income taxes have been made in the accompanying
financial statements.
(4) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily. Security
transactions are accounted for on the date securities are purchased or sold.
Security gains and losses are determined on the identified cost basis.
(5) DIVIDENDS AND DISTRIBUTIONS: Substantially all of the net investment
income (exclusive of capital gains) of the Midwest Growth Fund and the
Growth and Income Fund is distributed in the form of dividends at least
annually, and of the Government Fund is distributed in the form of quarterly
dividends. Shareholders of record of the Government Fund on the next-to-last
business day of each quarter will be entitled to receive the quarterly
dividend distribution. If any capital gain is realized by a Fund,
substantially all of it will be distributed at least annually.
(6) DEFERRED ORGANIZATION COSTS: Organizational costs are being
amortized on a straight-line basis over five years commencing April 29,
1995.
NOTE (B) RELATED PARTY TRANSACTIONS: The Trust and Roulston have entered
into an Investment Advisory Agreement (the "Agreement") dated as of January 20,
1995. Under terms of the Agreement, Roulston makes the investment decisions for
the assets of the Funds and continuously reviews, supervises, and administers
the investment program of the Funds. For its services as investment adviser,
Roulston receives a fee, at an annual rate of 0.75% of the average daily net
assets of each of the Midwest Growth Fund and the Growth and Income Fund up to
$100 million of such assets, and 0.50% of each such Fund's assets of $100
million or more. With respect to the Government Fund, Roulston receives a fee at
an annual rate of 0.25% of the average daily net assets of the Government Fund
up to $100 million of such assets, and 0.125% of such assets of $100 million or
more. Such fees will be calculated daily and paid monthly.
Prior to the effective date of the Reorganization, Roulston served as the
investment adviser to each of the Acquired Funds. For such services, Roulston
received an advisory fee from the Acquired Funds at the following annual rates:
1.00% of the value of each of the Midwest Growth Fund's and the Growth and
Income Fund's average daily net assets up to $100 million, 0.75% of each such
Fund's assets over $100 million; and 0.50% of the value of the Government Fund's
average daily net assets up to $100 million, 0.375% of the average daily net
assets from $100 million to $200 million, and 0.25% of the average daily net
assets of such Fund over $200 million.
Pursuant to Rule 12b-1 under the Act, effective April 29, 1995, the Trust
has adopted a Distribution and Shareholder Service Plan and Agreement (the
"Plan"), under which each Fund is authorized to pay or reimburse Roulston
Research Corp. (the "Distributor"), a wholly owned subsidiary of Roulston, a
periodic amount calculated at an annual rate not to exceed 0.25% of the average
daily net assets value of such Fund. Such an amount may be used by the
Distributor to pay broker-dealers, banks and other
17
<PAGE> 95
THE ROULSTON FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued) October 31, 1995
- --------------------------------------------------------------------------------
institutions (a "Participating Organization") for distribution and/or
shareholder service assistance pursuant to an agreement between the Distributor
and the Participating Organization or for distribution assistance and/or
shareholder service provided by the Distributor. Under the Plan, a Participating
Organization may include the Distributor's affiliates.
In addition, the Board of Trustees of the Trust has adopted certain
procedures in accordance with Section 17(e)(2) and Rule 17e-1 under the Act
pursuant to which the Distributor may execute certain portfolio transactions as
broker on behalf of the Funds. In connection with such brokerage transactions,
Roulston as the investment adviser may determine to use the Distributor if such
use will likely result in commissions, fees or other renumeration and prices for
and execution of securities transactions at least as favorable to such Fund as
those likely to be derived from other qualified brokers.
Roulston and the Distributor have each agreed with the Trust to waive its
investment advisory and 12b-1 fees, respectively, and to reimburse certain other
expenses of the Funds for one year from the effective date of the Reorganization
(April 29, 1995) to the extent necessary to cause total operating expenses as a
percentage of net assets of the Midwest Growth Fund, the Growth and Income Fund
and the Government Fund not to exceed 1.38%, 1.50% and 0.90%, respectively. For
the Midwest Growth Fund, such voluntary fee waivers and reimbursements limited
such Fund's total operating expenses for the year ended October 31, 1995, to
1.41% since for the period from November 1, 1994 to April 29, 1995, such
operating expenses had been limited to 1.50%.
Information regarding these transactions is as follows for the year ended
October 31, 1995:
<TABLE>
<CAPTION>
MIDWEST GROWTH AND GOVERNMENT
GROWTH FUND INCOME FUND FUND
(000) (000) (000)
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Fees Before Fee Waiver.................... $ 342 $ 176 $ 30
Fees Waived............................... 61 59 30
RULE 12B-1 FEES1:
Fees Before Fee Waiver.................... 59 28 10
Fees Waived............................... 0 0 4
OTHER EXPENSES REIMBURSED................. 0 0 67
BROKERAGE FEES PAID TO THE DISTRIBUTOR ON
PORTFOLIO TRANSACTIONS.................. 140 12 0
- ---------------
<FN>
1 Effective for the period April 30, 1995 through October 31, 1995.
</TABLE>
All of the officers and certain of the trustees of the Trust are also
officers, directors and/or employees of Roulston and the Distributor. The
officers and such interested trustees served without direct compensation from
the Trust during the year.
18
<PAGE> 96
THE ROULSTON FAMILY OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued) October 31, 1995
- --------------------------------------------------------------------------------
NOTE (C) INVESTMENT TRANSACTIONS: Purchases and sales of investment
securities (excluding short-term securities) for the year ended October 31,
1995, were:
<TABLE>
<CAPTION>
PROCEEDS FROM
PURCHASES SALES
(000) (000)
---------------- ----------------
<S> <C> <C>
Midwest Growth Fund.................................... $ 29,354 $ 17,198
Growth and Income Fund................................. 5,923 2,608
Government Fund........................................ 549 97
</TABLE>
NOTE (D) UNREALIZED APPRECIATION AND DEPRECIATION: At October 31, 1995, the
gross unrealized appreciation and depreciation of securities for book and
Federal income tax purposes consisted of the following:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
(000) (000) (000)
------------- ------------- -------------
<S> <C> <C> <C>
Midwest Growth Fund....................... $ 7,896 $ 1,561 $ 6,335
Growth and Income Fund.................... 3,494 292 3,202
Government Fund........................... 79 75 4
</TABLE>
19
<PAGE> 97
THE ROULSTON FAMILY OF FUNDS
REPORT OF INDEPENDENT AUDITORS October 31, 1995
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of
Roulston Midwest Growth Fund,
Roulston Growth and Income Fund and
Roulston Government Securities Fund of
The Roulston Family of Funds:
We have audited the accompanying statements of assets and liabilities of
Roulston Midwest Growth Fund, Roulston Growth and Income Fund and Roulston
Government Securities Fund (the three funds constituting the Roulston Family of
Funds), including the schedules of investments, as of October 31, 1995, and the
related statements of operations, changes in net assets and financial highlights
for the year then ended. These financial statements and financial highlights are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets of Roulston Midwest Growth Fund,
Roulston Growth and Income Fund and Roulston Government Securities Fund of the
Roulston Family of Funds for the year ended October 31, 1994 and the financial
highlights for the period from July 1, 1993 (commencement of operations) to
October 31, 1993 and for the year ended October 31, 1994 were audited by other
auditors whose report dated December 14, 1994 expressed an unqualified opinion
on those statements and financial highlights.
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 financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian. 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 1995 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Roulston Midwest Growth Fund, Roulston Growth and Income Fund and
Roulston Government Securities Fund of the Roulston Family of Funds at October
31, 1995, the results of their operations, the changes in their net assets and
financial highlights for the year then ended in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
November 27, 1995
Cleveland, Ohio
20
<PAGE> 98
[This Page Intentionally Left Blank]
<PAGE> 99
[This Page Intentionally Left Blank]
<PAGE> 100
DIRECTORS:
<TABLE>
<S> <C>
Thomas V. Chema Scott D. Roulston
David H. Gunning Ivan Winfield
</TABLE>
OFFICERS:
Scott D. Roulston, President
Kathryn G. Balazs, Secretary
Martin P. Rizzo, Treasurer
ADVISER:
ROULSTON & COMPANY, INC.
4000 Chester Avenue
Cleveland, Ohio 44103-3693
DISTRIBUTOR:
ROULSTON RESEARCH CORP.
4000 Chester Avenue
Cleveland, Ohio 44103-3693
ADMINISTRATOR & TRANSFER AGENT:
FUND/PLAN SERVICES, INC.
2 West Elm Street
Conshohocken, Pennsylvania 19428-0874
LEGAL COUNSEL:
BAKER & HOSTETLER
65 East State Street
Columbus, Ohio 43215-4260
INDEPENDENT PUBLIC ACCOUNTANTS:
ERNST & YOUNG LLP
1300 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115-1405
This report is submitted for the general information of
the shareholders of the Fund. It is not authorized for
distribution to prospective investors in the Fund unless
preceded or accompanied by an effective Prospectus
which includes details regarding the Fund's objectives,
policies, expenses and other information.
------------------------------------------------------
For information call Roulston Research Corp.:
1-800-3-FAMILY (1-800-332-6459)
(LOGO) printed on recycled paper
-------------------------------------------------
THE ROULSTON
FAMILY OF FUNDS
Roulston Midwest
Growth Fund
Roulston Growth and
Income Fund
Roulston Government
Securities Fund
------------------------------------------------------
ANNUAL REPORT TO
SHAREHOLDERS
October 31, 1995
------------------------------------------------------
THE ROULSTON FAMILY OF FUNDS
------------------------------------------------------
Investing Family Style
<PAGE> 101
REGISTRATION STATEMENT
OF
FAIRPORT FUNDS
ON
FORM N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
-- FINANCIAL HIGHLIGHTS
Included in Part B:
-- Report of Independent Public Accountants dated
November 27, 1995;
Statement of Net Assets as of October 31, 1995;
Statements of Operations for the year ended
October 31, 1995;
Statements of Changes in Net Assets for the year
ended October 31, 1995 and the period ended
October 31, 1994;
Financial Highlights for the years ended October
31, 1995, October 31, 1994 and the period ended
October 31, 1993; and
Notes to Financial Statements.
All required financial statements are included as Appendix "B"
to Part B hereof. All other financial statements and schedules
are inapplicable.
<PAGE> 102
(b) Exhibits
(1) Declaration of Trust, dated as of September 16, 1994 and
amended as of March 1, 1996 -- filed herewith.
(2) By-Laws as amended March 1, 1996 -- filed herewith.
(3) None.
(4) Certificates for shares are not issued. Articles IV, V,
VI and VII of the Declaration of Trust, filed as Exhibit
1 hereto, define the rights of holders of shares.
(5) Investment Advisory Agreement dated January 20, 1995,
between Registrant and Roulston & Company, Inc. and Form
of Amendment dated March 1, 1996 -- filed herewith.
(6) (a) Distribution Agreement dated January 20, 1995,
between Registrant and Roulston Research Corp. and
form of Amendment dated March 1, 1996 -- filed
herewith.
(b) Form of Selected Dealer Agreement -- filed
herewith.
(7) None.
(8) (a) Custody Agreement between Registrant and UMB Bank,
N.A. -- filed herewith.
(b) Custody Administration and Agency Agreement dated
January 20, 1995, as Amended March 1, 1996,
between Registrant and Fund/Plan Services, Inc. --
filed herewith.
C-2
<PAGE> 103
(9) (a) Administration Agreement dated January 20, 1995,
as Amended March 1, 1996, between Registrant and
Fund/Plan Services, Inc. -- filed herewith.
(b) Accounting Services Agreement dated January 20,
1995, as Amended March 1, 1996, between Registrant
and Fund/Plan Services, Inc. -- filed herewith.
(c) Transfer Agent Services Agreement dated January
20, 1995, as Amended March 1, 1996, between
Registrant and Fund/Plan Services, Inc. -- filed
herewith.
(d) Agreement and Plan of Reorganization and
Liquidation dated November 23, 1994, between
Registrant and The Advisers' Inner Circle Fund is
incorporated by reference to Exhibit (9)(d) of
Pre-Effective Amendment No. 1 to Registrant's
Registration Statement (No. 33-84186) filed on
January 19, 1995.
(10) Opinion of Counsel is filed herewith.
(11) (a) *Consent of Ernst & Young LLP.
(12) None.
(13) None.
(14) None.
(15) (a) Amended Distribution (12b-1) Plan and Agreement
dated January 20, 1995, as Amended March 1, 1996.
(b) Form of Selected Dealer Agreement (a related
agreement under the Rule 12b-1 Plan) is
incorporated by reference to Exhibit (15)(b) of
Pre-Effective Amendment No. 1 to Registrant's
Registration Statement (No. 33-84186) filed on
January 19, 1995 -- see (6)(b) above.
(16) Computation of Performance Quotations for FAIRPORT
MIDWEST GROWTH FUND, FAIRPORT GROWTH AND INCOME FUND and
FAIRPORT GOVERNMENT SECURITIES FUND.
C-3
<PAGE> 104
(17) None.
(18) (a) Consent of Baker & Hostetler.
(b) Powers of Attorney of Scott D. Roulston, Ronald G.
Fountain, Thomas V. Chema, David H. Gunning and
Ivan J. Winfield are filed herewith.
Item 25. Persons Controlled Or Under Common Control With Registrant
None.
Item 26. Number Of Holders Of Securities
The number of holders of securities for each Series of the Trust as of
February 27, 1996 is set forth below:
<TABLE>
<CAPTION>
FUND NUMBER OF SECURITY HOLDERS
=========================================================================
<S> <C>
FAIRPORT MIDWEST GROWTH FUND 1,035
FAIRPORT GROWTH AND INCOME FUND 414
FAIRPORT GOVERNMENT SECURITIES FUND 102
</TABLE>
C-4
<PAGE> 105
Item 27. Indemnification
Article VI, Section 6.4 of the Registrant's Declaration of Trust,
filed as Exhibit 1 hereto, provides for the indemnification of
Registrant's Trustees and officers. Indemnification of Registrant's
principal underwriter, custodian, investment adviser, administrator,
and transfer agent is provided for, respectively, in Section 1.11 of
the Distribution Agreement filed as Exhibit 6(a) hereto, Section 8(a)
of the Custody Agreement filed as Exhibit 8(a) hereto, Section 4(c) of
the Custody Administration and Agency Agreement filed as Exhibit 8(b)
hereto, Section 5 of the Investment Advisory Agreement filed as
Exhibit 5 hereto, Section 9(d) of the Administration Agreement filed
as Exhibit 9(a) hereto, Section 11(c) of the Accounting Services
Agreement filed as Exhibit 9(b) hereto and Section 19(c) of the
Transfer Agent Services Agreement filed as Exhibit 9(c) hereto. As of
the effective date of this Registration Statement, Registrant will
have obtained from a major insurance carrier a trustees' and officers'
liability policy covering certain types of errors and omissions. In no
event will Registrant indemnify any of its trustees, officers,
employees or agents against any liability to which such person would
otherwise be subject by reason of his willful misfeasance, bad faith,
or gross negligence in the performance of his duties, or by reason of
his reckless disregard of the duties involved in the conduct of his
office or under his agreement with Registrant. Registrant will comply
with Rule 484 under the Securities Act of 1933 and Release 11330 under
the Investment Company Act of 1940 in connection with any
indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of
Registrant 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, 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 of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Information with respect to Roulston & Company, Inc. and its officers
and directors as set forth under the captions "MANAGEMENT OF THE
TRUST" contained in Prospectus and in the Statement of Additional
Information which are a part of this Registration Statement is hereby
incorporated herein by reference.
C-5
<PAGE> 106
To the knowledge of Registrant, none of the directors or officers of
Roulston & Company, Inc., except those set forth below, is or has been
at any time during the past two fiscal years engaged in any other
business, profession, vocation or employment of a substantial nature.
Set forth below are the names, principal businesses and addresses of
those businesses of the directors and officers of Roulston & Company,
Inc. who are or have been engaged in any other business, profession,
vocation or employment of a substantial nature during the past two
fiscal years.
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS OF POSITION WITH NAME AND ADDRESS OF NATURE OF CONNECTION
ROULSTON & COMPANY, INC. ROULSTON OTHER BUSINESS TO OTHER BUSINESS
===================================================================================================================
<S> <C> <C> <C>
Thomas H. Roulston Chairman; Defiance, Inc. Director
Director 1111 Chester Avenue
Suite #750
Cleveland, Ohio 44114
-------------------------------------------------
University Club Director
of Cleveland
3813 Euclid Avenue
Cleveland, Ohio 44115
- -------------------------------------------------------------------------------------------------------------------
Scott D. Roulston Director; Defiance, Inc. Director
President; Chief 1111 Chester Avenue
Executive Officer Suite #750
Cleveland, Ohio 44114
- -------------------------------------------------------------------------------------------------------------------
Heather R. Ettinger Director; University Club Director
Senior Vice of Cleveland
President; 3813 Euclid Avenue
Secretary Cleveland, Ohio 44115
Continental Managed Director
Pharmacy Services
1400 Schaaf Road
Cleveland, Ohio 44113
- -------------------------------------------------------------------------------------------------------------------
Ronald G. Fountain Senior Executive Harris Publishing Director
Vice President 2057 Aurora Road
Twinsburg, Ohio 44087
</TABLE>
C-6
<PAGE> 107
<TABLE>
<CAPTION>
NAME AND NATURE OF
OFFICERS AND DIRECTORS OF POSITION WITH ADDRESS OF CONNECTION
ROULSTON & COMPANY, INC. ROULSTON & COMPANY, INC. OTHER BUSINESS TO OTHER BUSINESS
===================================================================================================================
<S> <C> <C> <C>
Norman F. Klopp, Jr. Executive Vice President
- -------------------------------------------------------------------------------------------------------------------
Robert J. Yaroma Executive Vice President
- -------------------------------------------------------------------------------------------------------------------
Joseph A. Harrison Executive Vice President
- -------------------------------------------------------------------------------------------------------------------
Kathryn G. Balazs Senior Vice President
- -------------------------------------------------------------------------------------------------------------------
Larry W. Bensinger Senior Vice President
- -------------------------------------------------------------------------------------------------------------------
Charles E. Long, Jr. Senior Vice President
- -------------------------------------------------------------------------------------------------------------------
Elmer L. Meszaros Senior Vice President
- -------------------------------------------------------------------------------------------------------------------
John P. Norton Vice President
and Assistant Secretary
- -------------------------------------------------------------------------------------------------------------------
Michelle R. Fogarty Treasurer
- -------------------------------------------------------------------------------------------------------------------
D. Keith Lockyer Vice President
- -------------------------------------------------------------------------------------------------------------------
George W. Sievila Vice President
- -------------------------------------------------------------------------------------------------------------------
Keith A. Vargo Vice President
- -------------------------------------------------------------------------------------------------------------------
J. Mark Wipper Vice President
- -------------------------------------------------------------------------------------------------------------------
Jeanine M. Bleich Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
Cynthia M. Krenz Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
Laurel A. Lawrence Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
Theresa D. Miller Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
Charles E. Nye Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
Judith E. Szentkiralyi Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
Nadine E. Trombley Assistant Vice President
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
C-7
<PAGE> 108
Item 29. Principal Underwriter
(a) Roulston Research Corp. acts as principal underwriter for
Registrant.
(b) The Directors and Senior Officers of Roulston Research Corp. and
their positions with Registrant are as follows:
<TABLE>
<CAPTION>
POSITIONS AND POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER REGISTRANT
================================================================================
<S> <C> <C>
Thomas H. Roulston Chairman;
4000 Chester Avenue Director
Cleveland, Ohio 44103
- --------------------------------------------------------------------------------
Scott D. Roulston Director; Chairman;
4000 Chester Avenue President Director;
Cleveland, Ohio 44103 President
- --------------------------------------------------------------------------------
Heather R. Ettinger Director;
4000 Chester Avenue Senior Vice
Cleveland, Ohio 44103 President
- --------------------------------------------------------------------------------
Ronald G. Fountain Director
4000 Chester Avenue
Cleveland, Ohio 44103
- --------------------------------------------------------------------------------
John B. Clinger Assistant Secretary;
Vice President
- --------------------------------------------------------------------------------
</TABLE>
C-8
<PAGE> 109
<TABLE>
<CAPTION>
POSITIONS AND POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER REGISTRANT
================================================================================
<S> <C> <C>
Gustave C. Aberle Vice President
- --------------------------------------------------------------------------------
Eric Bosshard Vice President
- --------------------------------------------------------------------------------
Chris Byke Vice President
- --------------------------------------------------------------------------------
M.W. Helderman Vice President
- --------------------------------------------------------------------------------
Mike Kavanaugh Vice President
- --------------------------------------------------------------------------------
Norman F. Klopp, Jr. Vice President
- --------------------------------------------------------------------------------
Mark Koznarek Vice President
- --------------------------------------------------------------------------------
Elmer L. Meszaros Vice President
- --------------------------------------------------------------------------------
Steve Purvis Vice President
- --------------------------------------------------------------------------------
D.R. Ross Vice President
- --------------------------------------------------------------------------------
N.H. Siegal Vice President
- --------------------------------------------------------------------------------
George W. Sievila Vice President
- --------------------------------------------------------------------------------
D.W. Tandy Vice President
- --------------------------------------------------------------------------------
Bob Wazevich Vice President
- --------------------------------------------------------------------------------
Mark Wipper Vice President
- --------------------------------------------------------------------------------
R. J. Yaroma Vice President
- --------------------------------------------------------------------------------
Terry Lynch Assistant
Vice President
- --------------------------------------------------------------------------------
Evan Morgan Assistant
Vice President
- --------------------------------------------------------------------------------
</TABLE>
C-9
<PAGE> 110
(c) None.
Item 30. Location of Accounts and Records
(1) Roulston & Company, Inc., 4000 Chester Avenue, Cleveland, Ohio
44103 (records relating to its functions as investment adviser).
(2) Roulston Research Corp., 4000 Chester Avenue, Cleveland, Ohio
44103 (records relating to its function as distributor).
(3) Fund/Plan Services, Inc., #2 West Elm Street, Conshohocken,
Pennsylvania, 19428 (records relating to its functions as
administrator, dividend and transfer agent, fund account and
custody administrator and agent, and Minute Books).
C-10
<PAGE> 111
(4) UMB Bank, N.A., 928 Grand Avenue, Kansas City, Missouri 64141
(records relating to its functions as custodian).
(5) Baker & Hostetler, 65 East State Street, Suite 2100, Columbus,
Ohio 43215 (Declaration of Trust and By-Laws).
Item 31. Management Services
None.
Item 32. Undertakings
Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's latest Annual Report to
Shareholders upon request and without charge.
C-11
<PAGE> 112
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 Cleveland and State of Ohio on the 27th day of
February, 1996.
THE ROULSTON FAMILY OF FUNDS
By /s/ Scott D. Roulston
----------------------------
Scott D. Roulston, President
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 date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Scott D. Roulston President (Principal
- --------------------------- Executive Officer) and Trustee
Scott D. Roulston
/s/ Ronald G. Fountain Treasurer (Principal Financial
- --------------------------- and Accounting Officer)
Ronald G. Fountain
/s/* Thomas V. Chema Trustee
- ---------------------------
Thomas V. Chema
/s/* David H. Gunning Trustee
- ---------------------------
David H. Gunning
/s/* Ivan J. Winfield Trustee
- ---------------------------
Ivan J. Winfield
*By /s/ Scott D. Roulston
------------------------
Scott D. Roulston
Attorney-In-Fact
</TABLE>
C-12
<PAGE> 113
ITEM #24 FINANCIAL STATEMENTS AND EXHIBITS
99.B INDEX TO EXHIBITS FILED PURSUANT TO FORM N-1A:
99.B(1) CERTIFICATE OF TRUST
99.B(2) BY-LAWS
99.B(5) INVESTMENT ADVISORY AGREEMENT AND AMENDMENT
99.B(6)(A) DISTRIBUTION AGREEMENT
99.B(6)(B) SELECTED DEALER AGREEMENT
99.B(8)(A) CUSTODIAN AGREEMENT
99.B(8)(B) CUSTODY ADMINISTRATION AND AGENCY AGREEMENT AND AMENDMENT
99.B(9)(A) ADMINISTRATION AGREEMENT AND AMENDMENT
99.B(9)(B) ACCOUNTING SERVICES AGREEMENT AND AMENDMENT
99.B(9)(C) TRANSFER AGENT SERVICES AGREEMENT AND AMENDMENT
99.B(11)(A) CONSENT OF INDEPENDENT AUDITORS
99.B(15) AMENDED DISTRIBUTION (12B-1) PLAN
99.B(16) SCHEDULES FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
99.B(18)(B) FORM OF POWERS OF ATTORNEY
(27) FINANCIAL DATA SCHEDULES FOR ANNUAL REPORT DATED 10/31/95
C-13
<PAGE> 1
EXHIBIT 99.B (1)
DECLARATION OF TRUST
C-14
<PAGE> 2
FAIRPORT FUNDS
DECLARATION OF TRUST
DATED AS OF SEPTEMBER 16, 1994
AMENDED AS OF MARCH 1, 1996
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I NAME, PRINCIPAL OFFICE AND DEFINITIONS....................... 1
Section 1.1 Name and Principal Office...................... 1
Section 1.2 Definitions.................................... 1
ARTICLE II PURPOSES OF TRUST............................................ 2
ARTICLE III THE TRUSTEES................................................. 3
Section 3.1 Number, Designation, Election, Term, etc....... 3
(a)Initial Trustees.................................. 3
(b)Number............................................ 3
(c)Term ............................................. 3
(d)Resignation....................................... 3
(e)Removal........................................... 3
(f)Vacancies......................................... 4
(g)Effect of Death, Resignation, etc................. 4
(h)No Accounting..................................... 4
Section 3.2 Powers of Trustees............................. 5
(a)Investments....................................... 6
(b)Disposition of Assets............................. 6
(c)Distribution of Securities........................ 6
(d)Ownership Powers.................................. 6
(e)Subscription...................................... 6
(f)Form of Holding................................... 6
</TABLE>
C-15
<PAGE> 3
<TABLE>
<S> <C> <C>
(g)Allocation of Assets, Liabilities and Expenses to Series or
Sub-Series................................................... 6
(h)Reorganization, Merger and Consolidation..................... 6
(i)Voting Trusts, etc........................................... 7
(j)Compromise................................................... 7
(k)Partnerships, etc............................................ 7
(l)Borrowing and Security....................................... 7
(m)Guarantees, etc.............................................. 7
(n)Insurance.................................................... 7
(o)Pensions, etc................................................ 8
(p)Corporate Acts or Activities................................. 8
Section 3.3 Certain Contracts......................................... 8
(a)Advisory..................................................... 8
(b)Administration............................................... 9
(c)Distribution................................................. 9
(d)Custodian and Depository..................................... 9
(e)Transfer and Dividend Disbursing Agency...................... 9
(f)Shareholder Servicing........................................ 9
(g)Accounting................................................... 9
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.... 10
ARTICLE IV SHARES.................................................................. 11
Section 4.1 Description of Shares..................................... 11
Section 4.2 Establishment and Designation of Series and Sub-Series. .. 13
(a)Assets Belonging to a Series................................. 13
(b)Liabilities Belonging to a Series............................ 14
(c)Dividends.................................................... 14
(d)Liquidation.................................................. 15
</TABLE>
C-16
<PAGE> 4
<TABLE>
<S> <C>
(e)Voting....................................................... 15
(f)Redemption by Shareholder.................................... 16
(g)Redemption by Trust.......................................... 16
(h)Net Asset Value.............................................. 17
(i)Transfer..................................................... 17
(j)Equality..................................................... 17
(k)Fractions.................................................... 18
(l)Conversion Rights............................................ 18
Section 4.3 Ownership of Shares....................................... 18
Section 4.4 Investments in the Trust.................................. 18
Section 4.5 No Preemptive Rights...................................... 18
Section 4.6 Status of Shares and Limitation of Personal Liability..... 19
ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS................................ 19
Section 5.1 Voting Powers............................................. 19
Section 5.2 Meetings.................................................. 20
Section 5.3 Record Dates.............................................. 20
Section 5.4 Quorum and Required Vote.................................. 21
Section 5.5 Action by Written Consent................................. 21
Section 5.6 Inspection of Records..................................... 22
Section 5.7 Additional Provisions..................................... 22
</TABLE>
C-17
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE VI LIMITATION OF LIABILITY; INDEMNIFICATION.................................. 22
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.. 22
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety...................................................... 22
Section 6.3 Indemnification of Shareholders............................. 23
Section 6.4 Indemnification of Trustees, Officers, etc.................. 23
Section 6.5 Advances of Expenses........................................ 24
Section 6.6 Indemnification Not Exclusive, etc.......................... 24
Section 6.7 Liability of Series......................................... 25
ARTICLE VII MISCELLANEOUS............................................................. 25
Section 7.1 Duration and Termination of Trust........................... 25
Section 7.2 Sale or Disposition of Assets............................... 25
Section 7.3 Merger or Consolidation..................................... 26
Section 7.4 Amendments.................................................. 26
Section 7.5 Absence of Dissenters' Rights............................... 27
Section 7.6 Filing of Copies; References; Headings ..................... 27
Section 7.7 Applicable Law.............................................. 27
</TABLE>
C-18
<PAGE> 6
FAIRPORT FUNDS
DECLARATION OF TRUST
DECLARATION OF TRUST made at Cleveland, Ohio, as of the 16th day of
September, 1994, by the Trustee hereunder, and by the holders of Shares of
beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, the Trust has been formed to carry on the business of an
investment company;
and
WHEREAS, the Trustee has agreed to manage all property coming into his
hands as trustee of an Ohio business trust in accordance with the provisions of
Chapter 1746, Ohio Revised Code, and as hereinafter set forth.
NOW, THEREFORE, the Trustee hereby declares that he will hold all cash,
securities and other assets which he may from time to time acquire in any manner
as Trustee hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of Shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME, PRINCIPAL OFFICE AND DEFINITIONS
Section 1.1 Name and Principal Office. The Trust shall be known as
"Fairport Funds" and the Trustee shall conduct the business of the Trust under
that name or any other name as he may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
C-1
<PAGE> 7
(a) The "By-Laws" shall mean the By-Laws of the Trust as
amended from time to time;
(b) "Commission" shall have the meaning given it in the 1940
Act;
(c) "Declaration of Trust" shall mean this Declaration of
Trust as amended or restated from time to time;
(d) The "1940 Act" refers to the Investment Company Act of
1940, the Rules, Regulations and any Orders of the Commission
applicable to the Trust thereunder, all as amended from time to time;
(e) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article IV;
(f) "Share" or "Shares" refers to the transferable unit or
units of interest into which the beneficial interest in the Trust or
any Series of the Trust (as the context may require) shall be divided
from time to time;
(g) "Shareholder" or "Shareholders" means a record owner or
owners of a Share or Shares;
(h) "Sub-Series" refers to one or more classes or sub-series
of Shares established and designated under or in accordance with the
provisions of Article IV.
(i) The "Trust" refers to the Ohio business trust established
by this Declaration of Trust, as amended from time to time; and
(j) "Trustee" or "Trustees" refers to the trustee or trustees
of the Trust named herein or selected in accordance with Article III.
So long as there is a single Trustee, references herein to "Trustees"
shall mean the single Trustee.
C-2
<PAGE> 8
ARTICLE II
PURPOSES OF TRUST
The purposes of the Trust are to operate as an investment company as
defined in the 1940 Act and to engage in any lawful act or activity for which
business trusts may be formed under Chapter 1746, Ohio Revised Code.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon his execution of this Declaration of
Trust or a counterpart hereof or some other writing in which he accepts
such trusteeship and agrees to the provisions hereof, Scott D. Roulston
shall become the initial Trustee of the Trust.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease the number of
Trustees to a number other than the number theretofore determined. A
Trustee shall qualify by accepting in writing his election or
appointment and agreeing to be bound by the Declaration of Trust. No
decrease in the number of Trustees shall have the effect of removing
any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of
a Trustee pursuant to subsection (e) of this Section 3.1. Except as set
forth in subsection (f) of this Section 3.1, Trustees (other than the
Initial Trustee described in Section 3.1(a)) shall be elected by the
Shareholders, who shall vote as a single class and not by Series and at
such times as the Trustees shall determine that such election is
required by the 1940 Act or is otherwise advisable.
(c) Term. Each Trustee, whether named above or hereafter becoming
a Trustee, shall serve as a Trustee during the continued lifetime of
the Trust until he dies, resigns or is removed, or, if sooner, until
the next meeting of Shareholders called for the purpose of electing
Trustees, and until the election and qualification of his successor.
C-3
<PAGE> 9
(d) Resignation. Any Trustee may resign his trust as a Trustee,
by written instrument signed by him and delivered to the other Trustees
or to any officer of the Trust or at a meeting of the Trustees, and
such resignation shall take effect upon such delivery or upon such
later date as is specified in such instrument.
(e) Removal. Any Trustee may be removed with or without cause at
any time either by written instrument, signed by at least two-thirds of
the number of Trustees prior to such removal, specifying the date upon
which such removal shall become effective, or by the Shareholders at
any meeting called for that purpose. No Trustee shall be entitled to
any damages on account of such removal.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from
any reason, including without limitation the death, resignation,
removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the Trustees, may (but need not
unless required by the 1940 Act) be filled either by a majority of the
remaining Trustees through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine
(unless a shareholder election is required by the 1940 Act) or by the
election by the Shareholders, at a meeting called for the purpose, of a
person to fill such vacancy, and such appointment or election shall be
effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such
appointment or election in anticipation of a vacancy to occur by reason
of resignation or increase in number of Trustees to be effective at a
later date shall become effective only at or after the effective date
of said resignation or increase in number of Trustees. As soon as any
Trustee so appointed or elected shall have accepted such appointment or
election and shall have agreed in writing to be bound by this
Declaration of Trust and the appointment or election is effective, the
Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act of conveyance.
Notwithstanding the foregoing, to the extent the Trust adopts and
implements a written plan pursuant to Rule 12b-1 under the 1940 Act,
and so long as required by the 1940 Act, the selection and nomination
of Trustees who are not "interested persons" of the Trust as defined in
the 1940 Act, shall be committed to the discretion of the Trustees who
are not "interested persons," as so defined.
C-4
<PAGE> 10
(g) Effect of Death, Resignation, etc. The death, resignation,
removal, or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the
terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for cause, no
person ceasing to be a Trustee as a result of his death, resignation,
removal or incapacity (nor the estate of any such person) shall be
required to make an accounting to the Shareholders or remaining
Trustees upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purposes of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, define the responsibility and authority of, and
terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more Advisers,
Administrators, Depositories and Custodians and may authorize any Depository or
Custodian to employ sub-custodians or agents which may deposit all or any part
of the assets of the Trust in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting and
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, depository, custodian,
transfer and dividend disbursing agent, or any other agent or consultant of the
Trust such authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees.
C-5
<PAGE> 11
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) Investments. To invest and reinvest cash and other property,
and to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in regard
to investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or all of the
assets of the Trust;
(c) Distribution of Securities. To act as a distributor of shares
and as underwriter of, or broker or dealer in, securities or other
property;
(d) Ownership Powers. To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or powers
of attorney to such person or persons as the Trustees shall deem
proper, granting to such person or persons such power and discretion
with relation to securities, debt instruments or property as the
Trustees shall deem proper;
(e) Subscription. To exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of securities
or debt instruments;
(f) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in bearer,
unregistered or other negotiable form, or in the name of the Trustees
or of the Trust or in the name of a custodian, sub-custodian or other
depository or a nominee or nominees or otherwise;
(g) Allocation of Assets, Liabilities and Expenses to Series or
Sub-Series. To allocate assets, liabilities and expenses of the Trust
to a particular Series or Sub-Series of Shares or to apportion the same
among two or more Series or Sub-Series, provided that any liabilities
or expenses incurred by a particular Series or Sub-Series of Shares
shall be payable solely out of the assets of that Series;
(h) Reorganization, Merger and Consolidation. To consent to or
participate in any plan for the reorganization, consolidation or merger
of any corporation or issuer the security or debt instrument of which
is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale or property by such corporation or issuer,
and to pay calls or subscriptions with respect to any security or debt
instrument held in the Trust;
(i) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a committee,
depository, voting trustee or otherwise, and in that connection to
deposit any security or debt instrument with, or transfer any security
or debt instrument to, any such committee, depository or trustee, and
to delegate to them such power and authority
C-6
<PAGE> 12
with relation to any security or debt instrument (whether or not
so deposited or transferred) as the Trustees shall deem proper, and
to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depository or trustee as the
Trustees shall deem proper;
(j) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(k) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(l) Borrowing and Security. To borrow funds and to mortgage and
pledge the assets of the Trust or any part thereof to secure
obligations arising in connection with such borrowing;
(m) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts of guaranty
or suretyship, or otherwise assume liability for payment thereof; and
to mortgage and pledge the Trust property or any part thereof to secure
any of or all such obligations;
(n) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for
the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
consultants, investment advisers, managers, administrators,
distributors, principal underwriters, or independent contractors, or
any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising
by reason of holding, being or having held any such office or position,
or by reason of any action alleged to have been taken or omitted by any
such person in any such capacity, including any action taken or omitted
that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such person against such
liability;
(o) Pensions, etc. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the
Trust; and
(p) Corporate Acts or Activities. To engage in any other lawful
act or activity in which corporations organized under Chapter 1701,
Ohio Revised Code, may engage.
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Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more exclusive or non-exclusive contracts with any one or more
corporations, trusts, associations, partnerships, limited partnerships, other
types of organizations, or individuals ("Contracting Party") to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or of the Trust and/or the Trustees, and to provide for
the performance and assumption of such other services, duties and
responsibilities in addition to those set forth below as the Trustees may
determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees
and in conformity with the stated policy of the Trustees with respect
to the investments of the Trust or of the assets belonging to a Series
of Shares (as that phrase is defined in subsection (a) of Section 4.2),
to manage such investments and assets, make investment decisions with
respect thereto, and to place purchase and sale orders for portfolio
transactions relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
Trustees and in conformity with any policies of the Trustees with
respect to the operations of the Trust, to supervise all or any part of
the operations of the Trust, and to provide all or any part of the
administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration and
operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as agent of the
Trust in the sale of Shares and the acceptance or rejection of orders
for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
maintain custody of the property of the Trust and accounting records in
connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records
of the ownership of outstanding Shares, the issuance and redemption and
the transfer thereof, and to disburse
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any dividends declared by the Trustees and in accordance with the
policies of the Trustees and/or the instructions of any particular
Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
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Subject to the provisions of the 1940 Act, the fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(b) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (a) on the part of any Trustee or
officer of the Trust either (i) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith by
a majority of such Trustees not having any such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of all of
the Trustees), (ii) the material facts as to such relationship or interest and
as to the contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically approved in
good faith by vote of the Shareholders, or (iii) the specific contract involved
is fair to the Trust as of the time it is authorized, approved or ratified by
the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and to
charge or allocate the same to, between or among such one or more of the Series
or Sub-Series that may be established and designated pursuant to Article IV, as
the Trustees deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser or advisers, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent, dividend
disbursing agent, accounting agent, Shareholder servicing agent, and such other
agents, consultants and independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur. Without limiting
the generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
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ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all without par value and, except as hereinafter
set forth, of one class, but the Trustees shall have the authority from time to
time, without the approval of Shareholders and upon the amendment of the
Declaration of Trust, to divide the class of Shares into two or more Series of
Shares (in addition to the Series initially established and designated in
Section 4.2), as they deem necessary or desirable, to establish and designate
such Series, and to fix, determine and amend the relative rights and preferences
as between the different Series of Shares as to right of redemption and the
price, terms and manner of redemption, special and relative rights as to
dividends and other distributions and on liquidation, sinking or purchase fund
provisions, conversion rights, and conditions under which the several Series
shall have separate voting rights or no voting rights and such other matters as
the Trustees deem appropriate. Except as aforesaid all Shares of the different
Series shall be identical.
The Shares of each Series may be issued or reissued from time to time
in one or more classes or Sub-Series, as determined by the Board of Trustees
without the approval of Shareholders and upon the amendment of the Declaration
of Trust. Each Sub-Series shall be appropriately designated by some
distinguishing letter, number or title. All Shares within a Sub-Series shall be
alike in every particular. All Shares of each Series shall be of equal rank and
have the same powers, preferences and rights, and shall be subject to the same
qualifications, limitations and restrictions without distinction between the
Shares of different Sub-Series thereof, except such differences among such
Sub-Series as the Board of Trustees shall from time to time determine to be
appropriate and necessary to comply with the 1940 Act and other applicable laws,
including differences in the allocation of expenses, right of redemption, rate
or rates of dividends or distributions, conversion rights and separate voting
rights. The Board of Trustees is hereby empowered to classify or reclassify from
time to time any unissued Shares of each Series by fixing or altering the terms
thereof and by assigning such unissued Shares to an existing or newly created
Sub- Series. In addition, the Board of Trustees is empowered, without
shareholder approval, (a) to classify all or any part of the issued Shares of
any Series to make them part of an existing or newly created Sub- Series, and
(b) to redesignate any issued Shares of any Series by assigning a distinguishing
letter, number or title to such Shares.
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The number of authorized Shares and the number of Shares of each Series
and Sub-Series that may be issued is unlimited, and the Trustees may issue
Shares of any Series for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or split-up),
all without action or approval of the Shareholders. All Shares when so issued on
the terms determined by the Trustees shall be fully paid and non-assessable (but
may be subject to mandatory contribution back to the Trust as provided in
subsection (h) of Section 4.2). The Trustees may classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any Series
into one or more Series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series
reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series of Shares in addition
to those initially established and designated in Section 4.2, or of any
Sub-Series of Shares, shall be effective upon the amendment of the Declaration
of Trust, which may take place without Shareholder approval, setting forth the
establishment and designation and relative rights and preferences of such Series
or Sub-Series. At any time that there are no Shares outstanding of any
particular Series or Sub-Series previously established and designated the
Trustees may by an amendment to the Declaration of Trust and without Shareholder
approval abolish that Series or Sub-Series and the establishment and designation
thereof.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust to the same extent as if such person were not
a Trustee, officer, or other agent of the Trust; and the Trust may issue and
sell or cause to be issued and sold and may purchase Shares of any Series from
any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or purchase
of Shares of such Series generally.
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Section 4.2 Establishment and Designation of Series and Sub-Series.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Series or Sub-Series or to classify all or
any part of the issued Shares of any Series to make them part of any existing or
newly created Sub-Series or to amend the rights and preferences of new or
existing Series or Sub-Series, including the following Series, all without
Shareholder approval, there are hereby established and designated initial Series
of Shares designated Series A, which shall represent interests in Fairport
Midwest Growth Fund, Series B, which shall represent interests in Fairport
Growth and Income Fund, and Series C, which shall represent interests in
Fairport Government Securities Fund. Shares of Series A, Series B and Series C
and, unless provisions to the contrary are set forth in an amendment of the
Declaration of Trust, Shares of each additional Series, shall have the following
relative rights and preferences:
(a) Assets Belonging to a Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall irrevocably
belong to that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the
same may be, together with any General Items allocated to that Series
as provided in the following sentence, are herein referred to as
"assets belonging to" that Series. In the event that there are any
assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any
particular Series (collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or more of the Series
established and designated from time to time in such manner and on such
basis as they, in their sole discretion, deem fair and equitable; and
any General Items so allocated to a particular Series shall belong to
that Series. Each such allocation by the Trustees shall be conclusive
and binding upon the Shareholders of all Series for all purposes.
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The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(b) Liabilities Belonging to a Series. The assets belonging to
each particular Series shall be charged with the liabilities of the
Trust in respect of that Series and all expenses, costs, charges and
reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series shall be allocated
and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair and equitable.
The liabilities, expenses, costs, charges and reserves allocated and so
charged to a Series are herein referred to as "liabilities belonging
to" that Series. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the Trustees may
determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, to the holders of Shares of that Series,
from such of the income and capital gains, accrued or realized, from
the assets belonging to that Series, as the Trustees may determine,
after providing for actual and accrued liabilities belonging to that
Series. All dividends and distributions on Shares of a particular
Series shall be distributed pro rata to the holders of that Series in
proportion to the number of Shares of that Series held by such holders
at the date and time of record established for the payment of such
dividends and distributions, except that in connection with any
dividend or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on Shares
as to which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Trustees under
such program or procedure. Such dividends and distributions may be made
in cash or Shares or a combination thereof as determined by the
Trustees or pursuant to any program that the Trustees may have in
effect at the time for the election by each Shareholder of the mode of
the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with subsection (h) of
Section 4.2.
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The Trust intends to qualify as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended, or any successor or comparable
statute thereto, and regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax purposes may vary
from the computation thereof on the books of the Trust, the Board of Trustees
shall have the power, in its sole discretion, to distribute in any fiscal year
as dividends, including dividends designated in whole or in part as capital
gains distributions, amounts sufficient, in the opinion of the Board of
Trustees, to enable the Trust to qualify as a regulated investment company and
to avoid liability of the Trust for federal income and excise tax in respect to
that year. However, nothing in the foregoing shall limit the authority of the
Board of Trustees to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability of
the Trust for such tax.
(d) Liquidation. In event of the liquidation and dissolution of
the Trust or any one or more of the Series, the Shareholders of each
Series that has been established and designated and which is to be
liquidated and dissolved shall be entitled to receive, as a Series,
when and as declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging to that Series.
The assets so distributable to the Shareholders of any particular
Series shall be distributed among such Shareholders in proportion to
the number of Shares of that Series held by them and recorded on the
books of the Trust.
(e) Voting. All Shares of all Series shall have "equal voting
rights" as provided in Section 18(i) of the Investment Company Act of
1940, as amended, except as otherwise permitted by the 1940 Act,
including Rule 18f-2 thereunder. The holder of each of the Shares shall
be entitled to one vote for each dollar of value attributable thereto.
On each matter submitted to a vote of the Shareholders, all Shares of
all Series shall vote as a single class ("Single Class Voting"),
provided, however, that (a) as to any matter with respect to which a
separate vote of any Series is required by the 1940 Act, such
requirements as to a separate vote by that Series shall apply in lieu
of Single Class Voting as described above; (b) in the event that the
separate vote requirements referred to in (a) above apply with respect
to one or more Series, then, subject to (c) below, the Shares of all
other Series shall vote as a single class; and (c) as to any matter
which does not affect the interest of a particular Series, only the
holders of Shares of the one or more affected Series shall be entitled
to vote.
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(f) Redemption by Shareholder. Each holder of Shares of a
particular Series shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to
require the Trust to redeem all or any part of his Shares of that
Series at a redemption price equal to the net asset value per Share of
that Series next determined in accordance with subsection (h) of this
Section 4.2 after the Shares are properly tendered for redemption.
Payment of the redemption price shall be in cash; provided, however,
that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash
unwise or undesirable, the Trust may make payment wholly or partly in
securities or other assets belonging to the Series of which the Shares
being redeemed are part at the value of such securities or assets used
in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Series to require the Trust to redeem Shares of that Series during any period or
at any time when and to the extent permissible under the 1940 Act, and such
redemption is conditioned upon the Trust having funds or property legally
available therefor.
(g) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being
redeemed by the Shareholder pursuant to subsection (f) of this Section
4.2: (i) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse
consequences to all or any of the holders of the Shares, or any Series
thereof, of the Trust, or (ii) upon such other conditions as may from
time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust applicable to such Shares or any Series
thereof with respect to maintenance of Shareholder accounts of a
minimum amount. Upon such redemption the holders of the Shares so
redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of the Shares
of any Series shall be the quotient obtained by dividing the value of
the net assets of that Series (being the value of the assets belonging
to that Series less the liabilities belonging to that Series) by the
total number of Shares of that Series outstanding, all determined in
accordance with the methods and procedures, including without
limitation those with respect to rounding, established by the Trustees
from time to time.
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The Trustees may determine to maintain the net asset value per
Share of any Series at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the
1940 Act for the continuing declarations of income attributable to that
Series as dividends payable in additional Shares of that Series at the
designated constant dollar amount and for the handling of any losses
attributable to that Series. Such procedures may provide that in the
event of any loss each Shareholder shall be deemed to have contributed
to the capital of the Trust attributable to that Series his pro rata
portion of the total number of Shares required to be canceled in order
to permit the net asset value per Share of that Series to be
maintained, after reflecting such loss, at the designated constant
dollar amount. Each Shareholder of the Trust shall be deemed to have
agreed, by his investment in any Series with respect to which the
Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any
such loss.
(i) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will be
recorded on the Share transfer records of the Trust applicable to that
Series only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of that Series and at such other
times as may be permitted by the Trustees.
(j) Equality. Except as otherwise may be set forth in this
Declaration of Trust all Shares of each particular Series shall
represent an equal proportionate interest in the assets belonging to
that Series (subject to the liabilities belonging to that Series), and
each Share of any particular Series shall be equal to each other Share
of that Series; but the provisions of this sentence shall not restrict
any distinctions permissible under subsection (c) of this Section 4.2
that may exist with respect to dividends and distributions on Shares of
the same Series. The Trustees may from time to time divide or combine
the Shares of any particular Series into a greater or lesser number of
Shares of that Series without thereby changing the proportionate
beneficial interest in the assets belonging to that Series or in any
way affecting the rights of Shares of any other Series.
(k) Fractions. Any fractional Share of any Series, if any such
fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole share of that Series, including with
respect to voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series shall have the right to
convert said Shares into Shares of one or more other Series in
accordance with such requirements and procedures as may be established
by the Trustees.
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Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
and Sub-Series that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust which are kept by the Trust or any transfer or similar agent,
as the case may be, shall be conclusive as to who are the Shareholders and as to
the number of Shares of each Series and Sub-Series held from time to time by
each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
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ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power, and shall
be entitled, to vote only (i) for the election or removal of Trustees as
provided in Section 3.1, (ii) with respect to any contract with a Contracting
Party as provided in Section 3.3 as to which Shareholder approval is required by
the 1940 Act, (iii) with respect to any termination or reorganization of the
Trust or any Series to the extent and as provided in Sections 7.1, 7.2 and 7.3,
(iv) with respect to any amendment of this Declaration of Trust to the extent
and as provided in Section 7.4, (v) to the same extent as the stockholders of an
Ohio corporation organized under Chapter 1701, Ohio Revised Code, as to whether
or not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (vi) with respect to such additional matters relating to the
Trust as may be required by the 1940 Act, this Declaration of Trust, the By-Laws
or any registration of the Trust with the Commission (or any successor agency)
or any state, or as the Trustees otherwise may consider necessary or desirable.
There shall be no cumulative voting in the election of any Trustee or Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden or proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the
By-Laws to be taken by Shareholders.
Section 5.2 Meetings. Meetings of the Shareholders of Trust or of any
one or more of its Series or Sub-Series may be called by the Trustees, and shall
be called by the Trustees whenever required by law or upon the written request
of holders of at least twenty percent of all votes attributable to the
outstanding Shares of the Trust or, as applicable, any one or more of its Series
or Sub-Series, entitled to vote.
Written notice, stating the place, day, and hour of each meeting of
Shareholders and the general nature of the business to be transacted, shall be
given by, or at the direction of, the person calling the meeting to each
Shareholder of record entitled to vote at the meeting at least ten days prior to
the day named for the meeting, unless in a particular case a different period of
notice is required by law.
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Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 90 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or distributions
on Shares that have not been ordered and/or paid for by the time or times
established by the Trustees under the applicable dividend or distribution
program or procedure then in effect) to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 Quorum and Required Vote. At any meeting of the
Shareholders at which the only actions to be taken are actions permitted by the
1940 Act to be taken by vote of all Shareholders of the Trust, voting together,
a quorum for the transaction of business shall consist of a majority represented
in person or by proxy of all votes attributable to the outstanding Shares
(without regard to individual Series or Sub-Series) entitled to vote with
respect to the matters; provided, however, that at any meeting at which the only
actions to be taken are actions involving matters required by the 1940 Act to be
taken by vote of the Shareholders of one or more individual Series or
Sub-Series, voting separately by Series or Sub-Series, a quorum with respect to
such matters shall consist of a majority of all votes attributable to the
outstanding Shares of such individual Series or Sub-Series entitled to vote
thereon, and provided further that at any meeting at which the actions to be
taken shall have been determined by the Board of Trustees to include both
actions permitted by the 1940 Act to be voted on by all Shareholders of the
Trust, voting together, and actions required by the 1940 Act to be voted on by
the Shareholders of one or more of the Series or Sub-Series, voting separately
by Series or Sub-Series, the meeting shall be divided into the number of
meetings equal to the number of matters being voted upon and a quorum shall be
determined by issue or matter to be voted on as set forth in the foregoing
provisions; and provided further, that reasonable adjournments of such meeting
or meetings or any portion thereof until a quorum is obtained may be made by a
vote attributable to the Shares present in person or by proxy and entitled to
vote on the matter or matters.
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A majority of the votes shall decide any question and a plurality shall
elect a Trustee, subject to any applicable requirements of law or of this
Declaration of Trust or the By-Laws; provided, however, that when any provision
of law or of this Declaration of Trust requires the holders of Shares of any
particular Series or Sub-Series to vote by Series or Sub-Series and not in the
aggregate with respect to a matter, then a majority of all votes attributable to
the outstanding Shares of that Series or Sub-Series shall decide such matter
insofar as that particular Series or Sub-Series shall be concerned.
Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such other proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the By-Laws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation organized under Chapter 1701, Ohio Revised
Code.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
A note, bond, contract, instrument, certificate or undertaking made or
issued by the Trust or Trustees or by any officer, employee or agent in writing
may give notice that this Declaration of Trust is on file with the Secretary of
State of Ohio and may recite to the effect that the same was executed or made by
or on behalf of the Trust or by them as Trustee, officer, employee or agent and
not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually
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but are binding only upon the assets and property of the Trust, as set forth in
Section 1746.13(A), Ohio Revised Code, but the omission thereof shall not
operate to bind any Trustee, officer, employee, agent or Shareholder
individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party authorized by the Trustees pursuant to Section 3.3. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder or
former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
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Section 6.4 Indemnification of Trustees, Officers, etc. 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 settlement or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Covered Person 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 ("disabling conduct"). Anything herein contained to
the contrary notwithstanding, no Covered Person shall be indemnified for any
liability to the Trust or its Shareholders to which such Covered Person would
otherwise be subject unless (a) a final decision on the merits is made by a
court or other body before whom the proceeding was brought that the Covered
Person to be indemnified was not liable by reason of disabling conduct or, (b)
in the absence of such a decision, a reasonable determination is made, based
upon a review of the facts, that the Covered Person was not liable by reason of
disabling conduct, by (i) the vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as defined in the 1940 Act nor parties
to the proceeding ("disinterested, non-party Trustees"), or (ii) an independent
legal counsel in a written opinion.
Section 6.5 Advances of Expenses. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding,
upon the undertaking by or on behalf of the Covered Person to repay the advance
unless it is ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is met: (a) the
Covered Person shall provide security for his undertaking, (b) the Trust shall
be insured against losses arising by reason of any lawful advances, or (c) a
majority of a quorum of the 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 the Covered Person ultimately will be found
entitled to indemnification.
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 VI shall affect any rights
to indemnification to which personnel of the Trust, other than any Covered
Person, 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.
Section 6.7 Liability of Series. Liabilities belonging to any Series or
Sub-Series of the Trust, including, without limitation, expenses, fees, charges,
taxes, and liabilities incurred or arising in
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connection with a particular Series or Sub-Series, or in connection with the
management thereof, shall be paid only from the assets belonging to that Series
or Sub-Series.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by the vote of Shareholders holding at least a
majority of the votes attributable to the outstanding Shares without regard to
Series or Sub-Series, or by the Trustees by written notice to the Shareholders.
Any Series of Shares may be terminated at any time by vote of Shareholders
holding at least a majority of the votes attributable to the outstanding Shares
of such Series, without regard to Sub-Series, or by the Trustees by written
notice to the Shareholders of such Series.
Upon termination of the Trust or of any one or more Series, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or of the particular Series
as may be determined by the Trustees, the Trust shall, in accordance with such
procedures as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series involved,
ratably according to the number of Shares of such Series held by the several
Shareholders of such Series on the date of termination, all as set forth in
subsection (d) of Section 4.2.
Section 7.2 Sale or Disposition of Assets. The Trustees may sell,
convey and transfer the assets of the Trust, or the assets belonging to any one
or more Series, to another trust, partnership, association or corporation
organized under the laws of any state of the United States, or to the Trust to
be held as assets belonging to another Series of the Trust, in exchange for
cash, shares or other securities (including, in the case of a transfer to
another Series of the Trust, Shares of such other Series) with such transfer
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Series the assets of which are so transferred;
provided, however, that if shareholder approval is required by the 1940 Act, no
assets belonging to any particular Series shall be so transferred unless the
terms of such transfer shall have first been approved at a meeting called for
that purpose by the affirmative vote of Shareholders holding a majority of the
voting power of that Series. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
Series the assets belonging to which have so been transferred) among the
Shareholders of the Series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred, the
Trust shall be terminated.
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Section 7.3 Merger or Consolidation. The Trust or any Series thereof
may be a party, with one or more entities (including another Series) to an
agreement of merger or consolidation; provided, however, that any such agreement
of merger or consolidation shall be approved by the Trustees and, if Shareholder
approval is required by the 1940 Act, by the affirmative vote of Shareholders
holding a majority of the voting power of the Trust or of each Series affected.
Section 7.4 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when authorized so to do
by the vote, in accordance with subsection (e) of Section 4.2, of Shareholders
holding a majority of the voting power of Shares entitled to vote, except that
amendments either (i) establishing and designating any new Series or Sub-Series
of Shares and changing the rights of the Shares of any existing or new Series or
Sub-Series, or (ii) abolishing any Series or Sub- Series under the circumstances
described in Sections 4.1 or 7.1, or having the purpose of changing the name of
the Trust or the name of any Series or Sub-Series theretofore established and
designated or of conforming the provisions hereof to the requirements of state
or federal law or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any provision hereof which is internally
inconsistent with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code of 1986 and applicable regulations for the Trust's obtaining the most
favorable treatment thereunder available to regulated investment companies,
shall not require authorization by Shareholder vote. In addition, amendment of
this Declaration of Trust as it may affect any one or more Series may be
effected by vote of the Trustees at any time when the Trust has no outstanding
Shares or Shareholders of such Series. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the terms
of such amendment or, if there is no provi sion therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer of the Trust
to the effect that such amendment has been duly adopted.
Section 7.5 Absence of Dissenters' Rights. No shareholder shall be
entitled, as a matter of right, to relief as a dissenting shareholder in respect
of any proposal or action involving the Trust.
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Section 7.6 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. An original of this
instrument and each amendment hereto, or a copy of this instrument and of each
amendment hereto certified as true and correct by a Trustee before a Notary
Public, shall be filed by the Trust with the Secretary of the State of Ohio,
together with the report required by Section 1746.04, Ohio Revised Code. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such amendments have been made, as to the identities of
the Trustees and officers, and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendments. In this instrument and in any such amendment, references to
this instrument, and all expressions like "herein", "hereof" and "hereunder"
shall be deemed to refer to this instrument as a whole as the same may be
amended or affected by any such amendments. The masculine gender shall include
the feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7.7 Applicable Law. This Declaration of Trust is made in the
State of Ohio and it is created under and is to be governed by and construed and
administered according to the laws of said State, as the same may be amended
from time to time, to which reference is made.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand in the
City of Cleveland, Ohio for himself and his assigns, as of the day and year
first above written.
-----------------
Scott D. Roulston
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EXHIBIT 99.B (2)
BY-LAWS
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BY-LAWS
OF
FAIRPORT FUNDS
ARTICLE I
Declaration of Trust and Offices
1.1 Declaration of Trust. These By-Laws shall be subject to the
Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of Fairport Funds, the Ohio business trust established by the
Declaration of Trust (the "Trust").
1.2 Offices. The Trust shall maintain its principal office in
Cleveland, Ohio, or in such other city as the Trustees otherwise may determine.
ARTICLE II
Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board, President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the officer of the Trustees calling the meeting.
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2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting except as
otherwise provided by the Investment Company Act of 1940.
2.6 Action by Consent. Unless otherwise required by the Investment
Company Act of 1940, any action required or permitted to be taken at any meeting
of the Trustees or any committee thereof may be taken without a meeting, if a
written consent of such action is signed by a majority of the Trustees then in
office or a majority of the members of such committee, as the case may be, and
such written consent is filed with the minutes of the proceedings of the
Trustees of such committee.
2.7 Chairman of the Board. The Trustees may at any time appoint one of
their number as Chairman of the Board, who shall serve at the pleasure of the
Trustees and who shall perform and execute such duties as the Trustees may from
time to time provide but who shall not by reason of performing or executing
these duties be deemed an officer or employee of the Trust.
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ARTICLE III
Officers
3.1 Number. The officers of the Trust shall be chosen by the Trustees
and shall include a President, who shall be a Trustee, a Secretary and a
Treasurer. the Board of Trustees may, from time to time, elect or appoint one or
more Vice Presidents, Assistant Secretaries, and Assistant Treasurers.
3.2 Other Officers. The Trustees may from time to time appoint such
other officers and agents as they shall deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Trustees. The Trustees may delegate
to one or more officers or agents the power to appoint any such subordinate
officers or agents and to prescribe their respective rights, terms of office,
authorities, and duties.
3.3 Election and Tenure. The officers of the Trust shall be chosen
annually by the Trustees. Two or more offices may be held by the same person but
no officer shall execute, acknowledge, or verify any instrument in more than one
capacity, if such instrument is required by law, the Declaration of Trust, or
these By-Laws to be executed, acknowledged, or verified by two or more officers.
Any officer or agent may be removed by the Trustees. An officer of the Trust may
resign by filing a written resignation with the President, with the Trustees, or
with the Secretary. Any vacancy occurring in any office of the Trust by death,
resignation, removal, or otherwise shall be filled by the Trustees.
3.4 Compensation. The salaries or other compensation of all officers
and agents of the Trust shall be fixed by the Trustees, except that the Trustees
may delegate to any committee the power to fix the salary or other compensation
of any officer of the Trust.
3.5 President. The President shall be the chief executive officer of
the Trust, shall preside at all meetings of the Shareholders and the Trustees
unless a chairman has been designated, shall be a member ex officio of all
standing committees, and shall see that all orders and resolutions of the
Trustees are carried into effect. The President, or such person as the President
may designate, shall sign, execute, and acknowledge, in the name of the Trust,
deeds, mortgages, bonds, contracts, and other instruments authorized by the
Trustees, except in the case where the signing and execution thereof shall be
delegated by the Trustees to some other officer or agent of the Trust. The
President shall also be the chief administrative officer of the Trust and shall
perform such other duties and have such other powers as the Trustees may from
time to time prescribe.
3.6 Vice Presidents. The Vice Presidents, if any, in the order of their
seniority, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties as the Trustees may from time to time prescribe.
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3.7 Secretary. The Secretary shall attend meetings of the Trustees and
meetings of the Shareholders and record all the proceedings thereof and shall
perform like duties for any committee when required. The Secretary shall give,
or cause to be given, notice of meetings of the Shareholders and of the
Trustees, and shall perform such other duties as may be prescribed by the
Trustees or the President, under whose supervision he or she shall be.
3.8 Assistant Secretaries. The Assistant Secretaries, if any, when so
directed by the Secretary, or in the absence or disability of the Secretary, in
order of their seniority, shall perform the duties and exercise the powers of
the Secretary and shall perform such other duties as the Trustees shall
prescribe.
3.9 Treasurer. The Treasurer shall be the chief financial officer of
the Trust and shall be responsible for the maintenance of its accounting records
and shall render to the Trustees when the Trustees so require an account of all
the Trust's financial transactions and a report of the financial condition of
the Trust.
3.10 Assistant Treasurers. The Assistant Treasurers, if any, when so
directed by the Treasurer, or in the absence or disability of the Treasurer, in
the order of their seniority, shall perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as the Trustees may from
time to time prescribe.
ARTICLE IV
Committees
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these By-Laws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these By-Laws for the Trustees
themselves. All members of such committees shall hold offices at the pleasure of
the Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
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ARTICLE V
Reports
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable laws.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE VI
Fiscal Year
6.1 General. The fiscal year of the Trust shall be fixed, and shall be
subject to change by the Trustees.
ARTICLE VII
Seal
7.1 General. If required by applicable law, the seal of the Trust shall
consist of a flat-faced die with the word "Ohio," together with the name of the
Trust and the year of its organization cut or engraved thereon, but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
ARTICLE VIII
Issuance of Share Certificates
8.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
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The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or a Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimiles if the certificate is signed by a transfer agent,
or by a registrar, other than a Trustee, officer or employee of the Trust. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such certificate is
issued, it may be issued by the Trust with the same effect as if he were such
officer at the time of its issue.
8.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
8.3 Issuance of New Certificate to Pledgee. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a shareholder and entitled to vote thereon.
8.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
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ARTICLE IX
Custodian
9.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Twenty-Five
Million Dollars ($25,000,000) as Custodian of the capital assets of the Trust.
The Custodian shall be compensated for its services by the Trust and upon such
basis as shall be agreed upon from time to time between the Trust and the
Custodian.
ARTICLE X
Dealings with Trustees and Officers
10.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trust may accept subscriptions to
shares or repurchase shares from any firm or company in which he or she is
interested.
ARTICLE XI
Amendments to the By-Laws
11.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
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EXHIBIT 99.B (5)
INVESTMENT ADVISORY AGREEMENT
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INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of January 20, 1995, between The Roulston
Family of Funds, an Ohio business trust (the "Trust"), and Roulston & Company,
Inc., an Ohio corporation (the "Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to the newly created investment portfolios of the Trust and
may retain the Adviser to serve in such capacity to certain additional
investment portfolios of the Trust, all as now or hereafter may be identified in
Schedule A hereto (such initial investment portfolios and any such additional
investment portfolios together called the "Funds") and the Adviser represents
that it is willing and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained in this Agreement, the parties hereto agree as follows:
Section 1. Appointment. The Trust hereby appoints the Adviser to act as
investment adviser to the Funds for the period and on the terms and subject to
the conditions set forth in this Agreement. The Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided. Additional investment portfolios may from time to time be added to
those covered by this Agreement by the parties executing a new Schedule A which
shall become effective upon its execution and shall supersede any Schedule A
having an earlier date.
Section 2. Investment Advisory Services. Subject to the supervision of
the Trust's Board of Trustees, the Adviser shall provide a continuous investment
program for the Funds, including investment, research and management with
respect to all securities and investments and cash equivalents in the Funds. The
Adviser shall determine from time to time what securities and other investments
will be purchased, retained or sold by the Trust with respect to the Funds. The
Adviser shall provide the services under this Agreement in accordance with each
of the Fund's investment objectives, policies, and restrictions as stated in
such Fund's most current Prospectus and Statement of Additional Information, as
then in effect, and all amendments or supplements thereto, and resolutions of
the Trust's Board of Trustees as may be adopted from time to time. The Adviser
further agrees that it:
C-38
<PAGE> 3
(a) will use the same skill and care in providing such services as it
uses in providing services to any fiduciary accounts for which it has investment
responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission (the "Commission") and, in addition, will
conduct its activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment advisory
activities of the Adviser;
(c) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers, the Adviser will attempt to obtain and is
hereby directed to obtain prompt execution of orders in an effective manner at
the most favorable price. Consistent with this obligation, the Adviser may, in
its discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Adviser with brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934). Subject to the
review of the Trust's Board of Trustees from time-to-time with respect to the
extent and continuation of this policy, the Adviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for effecting a securities transaction for any of the Funds which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities of the
Adviser with respect to the accounts as to which it exercises investment
discretion. In no instance will portfolio securities be purchased from or sold
to Roulston Research Corp., the Adviser, or any affiliated person of the Trust,
Roulston Research Corp. or the Adviser unless otherwise permitted by the 1940
Act, an exemption therefrom, or an order thereunder;
(d) will maintain all books and records with respect to the securities
transactions of the Funds and will furnish the Trust's Board of Trustees such
periodic and special reports as the Board may request; and
(e) will advise and assist the officers of the Trust in taking such
actions as may be necessary or appropriate to carry out the decisions of the
Trust's Board of Trustees and of the appropriate committees of such Board
regarding the conduct of the business of the Funds; and
Section 3. Expenses. During the term of this Agreement, the Adviser
will pay all expenses incurred by it in connection with its activities, duties
and obligations under this Agreement, other than the costs of securities
(including brokerage fees, if any) purchased for the Funds.
C-39
<PAGE> 4
Section 4. Compensation. For the services provided and the expenses
assumed pursuant to this Agreement, each of the Funds will pay the Adviser and
the Adviser will accept as full compensation therefor a fee set forth on
Schedule A hereto. The obligations of the Funds to pay the above-described fee
to the Adviser will begin as of the respective dates of the initial public sale
of shares in the Funds, including any shares sold or exchanged in connection
with a merger, consolidation or reorganization involving one or more of the
Funds.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, the Adviser will
reimburse such Fund for such excess expenses. The obligation of the Adviser to
reimburse the Funds hereunder is limited in any fiscal year to the amount of its
fee hereunder for such fiscal year; provided, however, that notwithstanding the
foregoing, the Adviser shall reimburse the Funds for such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over the
Trust so require. Such expense reimbursement, if any, will be estimated daily
and reconciled and paid on a monthly basis.
Section 5. Limitation of Liability. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Funds in
connection with the performance of this Agree ment, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
Section 6. Duration and Termination. This Agreement will become
effective as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date a registration statement relating to that
Fund becomes effective with the Commission), provided that it shall have been
approved by vote of a majority of the outstanding voting securities of such
Fund, in accordance with the requirements, if any, under the 1940 Act, and,
unless sooner terminated as provided herein, shall continue in effect until
January 20, 1997.
C-40
<PAGE> 5
Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Fund for successive periods of twelve months each ending on
January 20th of each year, provided such continu ance is specifically approved
at least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding shares of such Fund. Notwithstanding the foregoing, this Agreement
may be terminated as to a particular Fund at any time on sixty days' written
notice, without the payment of any penalty, by the Trust (by vote of the Trust's
Board of Trustees or by vote of a majority of the outstanding voting securities
of such Fund) or by the Adviser. This Agreement will immediately terminate in
the event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested persons" and "assignment" shall
have the same meanings as ascribed to such terms in the 1940 Act.)
Section 7. Name. The Trust hereby acknowledges that the name "Roulston"
is a property right of the Adviser. The Adviser agrees that the Trust and the
Funds may, so long as this Agreement remains in effect, use "Roulston" as part
of its name. The Adviser may permit other persons, firms or corporations,
including other investment companies, to use such name and may, upon termination
of this Agreement, require the Trust and the Funds to refrain from using the
name "Roulston" in any form or combination in its name or in its business or in
the name of any of its Funds, and the Trust shall, as soon as practicable
following its receipt of any such request from the Adviser, so refrain from
using such name.
Section 8. Adviser's Representations. The Adviser hereby represents and
warrants that it is willing and possesses all requisite legal authority to
provide the services contemplated by this Agreement without violation of
applicable laws and regulations.
Section 9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
Section 10. Miscellaneous. 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 con struction 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the laws of the State of Ohio.
C-41
<PAGE> 6
The Roulston Family of Funds is a business trust organized under
Chapter 1746, Ohio Revised Code and under a Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of Ohio as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The Roulston Family of
Funds" entered into in the name or on behalf thereof by any of the Trustees,
officers, employees or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, officers, employees, agents or
shareholders of the Trust personally, but bind only the assets of the Trust, as
set forth in Section 1746.13(A), Ohio Revised Code, and all persons dealing with
any of the Funds of the Trust must look solely to the assets of the Trust
belonging to such Fund for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE ROULSTON FAMILY OF FUNDS
By: /s/ Scott D. Roulston
----------------------------
Name: Scott D. Roulston
--------------------------
Title: President
------------------------
ROULSTON & COMPANY, INC.
By: /s/ Ronald G. Fountain
----------------------------
Name: Ronald G. Fountain
--------------------------
Title: Sr. Exec. V.P.
------------------------
C-42
<PAGE> 7
Dated as of: January 20, 1995
Amended as of: March 1, 1996
SCHEDULE "A"
Investment Advisory Agreement
between
FAIRPORT FUNDS
and
ROULSTON & COMPANY, INC.
<TABLE>
<CAPTION>
Name of Fund Compensation*
- ------------ -------------
<S> <C>
Fairport Midwest Growth Fund Annual rate of seventy-five one hundredths
of one percent (0.75%) of the average daily
net assets of such Fund up to $100 Million
and fifty one-hundredths of one percent
(0.50%) of the average daily net assets of such
Fund of $100 Million or more.
Fairport Growth and Income Fund Annual rate of seventy-five one hundredths
of one percent (0.75%) of the average daily
net assets of such Fund up to $100 Million
and fifty one-hundredths of one percent
(0.50%) of the average daily net assets of such
Fund of $100 Million or more.
Fairport Government Securities Fund Annual rate of twenty-five one-hundredths
of one percent (.25%) of the average daily net
assets of such Fund up to $100 Million and
one hundred twenty-five one thousandths of
one percent (0.125%) of the average daily net
assets of such Fund of $100 Million or more.
</TABLE>
ROULSTON & COMPANY, INC. THE ROULSTON FAMILY OF FUNDS
By: /s/ Ronald G. Fountain By: /s/ Scott D. Roulston
--------------------------- -------------------------
Name: Ronald G. Fountain Name: Scott D. Roulston
------------------------- -----------------------
Title: Sr. Exec. V.P. Title: President
------------------------ ----------------------
* All fees are computed and paid monthly.
C-43
<PAGE> 1
EXHIBIT 99.B (6)(A)
DISTRIBUTION AGREEMENT
C-44
<PAGE> 2
DISTRIBUTION AGREEMENT
January 20, 1995
Roulston Research Corp.
4000 Chester Avenue
Cleveland, Ohio 44103
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, The Roulston Family of Funds, an Ohio business trust
(the "Trust"), has agreed that Roulston Research Corp., an Ohio corporation
("Distributor"), shall be, for the period of this Distribution Agreement (the
"Agreement"), the principal underwriter and distributor of the shares of
beneficial interest of each currently constituted investment portfolio and any
additional investment portfolios of the Trust, as each is or will be identified
on Schedule A hereto (such current investment portfolios and any additional
investment portfolios together called the "Funds"). Such shares of beneficial
interest are hereinafter called "Shares."
1. Services as Distributor.
1.1 Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectus of the Trust then in effect
under the Securities Act of 1933, as amended (the "1933 Act").
1.2 Distributor agrees to use appropriate efforts to solicit orders for
the sale of the Shares and will undertake such advertising and promotion as it
believes reasonable in connection with such solicitation. The Trust understands
that Distributor is now and, in the future, may be the distributor of the shares
of other investment companies or series (together, "Companies") including
Companies having investment objectives similar to those of the Funds of the
Trust. The Trust further understands that investors and potential investors in
the Trust may invest in shares of such other Companies. The Trust agrees that
Distributor's duties to such Companies shall not be deemed in conflict with its
duties to the Trust under this paragraph 1.2.
Except as provided in Section 2 herein, Distributor shall, at its own
expense, finance appropriate activities which it deems reasonable which are
primarily intended to result in the sale of the Shares, including, but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of prospectuses to other than current
Shareholders, and the printing and mailing of sales literature.
C-45
<PAGE> 3
1.3 All activities by Distributor and its shareholders, directors,
agents, and employees as distributor of the Shares shall comply with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended ("1940 Act"), and the Securities Exchange Act of 1934, as amended
(the "1934 Act"), by the Securities and Exchange Commission (the "Commission")
or any securities association registered under the 1934 Act.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust and
the Funds.
1.5 Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent and custodian for the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) quarterly earnings statements prepared by
the Trust, (c) a monthly itemized list of the securities in the Funds, (d)
monthly balance sheets as soon as practicable after the end of each month, and
(e) from time to time such additional information regarding the financial
condition of the Funds as Distributor may reasonably request.
C-46
<PAGE> 4
1.10 The Trust represents to Distributor that all registration
statements and prospectuses filed by the Trust with the Commission under the
1933 Act with respect to the Shares have been carefully prepared in conformity
with the requirements of the 1933 Act and rules and regulations of the
Commission thereunder. As used in this agreement the terms "registration
statement" and "prospectus" shall mean any registration statement and any
prospectus and statement of additional information relating to the Funds filed
with the Commission and any amendments and supplements thereto which at any time
shall have been filed with the Commission. The Trust represents and warrants to
Distributor that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with the 1933 Act and the rules and
regulations of the Commission; that all statements of fact contained in any such
registration statement and prospectus will be true and correct when such
registration statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of the Shares. The Trust may but shall not be
obligated to propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus as,
in the light of future developments, may, in the opinion of the Trust's counsel,
be necessary or advisable. If the Trust shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days after receipt by
the Trust of a written request from Distributor to do so, Distributor may, at
its option, terminate this agreement. The Trust shall not file any amendment to
any registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.11 The Trust authorizes Distributor and dealers to use any prospectus
in the form most recently furnished in connection with the sale of the Shares.
The Trust agrees to indemnify, defend and hold Distributor, its directors,
shareholders and employees, and any person who controls Distributor within the
meaning of Section 15 of the 1933 Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which Distributor, its shareholders,
directors and employees, or any such controlling person, may incur under the
1933 Act or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Trust's
agreement to indemnify Distributor, its shareholders, directors or employees,
and any such controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any statements or
representations as are contained in any prospectus and in such financial and
other statements as are furnished in writing to the Trust by Distributor and
used in the answers to the registration statement or in the corresponding
statements made in the prospectus, or arising out of or based upon any omission
or alleged omission to state a material fact in connection with the giving of
such information required to be stated in such answers or necessary to make the
answers not misleading; and further provided that the Trust's agreement to
indemnify Distributor and the Trust's representations and warranties
hereinbefore set forth in paragraph 1.10 shall not be deemed to cover any
C-47
<PAGE> 5
liability to the Trust or its Shareholders to which Distributor would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of Distributor's reckless disregard
of its obligations and duties under this agreement. The Trust's agreement to
indemnify Distributor, its shareholders, directors and employees, and any such
controlling person, as aforesaid, is expressly conditioned upon the Trust's
being notified of any action brought against Distributor, its shareholders,
directors or employees, or any such controlling person, such notification to be
given by letter or by telegram addressed to the Trust at its principal office in
Cleveland, Ohio and sent to the Trust by the person against whom such action is
brought, within 10 days after the summons or other first legal process shall
have been served. The failure to so notify the Trust of any such action shall
not relieve the Trust from any liability which the Trust may have to the person
against whom such action is brought by reason of any such untrue, or allegedly
untrue, statement or omission, or alleged omission, otherwise than on account of
the Trust's indemnity agreement contained in this paragraph 1.11. The Trust will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Trust and approved by Distributor, which
approval shall not be unreasonably withheld. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing approved
by Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Distributor, its shareholders, directors and employees, or
the controlling person or persons named as defendant or defendants in such suit,
for the fees and expenses of any counsel retained by Distributor or them. The
Trust's indemnification agreement contained in this paragraph 1.11 and the
Trust's representations and warranties in this agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of Distributor, its shareholders, directors and employees, or any
controlling person, and shall survive the delivery of any Shares. This agreement
of indemnity will inure exclusively to Distributor's benefit, to the benefit of
its several shareholders, directors and employees, and their respective estates,
and to the benefit of the controlling persons and their successors. The Trust
agrees promptly to notify Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or Trustees in connection
with the issue and sale of any Shares.
C-48
<PAGE> 6
1.12 Distributor agrees to indemnify, defend and hold the Trust, its
several officers and Trustees and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or Trustees
or any such controlling person, may incur under the 1933 Act or under common law
or otherwise, but only to the extent that such liability or expense incurred by
the Trust, its officers or Trustees or such controlling person resulting from
such claims or demands, shall arise out of or be based upon any untrue, or
alleged untrue, statement of a material fact contained in information furnished
in writing by Distributor to the Trust and used in the answers to any of the
items of the registration statement or in the corresponding statements made in
the prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Distributor to the Trust required to be stated in such answers or
necessary to make such information not misleading. Distributor's agreement to
indemnify the Trust, its officers and Trustees, and any such controlling person,
as aforesaid, is expressly conditioned upon Distributor's being notified of any
action brought against the Trust, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in Cleveland, Ohio, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Trust, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in any other event the Trust, its officers or Trustees or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure to so notify Distributor of any such
action shall not relieve Distributor from any liability which Distributor may
have to the Trust, its officers or Trustees, or to such controlling person by
reason of any such untrue or alleged untrue statement, or omission or alleged
omission, otherwise than on account of Distributor's indemnity agreement
contained in this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Trust
under any of the 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 then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 10(a) of
the 1933 Act is not on file with the Commission; provided, however, that nothing
contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any Shareholder in accordance with the provisions of the Trust's prospectus,
Declaration of Trust, or By-Laws.
1.14 The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for additional
information;
C-49
<PAGE> 7
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation by service of process on
the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement
of a material fact made in the registration statement or prospectus
then in effect or which requires the making of a change in such
registration statement or prospectus in order to make the statements
therein not misleading; and
(d) of all action of the Commission with respect to any amendment
to any registration statement or prospectus which may from time to time
be filed with the Commission.
For purposes of this section, informal requests by or acts of the Staff
of the Commission shall not be deemed actions of or requests by the Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
1.16 This Agreement shall be governed by the laws of the State of
Ohio.
2. Fee.
Distributor shall receive from the Funds identified on Schedule B
hereto a distribution fee at the rate and upon the terms and conditions set
forth in the Distribution and Shareholder Service Plan attached as Schedule C
hereto, and as amended from time to time. The distribution fee described above
shall be accrued daily and shall be paid on the first business day of each
month, or at such time(s) as Distributor shall reasonably request.
3. Sale and Payment.
(a) Distributor shall, as agent for the Trust, sell Shares of the
Funds to the public and to dealers against orders therefor at their net
asset value.
(b) Prior to the time of delivery of any Shares by a Fund to, or
on the order of, Distributor, Distributor shall pay or cause to be paid
to the Fund or to its order an amount in federal funds equal to the
applicable net asset value of such Shares.
C-50
<PAGE> 8
4. Term and Matters Relating to the Trust as an Ohio Business Trust.
This Agreement shall become effective on January 20, 1995, and, unless
sooner terminated as provided herein, shall continue until January 20, 1997, and
thereafter shall continue automatically for successive annual periods ending on
January 20 of each year with respect to each of the Funds, provided such
continuance is specifically approved at least annually by (i) the Trust's Board
of Trustees or (ii) by "vote of a majority of the outstanding voting securities"
(as defined below) of the Trust, provided, however, that in either event the
continuance is also approved by the majority of the Trust's Trustees who are not
parties to the agreement or interested persons (as defined in the 1940 Act) of
any party to this agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This agreement is terminable without
penalty, on not less than sixty days' notice, by the Trust's Board of Trus tees,
by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Trust or by Distributor. This agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
The Roulston Family of Funds is a business trust organized under
Chapter 1746, Ohio Revised Code, and under a Declaration of Trust to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of the State of Ohio as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The Roulston Family of
Funds" entered into in the name or on behalf thereof by any of the Trustees,
officers, employees or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, Shareholders, officers, employees
or agents of the Trust personally, but bind only the assets of the Trust, as set
forth in Section 1746.13(A), Ohio Revised Code, and all persons dealing with any
of the Funds of the Trust must look solely to the assets of the Trust belonging
to such Fund for the enforcement of any claims against the Trust.
C-51
<PAGE> 9
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Yours very truly,
THE ROULSTON FAMILY OF FUNDS
By /s/ Scott D. Roulston
------------------------------
(name) (title)
Accepted:
ROULSTON RESEARCH CORP.
By /s/ Ronald G. Fountain
------------------------------
(name) (title)
C-52
<PAGE> 10
Dated as of: January 20, 1995
Amended as of: March 1, 1996
SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
FAIRPORT FUNDS
and
ROULSTON RESEARCH CORP.
Name of Fund Date
FAIRPORT MIDWEST GROWTH FUND Effective March 1, 1996
FAIRPORT GROWTH AND INCOME FUND Effective March 1, 1996
FAIRPORT GOVERNMENT SECURITIES FUND Effective March 1, 1996
FAIRPORT FUNDS
By: /s/ Scott D. Roulston
---------------------
(name)
(title)
ROULSTON RESEARCH CORP.
By /s/ Ronald G. Fountain
---------------------
(name)
(title)
C-53
<PAGE> 11
Dated as of: January 20, 1995
Amended as of: March 1, 1996
SCHEDULE B
to the
DISTRIBUTION AGREEMENT
between
FAIRPORT FUNDS
and
ROULSTON RESEARCH CORP.
Name of Fund Date
FAIRPORT MIDWEST GROWTH FUND Effective March 1, 1996
FAIRPORT GROWTH AND INCOME FUND Effective March 1, 1996
FAIRPORT GOVERNMENT SECURITIES FUND Effective March 1, 1996
FAIRPORT FUNDS
By: /s/ Scott D. Roulston
---------------------
(name)
(title)
ROULSTON RESEARCH CORP.
By /s/ Ronald G. Fountain
----------------------
(name)
(title)
C-54
<PAGE> 12
SCHEDULE C
to the
DISTRIBUTION AGREEMENT
between FAIRPORT FUNDS and
ROULSTON RESEARCH CORP.
Dated as of January 20, 1995
As amended May 8, 1995
As Amended March 1, 1996
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
This Plan (the "Plan") constitutes a distribution and shareholder
service plan of The Roulston Family of Funds, an Ohio business trust (the
"Trust"), adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Plan relates to shares of those
investment portfolios identified on Schedule B to the Trust's Distribution
Agreement, as such schedule may be amended from time to time (the "Plan Funds").
Section 1. Each Plan Fund shall pay to the principal underwriter (the
"Distributor") of the Trust's shares of beneficial interest (the "Shares"),
currently Roulston Research Corp., an Ohio corporation, or its designee, a fee
in an amount not to exceed on an annual basis .25% of the average daily net
asset value of such Plan Fund (the "Plan Fee") for: (a) payments Distributor
makes or agrees to have made to broker/dealers, banks and other institutions (a
"Participating Organization") for distribution assistance and/or Shareholder
service pursuant to an agreement with the Participating Organization or for
distribution assistance and/or Shareholder service provided by Distributor
pursuant to the Plan; or (b) reimbursement of expenses incurred by a
Participating Organization pursuant to an agreement in connection with
distribution assis tance and/or Shareholder service including, but not limited
to, the reimbursement of expenses relating to printing and distributing
prospectuses to persons other than Shareholders of a Plan Fund, printing and dis
tributing advertising and sales literature and reports to Shareholders used in
connection with the sale of Shares, and personnel and communication equipment
used in servicing Shareholder accounts and prospective shareholder inquiries.
For purposes of the Plan, a Participating Organization may include the
Distributor and the Distributor's affiliates and subsidiaries.
Section 2. The Plan Fee shall be paid by the Plan Funds to Distributor
only to compensate Distributor for assistance or services provided, or to
reimburse Distributor for payments or expenses incurred, pursuant to Section 1.
C-1
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Section 3. The Plan shall not take effect with respect to a Plan Fund
until it has been approved by the vote of the initial Shareholder of such Fund.
Section 4. The Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
1940 Act or the rules and regulations thereunder) of both (a) the Trustees of
the Trust, and (b) the Independent Trustees of the Trust cast in person at a
meeting called for the purpose of voting on the Plan or such agreement.
Section 5. The Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of the Plan in
Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Plan Funds pursuant to the Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
Section 7. The Plan may be terminated as to a Plan Fund at any time,
without the payment of any penalty, by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding Shares of a Plan Fund.
Section 8. All agreements with any person relating to implementation of
the Plan shall be in writing, and any agreement related to the Plan shall
provide:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Independent
Trustees or by vote of a majority of the out standing voting securities
of the Plan Fund, on not more than 60 days' written notice to any other
party to the agreement; and
(b) That such agreement shall terminate automatically in the
event of its assignment.
C-2
<PAGE> 14
Section 9. The Plan may not be amended to increase materially the
amount of distribution expenses of a Plan Fund permitted pursuant to Section 1
hereof without approval by a vote of at least a majority of the outstanding
voting securities of such Plan Fund, and all material amendments to the Plan
shall be approved in the manner provided for approval of the Plan in Section 4.
Section 10. As used in the Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of the
Plan or any agreements related to it, and (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
Effective: January 20, 1995
Amended: May 8, 1995
March 1, 1996
C-3
<PAGE> 1
EXHIBIT 99.B (6)(B)
SELECTED DEALER AGREEMENT
C-4
<PAGE> 2
ROULSTON RESEARCH CORP.
4000 Chester Avenue
Cleveland, Ohio 44103
Dealer No.: ___________
Effective Date: __________
The Roulston Family of Funds
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
Roulston Research Corp., an Ohio corporation (the "Company"), which is
the principal underwriter of a certain registered open-end management investment
company and the portfolios thereof (together the "Funds," or singly a "Fund"),
hereby invites the undersigned broker or dealer ("Dealer") to participate in the
distribution of shares of the Funds ("Shares") [and to assist in rendering
distribution and shareholder services to the Funds] on and subject to the
following terms and conditions:
Section
1. Dealer Authority. With respect to the distribution and sale of Shares,
Dealer shall have no authority to act as agent for the Funds, the Company or any
other dealer in any respect in such transactions. All orders are subject to
acceptance by the Company and become effective only upon confirmation by the
Company, and are subject to acceptance or rejection by the Company or the
appropriate Fund in its sole discretion. Dealer shall have no authority to make
any representations concerning the Shares of any Fund except such
representations as may be contained in that Fund's then current prospectus
("Prospectus"), in its then current Statement of Additional Information, and in
such other printed information as that Fund or the Company may subsequently
prepare and distribute to Dealer for purposes of selling the Shares, and Dealer
shall have no authority to distribute any other sales material relating to a
Fund or its Shares without the prior written approval of the Company.
C-5
<PAGE> 3
Section 2. Sales and Pricing of Shares. Dealer shall offer and sell
Shares only at their respective net asset values in accordance with the terms
and conditions of the Prospectus of the Fund whose Shares Dealer offers. An
order for the purchase of Shares shall be accepted at the time such order is
received by the Company and at the price next determined unless the order is
otherwise rejected in accordance with ss.1 above. In addition, the Company will
not accept any order from Dealer which is placed on a conditional basis or
subject to any delay or contingency prior to execution. Dealer shall place
orders for Shares only with the Company and shall date and time stamp all orders
received by Dealer and promptly shall transmit all orders to the Company in time
for processing at the price next determined after receipt of the order by
Dealer, in accordance with the Prospectus of the Fund whose Shares are being
sold. Dealer shall confirm the transaction with Dealer's customer at the price
confirmed in writing by the Company. In the event of difference between verbal
and written price confirmations, the written confirmations shall be considered
final. Prices of the Shares are computed by a Fund in accordance with its
Prospectus.
Dealer shall place orders with the Company only through Dealer's
central order department unless the Company accepts Dealer's written Power of
Attorney authorizing others to place orders on Dealer's behalf.
Section 3. Dealer Services. With respect to shareholder services, the
Company hereby appoints Dealer to render shareholder services to each of the
Funds. Shareholder services may include, but are not limited to, answering
routine client inquiries regarding the Funds; providing information to
shareholders on their investments in the Funds; providing personnel and
communication equipment used in connection therewith; and providing such other
services as the Company may reasonably request.
Section 4. Dealer Compensation. Subject to any limitations set forth in
the N.A.S.D.'s Rules of Fair Practice, the Company will pay Dealer, with respect
to each of the Funds for which Dealer is providing shareholder services, a
monthly fee computed at the annual rate of .25% during the period and for such
accounts for which Dealer provides services as described in ss.3 above.
Section 5. Dealer Authorization. Dealer hereby authorizes the Company
to act as its agent in connection with all transactions in shareholder accounts
for which Dealer is designated as Dealer of Record. All designations of Dealer
of Record and all authorizations of the Company to act as Dealer's agent shall
cease upon the termination of this Agreement or upon the shareholders'
instructions to transfer his or her account to another Dealer of Record.
C-6
<PAGE> 4
Section 6. Payment for Shares. Payment for all Shares purchased from
the Company by Dealer shall be made to _______, _______, _______, as custodian
for each of the Funds (the "Custodian"), and shall be received by the Custodian
for the account of the applicable Fund within five business days after the
acceptance of Dealer's order or by the end of one business day following receipt
of a customer's payment for such Shares, whichever is the later date. If such
payment is not so received by the Custodian, the Company and the Funds reserve
the right, without notice, to immediately cancel the sale, or, at the Company's
option, to sell the Shares ordered by Dealer back to the Fund in which latter
case, the Company may hold Dealer responsible for any loss, including loss of
profit, suffered by the Company or by the Fund resulting from Dealer's failure
to make payment as described above.
Section 7. Purchase of Shares. Dealer shall purchase Shares of the Fund
only from the Company or from Dealer's customers. If Dealer purchases Shares
from the Company, Dealer agrees that all such pur chases shall be made only to
cover orders already received by Dealer from Dealer's customers, or for Dealer's
own bona fide investment without a view to resale. If Dealer purchases Shares
from Dealer's customers, Dealer agrees to pay such customers the applicable net
asset value per share that would be applicable if such Shares were then tendered
for redemption in accordance with the applicable Prospectus ("Repurchase
Price").
Section 8. Limitation on Sale of Shares. Dealer shall sell Shares only:
(a) to the Dealer's customers at the price described in ss.2
above; or
(b) to the Company as agent for the Fund at the Repurchase
Price. In such sale to the Company, Dealer may act either as
principal for Dealer's own account or as agent for Dealer's
customer. If Dealer acts as principal for Dealer's own
account in purchasing Shares for resale to the Company,
Dealer agrees to pay Dealer's customer not less than nor
more than the Repurchase Price which Dealer received from
the Company. If Dealer acts as agent for Dealer's customer
in selling Shares to the Company, Dealer agrees not to
charge Dealer's customer more than a fair commission for
handling the transaction.
Section 9. Dealer's Representations and Warranties. Dealer hereby
represents and warrants to the Company that:
(a) Dealer is willing and possesses the legal authority to
provide the services contemplated by this Agreement without
violation of applicable laws;
C-7
<PAGE> 5
(b) Dealer is and shall remain throughout the term of the
Agreement a member in good standing of the N.A.S.D. and
shall immediately notify the Company should it cease to be a
member of the N.A.S.D.;
(c) Dealer is and shall remain throughout the term of this
Agreement a broker-dealer duly and properly registered and
qualified under all applicable laws, rules and regulations,
including, but not limited to, all state and federal
securities laws, rules and regulations, as may be necessary
or appropriate for Dealer to perform and observe all of its
duties, obligations and covenants set forth or contemplated
by this Agreement;
(d) Dealer shall throughout the term of this Agreement
comply with the requirements of all applicable laws, rules
and regulations, including, but not limited to, federal and
state securities laws, the rules, regulations and orders of
the Securities and Exchange Commission and the N.A.S.D., in
performing and observing all of its duties, obligations and
covenants set forth or contemplated by this Agreement;
(e) Dealer shall not withhold placing with the Company
orders received from Dealer's customers so as to profit
itself as a result of such withholding; and
(f) Dealer shall not offer Shares of any Fund in any state
where such Shares are not qualified for sale under the Blue
Sky Laws and Regulations of such state or where Dealer is
not qualified to act as a dealer, except in appropriate
circumstances when under state laws and regulations the
Shares or the sales transactions are exempt from
qualification or dealer registration is not required.
Section 10. Refund of Compensation. If any Shares sold to Dealer under
the terms of this Agreement are repurchased by the Fund, or are tendered for
redemption, within seven business days after the date of the Company's
confirmation of the original purchase by Dealer, Dealer shall promptly refund to
the Company the full Dealer Commission received by Dealer pursuant to ss.4(a)
above.
Section 11. Indemnification. Dealer shall indemnify and hold harmless
the Company, its affiliates and the Funds against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and expenses)
resulting from (a) any negligence or misfeasance of Dealer or any of its
officers, directors, employees or agents; or (b) any violation of any law, rule
or regulation or any failure to perform or observe any obligations of Dealer set
forth in this agreement by Dealer or any of its officers, directors, employees
or agents.
C-8
<PAGE> 6
Section 12. Provision of Sales Material. The Company shall deliver to
Dealer without charge reasonable quantities of the Funds' Prospectuses with any
supplements thereto currently in effect, copies of current shareholder reports
of the respective Funds, and sales material issued by the Company from time to
time.
Section 13. Termination. This Agreement may be terminated as to a Fund
at any time by the Company or Dealer upon 10 days' prior written notice to the
other party.
Section 14. Complete Agreement. This Agreement supersedes and cancels
any prior agreement with respect to the sale of Shares of any Fund and may be
amended at any time and from time to time by writ ten agreement of the parties
hereto.
Section 15. Choice of Law. This Agreement shall be effective upon
acceptance by the Company in Columbus, Ohio, and all sales hereunder are to be
made, and title to Shares shall pass, in Cleveland, Ohio. This Agreement is made
in the State of Ohio and shall be interpreted in accordance with the laws of
Ohio. Each party represents that the undersigned has authority to act, and to
execute this Agreement, on behalf of such party.
Section 16. Notices. All communications and notices to the Company
should be sent to the above address. Any communications or notice to Dealer
shall be duly given if mailed or delivered to Dealer at the address specified by
Dealer below.
Very truly yours,
ROULSTON RESEARCH CORP.
C-9
<PAGE> 7
The undersigned Dealer hereby accepts the Company's invitation to
participate in the distribution of the Funds' Shares and agrees to be bound by
and comply with the terms and conditions of this Agree ment as set forth above.
------------------
Firm
By
------------------
Officer of Partner
------------------
Date:
------------------
------------------
(Address)
States in which Shares will be offered for sale by Dealer:
- ---------------------------------
- ---------------------------------
- ---------------------------------
Accepted:
ROULSTON RESEARCH CORP.
By
------------------
Date:
------------------
C-10
<PAGE> 1
EXHIBIT 99.B (8)(A)
CUSTODIAN AGREEMENT
C-11
<PAGE> 2
CUSTODY AGREEMENT
This agreement made as of this 20th day of January, 1995, between The
Roulston Family of Funds, an Ohio business trust with its principal place of
business located at Cleveland, Ohio (hereinafter "Fund"), and UMB Bank, n.a., a
national banking association with its principal place of business located at
Kansas City, Missouri (hereinafter "Custodian").
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, the Fund desires to appoint Custodian as its custodian for the
custody of Assets (as hereinafter defined) owned by the Fund, which Assets are
to be held in such accounts as the Fund may establish from time to time; and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof; and
WHEREAS, the Fund represents that by separate agreement between
Fund/Plan Services, Inc. ("Fund/Plan") and the Fund, Fund/Plan (a) has agreed to
perform certain administrative functions which may include the functions of
administrator, transfer agent and accounting services agent and (b) has been
appointed by the Fund to act as its agent in respect of the transactions
contemplated in this Agreement; and
WHEREAS, the Fund represents that (a) Fund/Plan has agreed to act as
Fund's agent in respect of the transactions contemplated in this Agreement and
(b) the Bank is authorized and directed to rely upon and follow directions and
instructions given by Fund/Plan, the Fund's agent, in respect of transactions
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
C-12
<PAGE> 3
1. APPOINTMENT OF CUSTODIAN.
The Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to the Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a custodian
and agrees to perform the duties and responsibilities of Custodian as set forth
herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills,
rights, scrip, warrants, interim certificates and all negotiable or
nonnegotiable paper commonly known as Securities and other instruments or
obligations.
(b) "Assets" shall mean Securities, monies and other property
held by the Custodian for the benefit of the Fund.
(c)(l) "Instructions", as used herein, shall mean: (i) a tested
telex, a written (including, without limitation, facsimile transmission)
request, direction, instruction or certification signed or initialed by or on
behalf of the Fund by an Authorized Person; (ii) a telephonic or other oral
communication from a person the Custodian reasonably believes to be an
Authorized Person; or (iii) a communication effected directly between an
electro-mechanical or electronic device or system (including, without
limitation, computers) on behalf of the Fund. Instructions in the form of oral
communications shall be confirmed by the Fund by tested telex or in writing in
the manner set forth in clause (I) above, but the lack of such confirmation
shall in no way affect any action taken by the Custodian in reliance upon such
oral Instructions prior to the Custodian's receipt of such confirmation. The
Fund authorizes the Custodian to record any and all telephonic or other oral
Instructions communicated to the Custodian.
(2) "Special Instructions", as used herein, shall mean
Instructions countersigned or confirmed in writing by the Treasurer or any
Assistant Treasurer of the Fund or any other person designated by the Treasurer
of the Fund in writing, which countersignature or confirmation shall be included
on the same instrument containing the Instructions or on a separate instrument
relating thereto.
(3) Instructions and Special Instructions shall be delivered to
the Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and the Fund.
C-13
<PAGE> 4
(4) Where appropriate, Instructions and Special Instructions
shall be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution
does not violate any of the provisions of its respective Declaration of Trust,
By-Laws, charter, articles of incorporation, or articles of association and all
required corporate action to authorize the execution and delivery of this
Agreement has been taken.
The Fund has furnished the Custodian with copies, properly certified or
authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Declaration of Trust of the Fund as in effect on the date
hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Trustees of the Fund appointing
the Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statement of additional
information.
The Fund shall promptly furnish the Custodian with copies of any
updates, amendments or supplements to the foregoing documents.
C-14
<PAGE> 5
In addition, the Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees and
all amendments or supplements thereto, properly certified or authenticated,
designating certain officers or employees of the Fund who will have continuing
authority to certify to the Custodian: (a) the names, titles, signatures and
scope of authority of all persons authorized to give Instructions or any other
notice, request, direction, instruction, certificate or instrument on behalf of
the Fund, and (b) the names, titles and signatures of those persons authorized
to countersign or confirm Special Instructions on behalf of the Fund (in both
cases collectively, the "Authorized Persons" and individually, an "Authorized
Person"). Such Resolutions and certificates may be accepted and relied upon by
the Custodian as conclusive evidence of the facts set forth therein and shall be
considered to be in full force and effect until delivery to the Custodian of a
similar Resolution or certificate to the contrary. Upon delivery of a
certificate which deletes or does not include the name(s) of a person previously
authorized to give Instructions or to countersign or confirm Special
Instructions, such persons shall no longer be considered an Authorized Person
authorized to give Instructions or to countersign or confirm Special
Instructions. Unless the certificate specifically requires that the approval of
anyone else will first have been obtained, the Custodian will be under no
obligation to inquire into the right of the person giving such Instructions or
Special Instructions to do so. Notwithstanding any of the foregoing, no
Instructions or Special Instructions received by the Custodian from the Fund
will be deemed to authorize or permit any director, trustee, officer, employee,
or agent of the Fund to withdraw any of the Assets of the Fund upon the mere
receipt of such authorization, Special Instructions or Instructions from such
director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant to
Section 5(a).
The Bank's performance of its duties hereunder and the day-to-day
operations of the Custody Account shall be in accordance with industry standards
which may be furnished in writing to the Fund, care of the Fund's agent,
Fund/Plan, by the Bank from time to time. Such service standards, as amended
from time to time, are incorporated herein by reference.
C-15
<PAGE> 6
(a) Safekeeping.
The Custodian will keep safely the Assets of the Fund which are
delivered to it from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian. The Bank shall supply to the Fund, addressed care of its agent,
Fund/Plan, from time to time as mutually agreed upon a written statement with
respect to all of the Assets in the Custody Account. In the event that the Fund,
acting through its agent, Fund/Plan, does not inform the Bank in writing of any
exceptions or objections within thirty (30) days after receipt of such
statement, the Fund shall be deemed to have approved such statement.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of the Fund
either: (i) by physical possession of the share certificates or other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in accordance
with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities which
have been delivered to it in physical form, by registering the same in the name
of the Fund or its nominee, or in the name of the Custodian or its nominee, for
whose actions the Fund and Custodian, respectively, shall be fully responsible.
Upon the receipt of Instructions, the Custodian shall hold such Securities in
street certificate form, so called, with or without any indication of fiduciary
capacity. However, unless it receives Instructions to the contrary, the
Custodian will register all such portfolio Securities in the name of the
Custodian's authorized nominee. All such Securities shall be held in an account
of the Custodian containing only assets of the Fund or only assets held by the
Custodian as a fiduciary, provided that the records of the Custodian shall
indicate at all times the Fund or other customer for which such Securities are
held in such accounts and the respective interests therein.
C-16
<PAGE> 7
(3) The Custodian may deposit and/or maintain domestic Securities
owned by the Fund in, and the Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry system
as provided in (i) Subpart O of Treasury Circular No. 300, 31 CFR 306.115, (ii)
Subpart B of Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or
(iii) the book-entry regulations of federal agencies substantially in the form
of 31 CFR 306.115. Upon the receipt of Special Instructions, the Custodian may
deposit and/or maintain domestic Securities owned by the Fund in any other
domestic clearing agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the SEC to serve in the capacity of depository or
clearing agent for the Securities or other assets of investment companies) which
acts as a Securities depository. Each of the foregoing shall be referred to in
this Agreement as a "Securities System", and all such Securities Systems shall
be listed on the attached Appendix A. Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
(i) The Custodian may deposit the Securities directly or
through one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the Securities
in a Securities System, provided that such Securities are represented in an
account ("Account") of the Custodian in the Securities System that includes only
assets held by the Custodian as a fiduciary, custodian or otherwise for
customers.
(iii) The books and records of the Custodian shall at all times
identify those Securities belonging to the Fund which are maintained in a
Securities System.
C-17
<PAGE> 8
(iv) The Custodian shall pay for Securities purchased for the
account of the Fund only upon (a) receipt of advice from the Securities System
that such Securities have been transferred to the Account of the Custodian in
accordance with the rules of the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of the Fund. The Custodian shall transfer Securities sold for the
account of the Fund only upon (a) receipt of advice from the Securities System
that payment for such Securities has been transferred to the Account of the
Custodian in accordance with the rules of the Securities System, and (b) the
making of an entry on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices from the Securities
System relating to transfers of Securities for the account of the Fund shall be
maintained for the Fund by the Custodian. The Custodian shall deliver to the
Fund on the next succeeding business day daily transaction reports which shall
include each day's transactions in the Securities System for the account of the
Fund. Such transaction reports shall be delivered to the Fund or any agent
designated by the Fund pursuant to Instructions, by computer or in such other
manner as the Fund and Custodian may agree.
(v) The Custodian shall, if requested by the Fund pursuant to
Instructions, provide the Fund with reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System on behalf of the Fund as promptly as
practicable and shall take all actions reasonably practicable to safeguard the
Securities of the Fund maintained with such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except
as provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with the Fund's transactions and
to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange
portfolio Securities held by it for the Fund for other Securities or cash paid
in connection with any reorganization, recapitalization, merger, consolidation,
or conversion of convertible Securities, and will deposit any such Securities in
accordance with the terms of any reorganization or protective plan.
C-18
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Without Instructions, the Custodian is authorized to exchange
Securities held by it in temporary form for Securities in definitive form, to
surrender Securities for transfer into a name or nominee name as permitted in
Section 4(b)(2), to effect an exchange of shares in a stock split or when the
par value of the stock is changed, to sell any fractional shares, and, upon
receiving payment therefor, to surrender bonds or other Securities held by it at
maturity or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for the Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has received
Special Instructions to the contrary, such payment will be made only upon
receipt of Securities by the Custodian, a clearing corporation of a national
securities exchange of which the Custodian is a member, or a Securities System
in accordance with the provisions of Section 4(b)(3) hereof. Notwithstanding the
foregoing, upon receipt of Instructions: (I) in connection with a repurchase
agreement, the Custodian may release funds to a Securities System prior to the
receipt of advice from the Securities System that the Securities underlying such
repurchase agreement have been transferred by book-entry into the Account
maintained with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the Securities
System may make payment of such funds to the other party to the repurchase
agreement only upon transfer by book-entry of the Securities underlying the
repurchase agreement into such Account; (ii) in the case of Interest Bearing
Deposits, currency deposits, and other deposits, foreign exchange transactions,
futures contracts or options, pursuant to Sections 4(g), 4(h), 4(1), and 4(m)
hereof, the Custodian may make payment therefor before receipt of an advice of
transaction; and (iii) in the case of Securities as to which payment for the
Security and receipt of the instrument evidencing the Security are under
generally accepted trade practice or the terms of the instrument representing
the Security expected to take place in different locations or through separate
parties, such as commercial paper which is indexed to foreign currency exchange
rates, derivatives and similar Securities, the Custodian may make payment for
such Securities prior to delivery thereof in accordance with such generally
accepted trade practice or the terms of the instrument representing such
Security.
(2) Other Assets Purchased. Upon receipt of Instructions and
except as otherwise provided herein, the Custodian shall pay for and receive
other Assets for the account of the Fund as provided in Instructions.
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(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the
Custodian will, with respect to a sale, deliver or cause to be delivered the
Securities thus designated as sold to the broker or other person specified in
the Instructions relating to such sale. Unless the Custodian has received
Special Instructions to the contrary, such delivery shall be made only upon
receipt of payment therefor in the form of: (a) cash, certified check, bank
cashier's check, bank credit, or bank wire transfer; (b) credit to the account
of the Custodian with a clearing corporation of a national securities exchange
of which the Custodian is a member; or (c) credit to the Account of the
Custodian with a Securities System, in accordance with the provisions of Section
4(b)(3) hereof. Notwithstanding the foregoing, Securities held in physical form
may be delivered and paid for in accordance with n street delivery custom" to a
broker or its clearing agent, against delivery to the Custodian of a receipt for
such Securities, provided that the Custodian shall have taken reasonable steps
to ensure prompt collection of the payment for, or return of, such Securities by
the broker or its clearing agent, and provided further that the Custodian shall
not be responsible for the selection of or the failure or inability to perform
of such broker or its clearing agent or for any related loss arising from
delivery or custody of such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of the Fund as provided in Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an
option or sale of a covered call option, the Custodian shall: (a) receive and
retain confirmations or other documents, if any, evidencing the purchase or
writing of the option by the Fund; (b) if the transaction involves the sale of a
covered call option, deposit and maintain in a segregated account the Securities
(either physically or by book-entry in a Securities System) subject to the
covered call option written on behalf of the Fund; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any notices or
other communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the securities or options exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
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<PAGE> 11
(2) Upon receipt of Instructions relating to the sale of a naked
option (including stock index and commodity options), the Custodian, the Fund
and the broker-dealer shall enter into an agreement to comply with the rules of
the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and the Fund's Instructions, the
Custodian shall: (a) receive and retain confirmations or other documents, if
any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The Fund and the broker-dealer shall be responsible for
determining the quality and quantity of assets held in any segregated account
established in compliance with applicable margin maintenance requirements and
the performance of other terms of any option contract.
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a futures
margin procedural agreement among the Fund, the Custodian and the designated
futures commission merchant (a "Procedural Agreement"). Under the Procedural
Agreement the Custodian shall: (a) receive and retain confirmations, if any,
evidencing the purchase or sale of a futures contract or an option on a futures
contract by the Fund; (b) deposit and maintain in a segregated account cash,
Securities and/or other Assets designated as initial, maintenance or variation
"margin" deposits intended to secure the Fund's performance of its obligations
under any futures contracts purchased or sold, or any options on futures
contracts written by the Fund, in accordance with the provisions of any
Procedural Agreement designed to comply with the provisions of the Commodity
Futures Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s), regarding
such margin deposits; and release Assets from and/or transfer Assets into such
margin accounts only in accordance with any such Procedural Agreements. The Fund
and such futures commission merchant shall be responsible for determining the
type and amount of Assets held in the segregated account or paid to the
broker-dealer in compliance with applicable margin maintenance requirements and
the performance of any futures contract or option on a futures contract in
accordance with its terms.
C-21
<PAGE> 12
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and
maintain on its books a segregated account or accounts for and on behalf of the
Fund, into which account or accounts may be transferred Assets of the Fund,
including Securities maintained by the Custodian in a Securities System pursuant
to Paragraph (b)(3) of this Section 4, said account or accounts to be maintained
(i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and (ii) for the
purpose of compliance by the Fund with the procedures required by the SEC
Investment Company Act Release Number 10666 or any subsequent release or
releases relating to the maintenance of segregated accounts by registered
investment companies, or (iii) for such other purposes as may be set forth, from
time to time, in Special Instructions. The Custodian shall not be responsible
for the determination of the type or amount of Assets to be held in any
segregated account referred to in this paragraph, or for compliance by the Fund
with required procedures noted in (ii) above.
(j) Depositary Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause to
be surrendered Securities to the depositary used for such Securities by an
issuer of American Depositary Receipts or International Depositary Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence satisfactory
to the organization surrendering the same that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such Securities in the
name of the Custodian or a nominee of the Custodian, for delivery in accordance
with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to
be surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar Securities to the issuer or trustee
thereof (or to the agent of such issuer or trustee) for the purpose of exercise
or sale, provided that the new Securities, cash or other Assets, if any,
acquired as a result of such actions are to be delivered to the Custodian; and
(b) deposit Securities upon invitations for tenders thereof, provided that the
consideration for such Securities is to be paid or delivered to the Custodian,
or the tendered Securities are to be returned to the Custodian.
C-22
<PAGE> 13
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall notify the Fund of such action in writing by facsimile
transmission or in such other manner as the Fund and Custodian may agree in
writing.
The Fund agrees that if it gives an Instruction for the performance of
an act on the last permissible date of a period established by any optional
offer or on the last permissible date for the performance of such act, the Fund
shall hold the Bank harmless from any adverse consequences in connection with
acting upon or failing to act upon such Instructions.
(1) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase
interest bearing fixed term and call deposits (hereinafter referred to,
collectively, as "Interest Bearing Deposits") for the account of the Fund, the
Custodian shall purchase such Interest Bearing Deposits in the name of the Fund
with such banks or trust companies, including the Custodian, any Subcustodian or
any subsidiary or affiliate of the Custodian (hereinafter referred to as
"Banking Institutions"), and in such amounts as the Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S. Dollars
or other currencies, as the Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to the Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts; and
(b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions Other than as Principal.
(1) Upon receipt of Instructions, the Custodian shall settle
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of the Fund with
such currency brokers or Banking Institutions as the Fund may determine and
direct pursuant to Instructions. The Fund accepts full responsibility for its
use of third party foreign exchange brokers and for execution of said foreign
exchange contracts and understands that the Fund shall be responsible for any
and all costs and interest charges which may be incurred as a result of the
failure or delay of its third party broker to deliver foreign exchange. The
Custodian shall have no responsibility with respect to the selection of the
currency brokers or Banking Institutions with which the Fund deals or, so long
as the Custodian acts in accordance with Instructions, for the failure of such
brokers or Banking Institutions to comply with the terms of any contract or
option.
C-23
<PAGE> 14
(2) Notwithstanding anything to the contrary contained herein,
upon receipt of Instructions the Custodian may, in connection with a foreign
exchange contract, make free outgoing payments of cash in the form of U.S.
Dollars or foreign currency prior to receipt of confirmation of such foreign
exchange contract or confirmation that the countervalue currency completing such
contract has been delivered or received.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from the Fund, the Custodian
will release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by the Fund with various lenders including but not limited to UMB
Bank, n.a.; provided, however, that the Securities shall be released only upon
payment to the Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions, the
Custodian will pay, but only from funds available for such purpose, any such
loan upon re-delivery to it of the Securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan. In lieu of
delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account for
the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a
separate Securities Lending Agreement, the Custodian will release Securities
held in custody to the borrower designated in such Instructions and may, except
as otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral, the
Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the Fund to the borrower thereof
only upon receipt of the collateral for such borrowing. The Custodian shall have
no responsibility or liability for any loss arising from the delivery of
Securities prior to the receipt of collateral. Upon receipt of Instructions and
the loaned Securities, the Custodian will release the collateral to the
borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends, rights,
and other items of like nature and, upon receipt of Instructions, take action
with respect to the same as directed in such Instructions.
C-24
<PAGE> 15
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and
mechanical matters in accordance with industry standards in connection with the
sale, exchange, substitution, purchase, transfer, or other dealings with
Securities or other property of the Fund except as may be otherwise provided in
this Agreement or directed from time to time by Instructions from the Fund. The
Custodian may also make payments to itself or others from the Assets for
disbursements and out-of-pocket expenses incidental to handling Securities or
other similar items relating to its duties under this Agreement, provided that
all such payments shall be accounted for to the Fund.
(q) Collections.
The Custodian shall (a) promptly collect amounts due and payable
to the Fund with respect to portfolio Securities and other Assets; (b) promptly
credit to the account of the Fund all income and other payments relating to
portfolio Securities and other Assets held by the Custodian hereunder upon
Custodian's receipt of such income or payments or as otherwise agreed in writing
by the Custodian and the Fund; (c) promptly endorse and deliver any instruments
required to effect such collection; and (d) promptly execute ownership and other
certificates and affidavits for all federal, state, local and foreign tax
purposes in connection with receipt of income or other payments with respect to
portfolio Securities and other Assets, or in connection with the transfer of
such Securities or other Assets; provided, however, that with respect to
portfolio Securities registered in so-called street name, or physical Securities
with variable interest rates, the Custodian shall use its best efforts to
promptly collect amounts due and payable to the Fund. The Custodian shall notify
the Fund in writing by facsimile transmission or in such other manner as the
Fund and Custodian may agree in writing if any amount payable with respect to
portfolio Securities or other Assets is not received by the Custodian when due.
The Custodian shall not be responsible for the collection of amounts due and
payable with respect to portfolio Securities or other Assets that are in
default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank
account or accounts on the books of the Custodian; provided that such bank
account(s) shall be in the name of the Custodian or a nominee thereof, for the
account of the Fund, and shall be subject only to draft or order of the
Custodian. The responsibilities of the Custodian to the Fund for deposits
accepted on the Custodian's books shall be that of a U.S. bank for a similar
deposit.
C-25
<PAGE> 16
(s) Dividends, Distributions and Redemptions.
To enable the Fund to pay dividends or other distributions to
shareholders of the Fund and to make payment to shareholders who have requested
repurchase or redemption of their shares of the Fund (collectively, the
"Shares~), the Custodian shall release cash or Securities insofar as available.
In the case of cash, the Custodian shall, upon the receipt of Instructions,
transfer such funds by check or wire transfer to any account at any bank or
trust company designated by the Fund in such Instructions. In the case of
Securities, the Custodian shall, upon the receipt of Special Instructions, make
such transfer to any entity or account designated by the Fund in such Special
Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments
received for shares issued or sold from time to time by the Fund, and shall
credit such funds to the account of the Fund. The Custodian shall notify the
Fund of Custodian's receipt of cash in payment for shares issued by the Fund by
facsimile transmission or in such other manner as the Fund and the Custodian
shall agree. Upon receipt of Instructions, the Custodian shall: (a) deliver all
federal funds received by the Custodian in payment for shares as may be set
forth in such Instructions and at a time agreed upon between the Custodian and
the Fund; and (b) make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian, in the amount of
checks received in payment for shares which are deposited to the accounts of the
Fund.
(u) Proxies and Notices: Compliance with the Shareholders
Communication Act of 1985.
The Custodian shall deliver or cause to be delivered to the Fund
all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by the Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Instructions,
neither the Custodian nor any Subcustodian or nominee shall vote upon any such
Securities, or execute any proxy to vote thereon, or give any consent or take
any other action with respect thereto.
The Custodian will not release the identity of the Fund to an
issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct communications
between such issuer and the Fund unless the Fund directs the Custodian otherwise
in writing.
(v) Books and Records.
C-26
<PAGE> 17
The Custodian shall maintain such records relating to its
activities under this Agreement as are required to be maintained by Rule 31a-1
under the Investment Company Act of 1940 ("the 1940 Act") and to preserve them
for the periods prescribed in Rule 31a-2 under the 1940 Act. These records shall
be open for inspection by duly authorized officers, employees or agents
(including independent public accountants) of the Fund during normal business
hours of the Custodian.
The Custodian shall provide accountings relating to its
activities under this Agreement as shall be agreed upon by the Fund and the
Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as the Fund may
request to obtain from year to year favorable opinions from the Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder and in connection with the preparation of the Fund's
periodic reports to the SEC and with respect to any other requirements of the
SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of the Fund, the Custodian shall deliver to the
Fund a written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities and
other Assets, including cash, Securities and other Assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
the Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause
to be paid, all bills, statements, or other obligations of the Fund.
C-27
<PAGE> 18
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of
this Agreement, the Custodian may appoint one or more Domestic Subcustodians,
Foreign Subcustodians, Special Subcustodians, or Interim Subcustodians (as each
are hereinafter defined) to act on behalf of the Fund. A Domestic Subcustodian,
in accordance with the provisions of this Agreement, may also appoint a Foreign
Subcustodian, Special Subcustodian, or Interim Subcustodian to act on behalf of
the Fund. For purposes of this Agreement, all Domestic Subcustodians, Foreign
Subcustodians, Special Subcustodians and Interim Subcustodians shall be referred
to collectively as "Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any
bank as defined in Section 2(a)(5) of the 1940 Act or any trust company or other
entity, any of which meet the requirements of a custodian under Section 17(f) of
the 1940 Act and the rules and regulations thereunder, to act for the Custodian
on behalf of the Fund as a subcustodian for purposes of holding Assets of the
Fund and performing other functions of the Custodian within the United States (a
"Domestic Subcustodian"). The Fund shall approve in writing the appointment of
the proposed Domestic Subcustodian; and the Custodian's appointment of any such
Domestic Subcustodian shall not be effective without such prior written approval
of the Fund. Each such duly approved Domestic Subcustodian shall be listed on
Appendix A attached hereto, as it may be amended, from time to time.
C-28
<PAGE> 19
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic
Subcustodian to appoint, any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Section 17(f) of the 1940
Act and the rules and regulations thereunder to act for the Custodian on behalf
of the Fund as a subcustodian or sub-subcustodian (if appointed by a Domestic
Subcustodian) for purposes of holding Assets of the Fund and performing other
functions of the Custodian in countries other than the United States of America
(hereinafter referred to as a "Foreign Subcustodian" in the context of either a
subcustodian or a sub-subcustodian); provided that the Custodian shall have
obtained written confirmation from the Fund of the approval of the Board of
Trustees of the Fund (which approval may be withheld in the sole discretion of
such Board of Trustees) with respect to (i) the identity of any proposed Foreign
Subcustodian (including branch designation), (ii) the country or countries in
which, and the securities depositories or clearing agencies (hereinafter
"Securities Depositories and Clearing Agencies"), if any, through which, the
Custodian or any proposed Foreign Subcustodian is authorized to hold Securities
and other Assets of the Fund, and (iii) the form and terms of the subcustodian
agreement to be entered into with such proposed Foreign Subcustodian. Each such
duly approved Foreign Subcustodian and the countries where and the Securities
Depositories and Clearing Agencies through which they may hold Securities and
other Assets of the Fund shall be listed on Appendix A attached hereto, as it
may be amended, from time to time. The Fund shall be responsible for informing
the Custodian sufficiently in advance of a proposed investment which is to be
held in a country in which no Foreign Subcustodian is authorized to act, in
order that there shall be sufficient time for the Custodian, or any Domestic
Subcustodian, to effect the appropriate arrangements with a proposed Foreign
Subcustodian, including obtaining approval as provided in this Section 5(b). In
connection with the appointment of any Foreign Subcustodian, the Custodian
shall, or shall cause the Domestic Subcustodian to, enter into a subcustodian
agreement with the Foreign Subcustodian in form and substance approved by the
Fund. The Custodian shall not consent to the amendment of, and shall cause any
Domestic Subcustodian not to consent to the amendment of, any agreement entered
into with a Foreign-Subcustodian, which materially affects the Fund's rights
under such agreement, except upon prior written approval of the Fund pursuant to
Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that the Fund shall
invest in an Asset to be held in a country in which no Foreign Subcustodian is
authorized to act, the Custodian shall notify the Fund in writing by facsimile
transmission or in such other manner as the Fund and Custodian shall agree in
writing of the unavailability of an approved Foreign Subcustodian in such
country; and upon the receipt of Special Instructions from the Fund, the
Custodian shall, or shall cause its Domestic Subcustodian to, appoint or approve
an entity (referred to herein as an "Interim Subcustodian") designated in such
Special Instructions to hold such Security or other Asset.
C-29
<PAGE> 20
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on
behalf of the Fund, appoint one or more banks, trust companies or other entities
designated in such Special Instructions to act for the Custodian on behalf of
the Fund as a subcustodian for purposes of: (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities through the use of a
common custodian or subcustodian; (ii) providing depository and clearing agency
services with respect to certain variable rate demand note Securities, (iii)
providing depository and clearing agency services with respect to dollar
denominated Securities, and (iv) effecting any other transactions designated by
the Fund in such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be listed on
Appendix A attached hereto, as it may be amended from time to time. In
connection with the appointment of any Special Subcustodian, the Custodian shall
enter into a subcustodian agreement with the Special Subcustodian in form and
substance approved by the Fund in Special Instructions. The Custodian shall not
amend any subcustodian agreement entered into with a Special Subcustodian, or
waive any rights under such agreement, except upon prior approval pursuant to
Special Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification to
the Fund, terminate any Subcustodian of the Fund in accordance with the
termination provisions under the applicable subcustodian agreement, and upon the
receipt of Special Instructions, the Custodian will terminate any Subcustodian
in accordance with the termination provisions under the applicable subcustodian
agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of the Fund, the Custodian shall deliver to the Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then acting
on behalf of the Custodian; (ii) the countries in which and the Securities
Depositories and Clearing Agencies through which each such Foreign Subcustodian
is then holding cash, Securities and other Assets of the Fund; and (iii) such
other information as may be requested by the Fund, and as the Custodian shall be
reasonably able to obtain, to evidence compliance with rules and regulations
under the 1940 Act.
C-30
<PAGE> 21
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to the Fund for all losses, damages
and reasonable costs and expenses (including reasonable attorneys' fees)
suffered or incurred by the Fund resulting from the gross negligence or willful
misfeasance of the Custodian; provided, however, in no event shall the Custodian
be liable for special, indirect or consequential damages arising under or in
connection with this Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond
Custodian's Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian
incur liability hereunder if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act or
thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (i) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or of
any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall be
obligated to take any action contrary thereto); or (ii) any event beyond the
control of the Custodian or other Person such as armed conflict, riots, strikes,
lockouts, labor disputes, equipment or transmission failures, natural disasters,
or failure of the mails, transportation, communications or power supply; or
(iii) any "Sovereign Risk." A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's Assets; or acts of armed conflict,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have
any liability in respect of any loss, damage or expense suffered by the Fund,
insofar as such loss, damage or expense arises from the performance of the
Custodian or any Domestic Subcustodian in reliance upon records that were
maintained for the Fund by entities other than the Custodian or any Domestic
Subcustodian prior to the Custodian's employment hereunder.
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(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled to
receive and act upon advice of counsel of its own choosing on all matters. The
Custodian and all Domestic Subcustodians shall be without liability for any
actions taken or omitted in good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the
advice of the Fund and upon statements of the Fund's accountants and other
persons believed by it in good faith to be expert in matters upon which they are
consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such advice
or statements.
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully
protected and indemnified in acting as a custodian hereunder upon any
Resolutions of the Board of Directors or Trustees, Instructions, Special
Instructions, advice, notice, request consent, certificate, instrument or paper
appearing to it to be genuine and to have been properly executed and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained from the Fund
hereunder a certificate signed by any officer of the Fund authorized to
countersign or confirm Special Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof,
neither the Custodian nor any Domestic Subcustodian shall be under any duty or
obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by
or for the Fund, the legality of the purchase thereof or
evidence of ownership required to be received by the
Fund, or the propriety of the decision to purchase or
amount paid therefor;
(ii) the legality of the sale of any Securities by or for the
Fund, or the propriety of the amount for which the same
were sold; or
C-32
<PAGE> 23
(iii) any other expenditures, encumbrances of Securities,
borrowings or similar actions with respect to the Fund's
Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of the Fund's Declaration of Trust, Partnership
Agreement, Articles of Incorporation or By-Laws or votes or proceedings of the
shareholders, trustees, partners or directors of the Fund, or the Fund's
currently effective Registration Statement on file with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any
Domestic Subcustodian to the same extent as if such actions or omissions were
performed by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to the Fund for any loss or damage
to the Fund caused by or resulting from the acts or omissions of any Foreign
Subcustodian to the extent that, under the terms set forth in the subcustodian
agreement between the Custodian or a Domestic Subcustodian and such Foreign
Subcustodian, the Foreign Subcustodian has failed to perform in accordance with
the standard of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign Subcustodian under
the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special
Subcustodians, Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to the Fund for any loss,
damage or expense suffered or incurred by the Fund resulting from or occasioned
by the actions or omissions of a Securities System, Interim Subcustodian,
Special Subcustodian, or Securities Depository and Clearing Agency unless such
loss, damage or expense is caused by, or results from, the gross negligence or
willful misfeasance of the Custodian.
C-33
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(d) Defaults or Insolvencies of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense
suffered or incurred by the Fund resulting from or occasioned by the actions,
omissions, negligence, defaults or insolvency of any broker, bank, trust company
or any other person with whom the Custodian may deal (other than any of such
entities acting as a Subcustodian, Securities System or Securities Depository
and Clearing Agency, for whose actions the liability of the Custodian is set out
elsewhere in this Agreement) unless such loss, damage or expense is caused by,
or results from, the gross negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
The Fund agrees to reimburse the Custodian for all out-of-pocket
expenses incurred by the Custodian in connection with this Agreement, but
excluding salaries and usual overhead expenses.
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, the Fund
agrees to indemnify and hold harmless the Custodian and its nominees from all
losses, damages and expenses (including attorneys' fees) suffered or incurred by
the Custodian or its nominee caused by or arising from actions taken by the
Custodian, its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent the Custodian is liable under Sections 6 or 7 hereof.
If the Fund requires the Custodian to take any action with
respect to Securities, which action involves the payment of money or which may,
in the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
C-34
<PAGE> 25
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in
addition to the obligations provided in Sections 6 and 7, the Custodian agrees
to indemnify and hold harmless the Fund from all losses, damages and expenses
suffered or incurred by the Fund caused by the gross negligence or willful
misfeasance of the Custodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each of
which for purposes of this Section 9 shall be referred to as "Custodian"), makes
any payment or transfer of funds on behalf of the Fund as to which there would
be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of the Fund, the Custodian
may, in its discretion without further Instructions, provide an advance
("Advance") to the Fund in an amount sufficient to allow the completion of the
transaction by reason of which such payment or transfer of funds is to be made.
In addition, in the event the Custodian is directed by Instructions to make any
payment or transfer of funds on behalf of the Fund as to which it is
subsequently determined that the Fund has overdrawn its cash account with the
Custodian as of the close of business on the date of such payment or transfer,
said overdraft shall constitute an Advance. Any Advance shall be payable by the
Fund on demand by Custodian, unless otherwise agreed by the Fund and the
Custodian, and shall accrue interest from the date of the Advance to the date of
payment by the Fund to the Custodian at a rate agreed upon in writing from time
to time by the Custodian and the Fund. It is understood that any transaction in
respect of which the Custodian shall have made an Advance, including but not
limited to a foreign exchange contract or transaction in respect of which the
Custodian is not acting as a principal, is for the account of and at the risk of
the Fund, and not, by reason of such Advance, deemed to be a transaction
undertaken by the Custodian for its own account and risk. The Custodian and the
Fund acknowledge that the purpose of Advances is to finance temporarily the
purchase or sale of Securities for prompt delivery in accordance with the
settlement terms of such transactions or to meet emergency expenses not
reasonably foreseeable by the Fund. The Custodian shall promptly notify the Fund
of any Advance. Such notification shall be sent by facsimile transmission or in
such other manner as the Fund and the Custodian may agree.
C-35
<PAGE> 26
10. SECURITY FOR OBLIGATION TO CUSTODIAN.
If the Custodian or any Subcustodian, Securities System, or
Securities Depository or Clearing Agency acting under agreement with the
Custodian, or any nominee of any of the foregoing) shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Agreement (collectively "Liability"), except such
as may arise from its or its nominee's breach of the relevant standard of care
set forth in this Agreement, or if the Custodian, or any Subcustodian,
Securities System, or Securities Depository or Clearing Agency acting under
agreement with the Custodian, or any nominee of any of the foregoing) shall make
any Advance to a Fund, then in such event property equal in value to not more
than 110% of such Advance and accrued interest thereon or the anticipated amount
of such Liability shall be held as security for such Liability or for such
advance and the interest thereon.
The Fund shall reimburse the Custodian promptly for any Liability
and shall pay any Advances on demand after notice from the Custodian to the Fund
of the existence of the Advance. If, after notification, the Fund shall fail to
promptly pay such advance or interest when due or shall fail to reimburse the
Custodian promptly in respect of a Liability, the Custodian, or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
shall be entitled to utilize available cash or dispose of the Fund's Assets to
the extent, and only to the extent, necessary to obtain repayment or
reimbursement.
11. COMPENSATION.
Payment for the Custodian's compensation for services rendered
hereunder shall be the responsibility of the Fund. The Fund represents that by
separate agreement it has appointed Fund/Plan as its agent, and that Fund/Plan,
as agent for the Fund, has agreed to pay the compensation payable in respect of
such services promptly upon receipt of statements therefore. The Fund shall pay
to Fund/Plan fees for services (including the Custodian's custodian services) in
accordance with the terms of an agreement between Fund/Plan and the Fund. The
Fund hereby directs the Custodian to (i) send all statements for compensation to
its attention care of Fund/Plan at the following address: Fund/Plan Services,
Inc., 2 W. Elm Street, Conshohocken, PA 19428, Attention: Mr. Elmer Gardner,
Senior Vice President, and (ii) accept all payments made by Fund/Plan in the
Fund's name as if such payments were made directly by the Fund. The Custodian's
compensation for services rendered hereunder is set forth in an agreement
between the Custodian and Fund/Plan. Should Fund/Plan fail to pay or remit such
compensation to the Custodian, the Custodian will be entitled to debit the
Custody Account directly for such compensation. In the absence of sufficient
cash in the Custody Account to cover compensation, the Fund shall promptly pay
the bank for the unpaid compensation due hereunder. In the absence of prompt
payments for the Fund of the unpaid compensation, the Custodian shall be
entitled to exercise, in addition to all other rights existing in law or equity,
the rights set forth in Section 10 hereof.
C-36
<PAGE> 27
12. POWERS OF ATTORNEY.
Upon request, the Fund shall deliver to the Custodian such
proxies, powers of attorney or other instruments as may be reasonable and
necessary or desirable in connection with the performance by the Custodian or
any Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
The Fund or the Custodian may terminate this Agreement by notice
in writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, the Fund
shall pay to the Custodian such fees as may be due the Custodian hereunder as
well as its reimbursable disbursements, costs and expenses paid or incurred.
Upon termination of this Agreement, the Custodian shall deliver, at the
terminating party's expense, all Assets held by it hereunder to the Fund or as
otherwise designated by the Fund by Special Instructions. Upon such delivery,
the Custodian shall have no further obligations or liabilities under this
Agreement except as to the final resolution of matters relating to activity
occurring prior to the effective date of termination.
This Agreement may not be assigned by the Custodian or the Fund
without the respective consent of the other, duly authorized by a resolution by
its Board of Directors or Trustees.
14. NOTICES.
Notices, requests, instructions and other writings delivered to
the Fund at The Roulston Family of Funds, c/o Fund/Plan Services, Inc., 2 West
Elm Street, Conshohocken, Pennsylvania 19428, postage prepaid, or to such other
address as the Fund may have designated to the Custodian in writing, shall be
deemed to have been properly delivered or given to the Fund.
The Fund shall give prior notice to the Custodian of any change
in its place of organization, mailing address, or sponsors, any significant
change in management, investment objectives, fees or redemption rights and any
change to the appointment of Fund/Plan as its agent.
C-37
<PAGE> 28
Notices, requests, instructions and other writings delivered to
the Securities Administration Department of the Custodian at its office at 928
Grand Avenue, Kansas City, Missouri, or mailed postage prepaid, to the
Custodian's Securities Administration Department, Post Office Box 226, Kansas
City, Missouri 64141, or to such other addresses as the Custodian may have
designated to the Fund in writing, shall be deemed to have been properly
delivered or given to the Custodian hereunder; provided, however, that
procedures for the delivery of Instructions and Special Instructions shall be
governed by Section 2(c) hereof.
15. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of
Missouri and shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be
binding upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or
waived, in any manner except in writing, properly executed by both parties
hereto; provided, however, Appendix A may be amended from time to time as
Domestic Subcustodians, Foreign Subcustodians, Special Subcustodians, and
Securities Depositories and Clearing Agencies are approved or terminated
according to the terms of this Agreement.
(d) 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.
(e) This Agreement shall be effective as of the date of execution
hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of
this Agreement, and the definitions thereof are found in the following sections
of the Agreement:
C-38
<PAGE> 29
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Account 4(b)(3)(ii)
ADR's 4(j)
Advance 9
Assets 2(b)
Authorized Person 3 (d)
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c) (1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
OCC 4(g)(2)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and 5(b)
Clearing Agencies
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)(iii)
Special Instruction 2(2)
Special Subcustodian 5(c)
Subcustodian 5
1940 4(v)
</TABLE>
C-39
<PAGE> 30
(h) If any part, term or provision of this Agreement is held to
be illegal, in conflict with any law or otherwise invalid by any court of
competent jurisdiction, the remaining portion or portions shall be considered
severable and shall not be affected, and the rights and obligations of the
parties shall be construed and enforced as if this Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof, and
accordingly supersedes, as of the effective date of this Agreement, any
custodian agreement heretofore in effect between the Fund and the Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their duly respective authorized officers.
THE ROULSTON FAMILY OF FUNDS UMB BANK, N.A.
By: By: Patricia A. Peterson,
Senior Vice President
C-40
<PAGE> 31
APPENDIX A
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant's Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES
FOREIGN SUBCUSTODIANS CLEARING AGENCIES
C-41
<PAGE> 1
EXHIBIT 99.B (8)(B)
CUSTODY ADMINISTRATION AND AGENCY AGREEMENT
C-42
<PAGE> 2
CUSTODY ADMINISTRATION AND AGENCY AGREEMENT
This AGREEMENT, dated as of the 20th day of January, 1995 made by and
between The Roulston Family of Funds, an Ohio Business Trust (the "Trust")
operating as an open end management investment company registered under the
Investment Company Act of 1940, as amended, duly organized and existing under
the laws of the State of Ohio, and Fund/Plan Services, Inc. ("Fund/Plan"), a
corporation duly organized and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Declaration of Trust ("Trust
Instrument") to issue separate series of shares representing interests in
separate investment portfolios (the "Series"), which Series are identified on
Schedule "B" attached hereto and which Schedule "B" may be amended from time to
time by mutual agreement of the Trust and Fund/Plan; and
WHEREAS, the Trust desires to retain Fund/Plan to perform certain
custody administration services; and
WHEREAS, the Trust desires that Fund/Plan act as its agent for the
specific purpose of taking receipt of, and making payment for, custody services
performed on the Trust's behalf by United Missouri Bank, N.A. ("UMB") pursuant
to an agreement between UMB and the Trust; and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform
such functions upon the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree as follows:
APPOINTMENT OF FUND/PLAN AS AGENT
Section 1. The Trust hereby appoints Fund/Plan as an agent of the
Trust, and Fund/Plan hereby accepts such appointment, for the limited purpose
of: (i) accepting invoices charged to the Trust for custody services performed
by UMB on the Trust's behalf, and (ii) remitting payment to UMB for such
services performed in amounts as set forth in Schedule "A" attached hereto.
C-43
<PAGE> 3
CUSTODY ADMINISTRATION SERVICES
Section 2. As Custody Administrator, Fund/Plan shall:
a) coordinate and process portfolio trades through client terminal links
with UMB.
b) input and verify portfolio trades
c) monitor pending and failed security trades
d) coordinate communications between brokers and banks to resolve any
operational problems
e) advise the Trust of any corporate action information, address and follow
up on any dividend or interest discrepancies
f) process the Trusts' expenses
g) interface with the accounting services provider and the transfer agent
to research and resolve custody cash problems
h) provide daily and monthly reports
TERM and FEES
Section 3.
(a) The initial term of this Agreement shall be for a period commencing
on the date of this Agreement and ending on a date two (2) years following the
Exchange Date of the reorganization described in the Agreement and Plan of
Reorganization and Liquidation between the Trust and The Advisors' Inner Circle
Fund ("Initial Term").
(b) The fee schedule set forth in Schedule "A" attached shall be fixed
for the Initial Term of this Agreement. Thereafter, the fee schedule will be
subject to annual review and adjustment.
(c) For any period after the Initial Term of this Agreement, the Trust
or Fund/Plan may give written notice to the other of the termination of this
Agreement, such termination to take effect at the time specified in the notice,
which date shall not be less than one hundred eighty (180) days after the date
of giving notice. Upon the effective termination date, the Trust shall pay to
Fund/Plan such compensation as may be due as of the date of termination and
shall likewise reimburse Fund/Plan for any out-of-pocket expenses and
disbursements reasonably incurred by Fund/Plan to such date.
(d) This Agreement also may be terminated at any time for "cause,"
after the giving of not less than sixty (60) days' notice.
C-44
<PAGE> 4
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, negligence or reckless disregard on the part of the
party to be terminated with respect to its obligations and duties set forth
herein; (b) the commencement of a judicial, regulatory or administrative
proceeding by either state or federal authorities in which criminal, illegal or
unethical behavior in the conduct of its business has been alleged against the
party to be terminated; (c) financial difficulties on the part of the party to
be terminated which is evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent, or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time is in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors; (d) any assignment (as
that term is defined in the 1940 Act) of this Agreement by Fund/Plan, including
any direct or indirect transfer or hypothecation of a controlling block of
Fund/Plan's voting securities by a security holder thereof, shall permit the
Trust to terminate for cause; or (e) any circumstance which substantially
impairs the performance of the obligations and duties of the party to be
terminated, or the ability to perform those obligations and duties, as
contemplated herein.
(e) If a successor to any of Fund/Plan's duties or responsibilities
under this Agreement is designated by the Trust by written notice to Fund/Plan
in connection with the termination of this Agreement, Fund/Plan shall promptly
upon such termination and at the expense of the Trust, transfer all records and
shall cooperate in the transfer of such duties and responsibilities.
For the purpose of determining fees payable to Fund/Plan, the value of a
Series' net assets shall be computed at the times and in the manner specified in
Trust's then current Prospectus and Statement of Additional Information.
During the term of this Agreement, should the Trust seek services or
functions in addition to those stated, a written amendment to this Agreement
specifying the additional services and corresponding compensation shall be
executed by both Fund/Plan and the Trust.
GENERAL PROVISIONS
Section 4.
(a) Fund/Plan, its directors, officers, employees, shareholders and
agents shall only be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust in connection with the performance of this
Agreement that results from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of Fund/Plan in the performance of its
obligations and duties under this Agreement.
(b) Any person, even though also a director, officer, employee,
shareholder or agent of Fund/Plan, who may be or become an officer, trustee,
employee, or agent of the Trust, shall be deemed, when rendering services to
such entity or acting on any business of the Trust, (other than services or
business in connection with Fund/Plan's duties hereunder), to be rendering such
services to or acting solely for the Trust and not as a director, officer,
employee, shareholder or agent of, or one under the control or direction of
Fund/Plan even though that person is being paid salary by Fund/Plan.
(c) Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Fund/Plan, its directors, officers, employees,
shareholders and agents from and against any and all claims, demands, expenses
and liabilities (whether with or without basis in fact or law) of any and every
nature which Fund/Plan may sustain or incur or which may be asserted against
Fund/Plan by any
C-45
<PAGE> 5
person by reason of, or as a result of (i) any action taken or omitted to be
taken by Fund/Plan in good faith hereunder or (ii) any action taken or omitted
to be taken by Fund/Plan in connection with its appointment under this
Agreement, which action or omission was taken in good faith in reliance upon any
law, act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended, or repealed. Indemnification
under this subparagraph, however, shall not apply to actions or omissions of
Fund/Plan or its directors, officers, employees, shareholders, or agents in
cases of its or their willful misfeasance, bad faith, gross negligence or
reckless disregard of its or their duties hereunder.
(d) Fund/Plan shall give written notice to the Trust within thirty (30)
business days of receipt by Fund/Plan of a written assertion or claim of any
threatened or pending legal proceeding which may be subject to this
indemnification. The failure to notify the Trust of such written assertion or
claim shall not, however, operate in any manner whatsoever to relieve the Trust
of any liability arising under this Section or otherwise, except to the extent
that failure to give notice prejudices the Trust.
(e) For any legal proceeding giving rise to this indemnification, the
Trust shall be entitled to defend or prosecute any claim in the name of
Fund/Plan at its own expense and through counsel of its own choosing if it gives
written notice to Fund/Plan within thirty (30) business days of receiving notice
of such claim. Notwithstanding the foregoing, Fund/Plan may participate in the
litigation at its own expense through counsel of its own choosing. In the event
the Trust chooses to defend or prosecute such claim, the parties shall cooperate
in the defense or prosecution thereof and shall furnish such records and other
information as are reasonably necessary.
(f) The Trust shall not settle any claim under (d) and (e) above
without Fund/Plan's express written consent, which consent shall not be
unreasonably withheld. Fund/Plan shall not settle any such claim under (d) and
(e) above without the Trust's express written consent which likewise shall not
be unreasonably withheld.
Section 5. This Agreement may be amended from time to time by a
supplemental agreement executed by the Trust and Fund/Plan.
Section 6. Except as otherwise provided in this Agreement, any notice or
other communication required by or permitted to be given in connection with this
Agreement shall be in writing, and shall be delivered in person or sent by first
class mail, postage prepaid, to the respective parties as follows:
C-46
<PAGE> 6
THE ROULSTON FAMILY OF FUNDS: FUND/PLAN:
The Roulston Family of Funds Fund/Plan Services, Inc.
4000 Chester Avenue 2 West Elm Street
Cleveland, OH 44103 Conshohocken, PA 19428
Attention: Scott D. Roulston, Attention: Kenneth J. Kempf,
President President
Section 7. The Trust represents and warrants to Fund/Plan that the
execution and delivery of this Agreement by the undersigned officers of the
Trust has been duly and validly authorized by resolution of the Board of
Trustees of the Trust.
Section 8. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 9. This Agreement shall extend to and shall be binding upon
the Parties and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of Fund/Plan or by Fund/Plan without the written consent of the Trust,
authorized or approved by a resolution of their respective Board of Directors or
Board of Trustees.
Section 10. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania and the venue of any action arising under this
Agreement shall be Montgomery County, Commonwealth of Pennsylvania.
Section 11. No provision of this Agreement may be amended or modified,
in any manner except in writing, properly authorized and executed by Fund/Plan
and the Trust.
Section 12. If any part, term or provision of this Agreement is held by
any court to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or provision held to
be illegal or invalid provided that the basic Agreement is not thereby
substantially impaired.
C-47
<PAGE> 7
Section 13. The Trust is a business trust organized under Chapter 1746,
Ohio Revised Code, and under its Trust Instrument, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Roulston Family of Funds" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Series of
the Trust must look solely to the assets of the Trust belonging to such Series
for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement,
consisting in its entirety of six typewritten pages, together with Schedules "A"
and "B" to be signed by their duly authorized officers, as of the day and year
first above written.
The Roulston Family of Funds Fund/Plan Services, Inc.
- -------------------------------- -------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
C-48
<PAGE> 8
SCHEDULE "A"
CUSTODY AGENCY AND ADMINISTRATION FEE SCHEDULE
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
I. Annual Custody Fee Schedule Per Portfolio: Subject to a minimum monthly fee
of $300 for each Series, Custody Agency and Administration Fees shall be
calculated as follows:
A) Domestic Securities and ADRs
.00065 On the First $ 10 Million of Average Net Assets
.00035 On the Next $ 20 Million of Average Net Assets
.00025 On the Next $ 20 Million of Average Net Assets
.000175 On the Next $ 50 Million of Average Net Assets
.00015 On the Next $150 Million of Average Net Assets
.000125 On Average Net Assets in Excess of $250 Million
B) Custody Domestic Securities Transactions Charge
<TABLE>
<S> <C>
Book Entry DTC, Federal Book Entry $14.00
NOW Accounts $ 2.50
Physical/Options/Physical GNMA's/RICs $24.50
Mortgage Backed Securities - Principal Pay Down Per Pool $10.00
</TABLE>
C) When Issued, Securities Lending, Index Futures:
Should any of these investment vehicles require a separate
segregated custody account, a fee of $250 per account per
month will apply.
II. Out-of-Pocket Expenses
The Trust will reimburse Fund/Plan Services monthly for all out-of-pocket
expenses, including telephone, postage, telecommunications, special reports,
record retention and copying and sending materials to auditors for off-site
audits.
Custody Administration and Agency Agreement between The Roulston Family of Funds
and Fund/Plan Services, Inc.
C-1 Schedule "A"; Page 1
<PAGE> 9
III. Other Services Not Covered By This Agreement
To the extent the Trust commences using investment techniques such as Security
Lending, Short Sales, Interest Rate Swaps, Futures, Leveraging, Precious Metals
or non-U.S. denominated Futures and Options on securities and currencies,
additional fees will apply.
Activities of a non-recurring nature such as fund consolidations, mergers, or
reorganizations will be subject to negotiation. To the extent the Trust should
decide to issue multiple/separate classes of shares, additional fees will apply.
Any enhanced services or reports will be quoted upon request.
IV. Interim Fee Arrangement
Notwithstanding the foregoing, during the period from the date hereof until the
Exchange Date of the Reorganization described in the Agreement and Plan of
Reorganization and Liquidation between the Trust and The Advisors' Inner Circle
Fund, Fund/Plan will be compensated at a rate not to exceed 25% of that to which
it would otherwise be entitled on a monthly basis hereunder.
The Roulston Family of Funds Fund/Plan Services, Inc.
- -------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Custody Administration and Agency Agreement between The Roulston Family of Funds
and Fund/Plan Services, Inc.
C-2 Schedule "A"; Page 2
<PAGE> 10
SCHEDULE "B"
Identification of Series
Dated: January 20, 1995
As Amended March 1, 1996
Below are listed the "Series" to which services under this Agreement are to be
performed as of the execution date of this Agreement:
"FAIRPORT FUNDS"
1. FAIRPORT MIDWEST GROWTH FUND
2. FAIRPORT GROWTH AND INCOME FUND
3. FAIRPORT GOVERNMENT SECURITIES FUND
This Schedule "B" may be amended from time to time by agreement of the Parties.
FAIRPORT FUNDS FUND/PLAN SERVICES, INC.
- --------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Custody Administration and Agency Agreement between The Roulston Family of Funds
and Fund/Plan Services, Inc.
C-3 Schedule "B"
<PAGE> 1
EXHIBIT 99.B (9)(A)
ADMINISTRATION AGREEMENT
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-4 Schedule "B"
<PAGE> 2
ADMINISTRATION AGREEMENT
This Agreement, dated as of the 20th day of January, 1995, made by and
between The Roulston Family of Funds, an Ohio Business Trust (the "Trust")
operating as a registered investment company under the Investment Company Act of
1940, as amended (the "Act"), duly organized and existing under the laws of the
State of Ohio and Fund/Plan Services, Inc. ("Fund/Plan"), a corporation duly
organized and existing under the laws of the State of Delaware (collectively,
the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Declaration of Trust ("Trust
Instrument") to issue separate series of shares representing interests in
separate investment portfolios (the "Series"), which Series are identified on
Schedule "C" attached hereto, and which Schedule "C" may be amended from time to
time by mutual agreement of the Trust and Fund/Plan; and
WHEREAS, the Parties desire to enter into an agreement whereby
Fund/Plan will provide certain administration services to each of the Series on
the terms and conditions set forth in this Agreement; and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform
such administrative services under the terms and conditions set forth below; and
WHEREAS, the Trust on behalf of each of the Series, will provide
certain information concerning the Series to Fund/Plan as set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree as follows:
Section 1. Appointment The Trust hereby appoints Fund/Plan as
administrator to each Series of the Trust and Fund/Plan hereby accepts such
appointment. Also, the Trust agrees to appoint Fund/Plan as administrator to any
additional series which, from time to time may be added to the Trust, upon
amendment of Schedule "C" attached hereto.
Section 2. Conversion The Trust shall promptly turn over to Fund/Plan
such of the Series' accounts and records previously maintained by or for it as
are requested by Fund/Plan to perform its functions under this Agreement. The
Trust authorizes Fund/Plan to rely on such accounts and records turned over to
it and hereby indemnifies and holds Fund/Plan, its successors and assigns,
harmless of and from any and all expenses demands and losses whatsoever arising
out of or in connection with any error, omission, inaccuracy or other deficiency
of such accounts and records.
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-5 Schedule "B"
<PAGE> 3
Fund/Plan shall make reasonable efforts to isolate and correct any
inaccuracies, omissions, discrepancies, or other deficiencies in the Accountants
and Records delivered to Fund/Plan, to the extent such matters are disclosed to
Fund/Plan or are discovered by it and are relevant to its performance of its
functions under this Agreement; however, Fund/Plan expressly makes no warranty
or representation that any error, omission or deficiency can be satisfactorily
corrected. The Trust shall provide Fund/Plan with such assistance as it may
reasonably request in connection with its efforts to correct such matters. The
Trust agrees to pay Fund/Plan on a current and ongoing basis for its reasonable
time and costs expended on the correction of such matters at an hourly rate of
$50.00, said payment to be in addition to the fees and charges agreed to for the
normal services rendered under this Agreement.
Section 3. Duties and Obligations of Fund/Plan
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Board of Trustees of the Trust, Fund/Plan shall
provide to each of the Series all administrative services as set forth in
Schedule "A" attached hereto and incorporated by reference into this Agreement.
In addition to the obligations set forth in Schedule "A", Fund/Plan shall (i)
provide its own office space, facilities and equipment and personnel for the
performance of its duties under this Agreement; and (ii) take all actions it
deems necessary to properly execute administration services on behalf of the
Series.
(b) So that Fund/Plan may perform its duties under the terms of this
Agreement, the Board of Trustees of the Trust shall direct the officers,
investment adviser, distributor, legal counsel, independent accountants and
custodian of the Trust to cooperate fully with Fund/Plan and to provide such
information, documents and advice relating to the Series as is within the
possession or knowledge of such persons provided that no such person need
provide any information to Fund/Plan if to do so would result in the loss of any
privilege or confidential treatment with respect to such information. In
connection with its duties, Fund/Plan shall be entitled to rely, and shall be
held harmless by the Trust when acting in reasonable reliance upon the
instruction, advice or any documents relating to the Series as provided by the
Trust to Fund/Plan by any of the aforementioned persons. All fees charged by any
such persons shall be deemed an expense of the Trust.
(c) Any activities performed by Fund/Plan under this Agreement shall
conform to the requirements of:
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-6 Schedule "B"
<PAGE> 4
(1) the provisions of the Act, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and of any rules or
regulations in force thereunder;
(2) any other applicable provision of state and federal law,
including any applicable state blue sky law;
(3) the provisions of the Trust Instrument and By-Laws of the
Trust as amended from time to time;
(4) any policies and determinations of the Board of Trustees
of the Trust; and
(5) the fundamental and other policies of the Series as
reflected in the Trust's registration statement under the Act.
Fund/Plan agrees that all records that it maintains for the Trust are
the property of the Trust and will be surrendered promptly to the Trust upon
written request. Fund/Plan will preserve, for the periods prescribed under Rule
31a-2 under the Act, all such records required to be maintained under Rule 31a-1
of the Act.
(d) Nothing in this Agreement shall prevent Fund/Plan or any officer
thereof from acting as administrator for or with any other person, firm or
corporation. While the administrative services supplied to the Trust may be
different than those supplied to other persons, firms or corporations, Fund/Plan
shall provide the Trust equitable treatment in supplying services. The Trust
recognizes that it will not receive preferential treatment from Fund/Plan as
compared with the treatment provided to other Fund/Plan clients. Fund/Plan
agrees to maintain the records and all other information of the Trust in a
confidential manner and shall not use such information for any purpose other
than the performance of Fund/Plan's duties under this Agreement.
Section 4. Allocation of Expenses All costs and expenses of the Trust
shall be paid by the Trust including, but not limited to:
(a) fees paid to an investment adviser ("Adviser");
(b) interest and taxes;
(c) brokerage fees and commissions;
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-7 Schedule "B"
<PAGE> 5
(d) insurance premiums;
(e) compensation and expenses of its Trustees who are not affiliated
persons of the Adviser;
(f) legal, accounting and audit expenses;
(g) custodian and transfer agent, or shareholder servicing agent,
fees and expenses;
(h) fees and expenses incident to the registration of the shares of
the Trust under Federal or state securities laws;
(i) expenses related to preparing, setting in type, printing and
mailing prospectuses, statements of additional information,
reports and notices and proxy material to shareholders of the
Trust;
(j) all expenses incidental to holding meetings of shareholders and
Trustees of the Trust;
(k) such extraordinary expenses as may arise, including
litigation, affecting the Trust and the legal obligations
which the Trust may have regarding indemnification of its
officers and trustees; and
(l) fees and out-of-pocket expenses paid on behalf of the Trust by
Fund/Plan.
Section 5. Compensation of Fund/Plan The Trust agrees to pay Fund/Plan
compensation for its services and to reimburse it for expenses, at the rates and
amounts as set forth in Schedule "B" attached hereto, and as shall be set forth
in any amendments to such Schedule "B" approved by the Trust and Fund/Plan. The
Trust agrees and understands that Fund/Plan's compensation be comprised of two
components, payable on a monthly basis, as follows:
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-8 Schedule "B"
<PAGE> 6
(i) A combined asset-based fee subject to a minimum amount
that the Trust hereby authorizes Fund/Plan to collect by debiting the Trust's
custody account for invoices which are rendered for the services performed. The
invoices for the services performed will be sent to the Trust after such
debiting with the indication that payment has been made; and
(ii) reimbursement of any out-of-pocket expenses paid by
Fund/Plan on behalf of the Trust, which out-of-pocket expenses will be billed to
the Trust within the first ten calendar days of the month following the month in
which such out-of-pocket expenses were incurred. The Trust agrees to reimburse
Fund/Plan for such expenses within ten calendar days of receipt of such bill.
For the purpose of determining fees payable to Fund/Plan, the value a
of Series' net assets shall be computed at the times and in the manner specified
in the Series' Prospectus and Statement of Additional Information then in
effect.
During the term of this Agreement, should the Trust seek services or
functions in addition to those outlined above or in Schedule "A" attached, a
written amendment to Schedule "A" and Schedule "B", as necessary, specifying the
additional services and corresponding compensation shall be executed by both
Fund/Plan and the Trust.
Section 6. Duration
(a) The initial term of this Agreement shall be for a period commencing
on the date of this Agreement and ending on a date two (2) years following the
Exchange Date of the reorganization described in the Agreement and Plan of
Reorganization and Liquidation between the Trust and The Advisors' Inner Circle
Fund ("Initial Term").
(b) The fee schedule set forth in Schedule "B" attached shall be fixed
for the Initial Term of this Agreement. Thereafter, the fee schedule will be
subject to review and adjustment, not to exceed 10% of those fees set forth in
Schedule "B."
(c) For any period after the Initial Term of this Agreement, the Trust
or Fund/Plan may give written notice to the other of the termination of this
Agreement, such termination to take effect at the time specified in the notice,
which date shall not be less than one hundred eighty (180) days after the date
of giving notice. Upon the effective termination date, the Trust shall pay to
Fund/Plan such compensation as may be due as of the date of termination and
shall likewise reimburse Fund/Plan for any out-of-pocket expenses and
disbursements reasonably incurred by Fund/Plan to such date.
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-9 Schedule "B"
<PAGE> 7
(d) This Agreement also may be terminated at any time for "cause,"
after the giving of not less than sixty (60) days' notice.
For purposes of this Agreement, "Cause" shall mean (a) willful
misfeasance, bad faith, negligence or reckless disregard on the part of the
party to be terminated with respect to its obligations and duties set forth
herein; (b) the commencement of a judicial, regulatory or administrative
proceeding by either state or federal authorities in which criminal, illegal or
unethical behavior in the conduct of its business has been alleged against the
party to be terminated; (c) financial difficulties on the part of the party to
be terminated which is evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent, or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time is in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors; (d) any assignment (as
that term is defined in the 1940 Act) of this Agreement by Fund/Plan, including
any direct or indirect transfer or hypothecation of a controlling block of
Fund/Plan's voting securities by a security holder thereof, shall permit the
Trust to terminate for cause; or (e) any circumstance which substantially
impairs the performance of the obligations and duties of the party to be
terminated, or the ability to perform those obligations and duties, as
contemplated herein.
(e) If a successor to any of Fund/Plan's duties or responsibilities
under this Agreement is designated by the Trust by written notice to Fund/Plan
in connection with the termination of this Agreement, Fund/Plan shall promptly
upon such termination and at the expense of the Trust, transfer all records and
shall cooperate in the transfer of such duties and responsibilities.
Section 7. Amendment No provision of this Agreement may be amended or
modified, in any manner except by a written agreement properly authorized and
executed by Fund/Plan and the Trust.
Section 8. Applicable Law This Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania and the venue of any action arising under
this Agreement shall be Montgomery County, Commonwealth of Pennsylvania.
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-10 Schedule "B"
<PAGE> 8
Section 9. Limitation of Liability
(a) The Trust is a business trust organized under Chapter 1746, Ohio
Revised Code, and under its Trust Instrument, to which reference is hereby made
and a copy of which is on file at the office of the Secretary of State of Ohio
as required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Roulston Family of Funds" entered into in the
name or on behalf thereof by any of the Trustees, officers, employees or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Trust
personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Series of
the Trust must look solely to the assets of the Trust belonging to such Series
for the enforcement of any claims against the Trust.
(b) Fund/Plan, its directors, officers, employees, shareholders and
agents shall only be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust in connection with the performance of this
Agreement that result from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of Fund/Plan in the performance of its
obligations and duties under this Agreement.
(c) Any person, even though a director, officer, employee, shareholder
or agent of Fund/Plan, who may be or become an officer, trustee, employee or
agent of the Trust, shall be deemed when rendering services to such entity or
acting on any business of such entity (other than services or business in
connection with Fund/Plan's duties under the Agreement), to be rendering such
services to or acting solely for the Trust and not as a director, officer,
employee, shareholder or agent of, or under the control or direction of
Fund/Plan even though such person may receive compensation from Fund/Plan.
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-11 Schedule "B"
<PAGE> 9
(d) Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Fund/Plan, its directors, officers, employees,
shareholders and agents from and against any and all claims, demands, expenses
and liabilities (whether with or without basis in fact or law) of any and every
nature which Fund/Plan may sustain or incur or which may be asserted against
Fund/Plan by any person by reason of, or as a result of (i) any action taken or
omitted to be taken by Fund/Plan in good faith, (ii) any action taken or omitted
to be taken by Fund/Plan in good faith in reliance upon any certificate,
instrument, order or stock certificate or other document reasonably believed by
Fund/Plan to be genuine and to be signed, countersigned or executed by any duly
authorized person, upon the oral instructions or written instruction of an
authorized person of the Trust or upon the opinion of legal counsel for the
Trust; or (iii) any action taken in good faith or omitted to be taken by
Fund/Plan in connection with its appointment in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. Indemnification under this
subparagraph shall not apply, however, to actions or omissions of Fund/Plan or
its directors, officers, employees, shareholders or agents in cases of its or
their willful misfeasance, bad faith, gross negligence or reckless disregard of
its or their duties hereunder.
(e) Fund/Plan shall give written notice to the Trust within thirty (30)
business days of receipt by Fund/Plan of a written assertion or claim of any
threatened or pending legal proceeding which may be subject to this
indemnification. The failure to notify the Trust of such written assertion or
claim shall not, however, operate in any manner whatsoever to relieve the Trust
of any liability arising under this Section or otherwise, unless such failure
prejudices the Trust.
(f) For any legal proceeding giving rise to this indemnification, the
Trust shall be entitled to defend or prosecute any claim in the name of
Fund/Plan at its own expense and through counsel of its own choosing if it gives
written notice to Fund/Plan within thirty (30) business days of receiving notice
of such claim. Notwithstanding the foregoing, Fund/Plan may participate in the
litigation at its own expense through counsel of its own choosing. If the Trust
does choose to defend or prosecute such claim, then the parties shall cooperate
in the defense or prosecution thereof and shall furnish such records and other
information as are reasonably necessary.
(g) The terms of this Section 9 shall survive the termination of this
Agreement.
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-12 Schedule "B"
<PAGE> 10
Section 10. Notices Except as otherwise provided in this Agreement, any
notice or other communication required by or permitted to be given in connection
with this Agreement shall be in writing, and shall be delivered in person or
sent by first class mail, postage prepaid to the respective parties as follows:
<TABLE>
<CAPTION>
If to the Trust: If to Fund/Plan:
- ---------------- ----------------
<S> <C>
The Roulston Family of Funds Fund/Plan Services, Inc.
4000 Chester Avenue 2 West Elm Street
Cleveland, OH 44103 Conshohocken, PA 19428
Attention: Scott D. Roulston, Attention: Kenneth J. Kempf,
President President
</TABLE>
Section 11. Severability If any part, term or provision of this
Agreement is held by any court to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be considered
severable and not affected, and the rights and obligations of the parties shall
be construed and enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
Section 12. Section Headings Section and Paragraph headings are for
convenience only and shall not be construed as part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting of eight typewritten pages, together with Schedules "A", "B" and "C",
to be signed by their duly authorized officers as of the day and year first
above written.
The Roulston Family of Funds Fund/Plan Services, Inc.
- -------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Custody Administration and Agency Agreement between The Roulston Family of
Funds and Fund/Plan Services, Inc.
C-13 Schedule "B"
<PAGE> 11
SCHEDULE "A"
FUND ADMINISTRATION SERVICES
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
I. REGULATORY COMPLIANCE
A. Compliance - Federal Investment Company Act of 1940
1. Review, report and renew
a. investment advisory contracts
b. fidelity bond
c. underwriting contracts
d. distribution (12(b)-1) plans - includes
NASD Rule 26 calculations
e administration contracts
f. accounting contracts
g. custody contracts
h. transfer agent and shareholder services
2. Filings.
a. N-SAR (semi-annual report)
b. N-1A (prospectus), post-effective
amendments and supplements ("stickers")
c. 24f-2 indefinite registration of shares
d. filing fidelity bond under 17g-1
e. filing shareholder reports under 30b2-1
3. Annual up-dates of biographical information
and questionnaires for Trustees and Officers
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-1 Schedule "A" Page 1
<PAGE> 12
B. Compliance - State "Blue Sky"
1. Blue Sky (state registration)
a. registration of shares
b. registration of issuer/dealer/agent (no
loads)
c. monitor of sale shares [over/under]
d. report shares sold
e. filing of required prospectus and reports to
states
C. Compliance - Other
1. applicable stock exchange rules
2. applicable state tax laws
II. CORPORATE BUSINESS AND SHAREHOLDER/PUBLIC INFORMATION
A. Trustees/Management
1. Preparation of meetings
a. agendas - all necessary items of compliance
b. arrange and conduct meetings
c. prepare minutes of meetings
d. keep attendance records
e. maintain corporate records/minute book
B. Coordinate Proposals
1. Printers
2. Auditors
3. Literature fulfillment
4. Insurance
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-2 Schedule "A" Page 2
<PAGE> 13
C. Maintain Corporate Calendars and Files
1. General
2. Blue sky
D. Release Corporate Information
1. To shareholders
2. To financial and general press
3. To industry publications
a. distributions (dividends and capital gains)
b. tax information
c. changes to prospectus
d. letters from management
e. funds' performance
4. Respond to:
a. financial press
b. miscellaneous shareholders inquiries
c. industry questionnaires
E. Communications to Shareholders
1. Coordinate printing and distribution of annual, semi-
annual, quarterly reports, and prospectus
III. FINANCIAL AND MANAGEMENT REPORTING
A. Income and Expenses
1. preparation of budgets
2. expense figures calculated and accrual levels set
3. monitoring of expenses
4. approve and authorize payment of expenses
5. projection of income
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-3 Schedule "A" Page 3
<PAGE> 14
6. checking account reconciliation
B. Distributions to Shareholders
1. Projections of distribution amounts
a. compliance with income tax provisions
b. compliance with excise tax provisions
c. compliance with Investment Company Act
of 1940
2. Compilation and reclassification of distributions,
where applicable, for year end tax reporting to
shareholders
C. Financial Reporting
1. liaison between fund management and auditors
2. preparation of unaudited and audited reports to
shareholders
3. 60 day delivery to SEC and shareholders
4. preparation of semi-annual and annual N-SAR's
5. liaison between fund management and printers for
financial reports
D. Subchapter M Compliance
1. Asset diversification test
2. Short/short test
3. Income qualification test
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-4 Schedule "A" Page 4
<PAGE> 15
E. Other Financial Analyses
1. Upon request from fund management, other budgeting
and analyses can be constructed to meet a fund's
specific needs
2. Sales information, portfolio turnover
3. Work closely with auditors on return of capital
statement of presentation
4. Total return and yield calculations
5. Provide various performance numbers to rating agencies
F. Review and Monitoring Functions
1. Review NAV calculations
2. Coordinate and review transfer agent, accounting and
custody functions
3. Review 12b-1, accruals, expenditures and payment trail
commissions where applicable
G. Preparation and distribution of periodic operation reports to
management
H. Monitor money market funds under Rule 2a-7
The Roulston Family of Funds Fund/Plan Services, Inc.
- -------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-5 Schedule "A" Page 5
<PAGE> 16
SCHEDULE "B"
ADMINISTRATION SERVICES FEE SCHEDULE
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
This Fee Schedule is fixed for the Initial Term as that term is defined in
the Agreement.
I. A) Base Fee for Single Class of Shares (calculated using average monthly
total net assets and payable monthly)
Subject to the minimum annual fee of $70,000 for the initial three (3)
separate Series of Shares of the Trust, the asset based administration
fees shall be calculated at:
.0015 On the First $50 Million of Total Average Net Assets
.0010 On the Next $50 Million of Total Average Net Assets; and
.0005 Of Total Average Net Assets in Excess of $100 Million of Average
Net Assets
II. Out of Pocket Expenses:
The Roulston Family of Funds will reimburse Fund/Plan Services monthly
for all reasonable out-of-pocket expenses, including postage and
Federal Express, telecommunications (telephone and fax), special
reports, Board Meeting Materials, record retention, transportation
costs as incurred and copying and sending materials to auditors for
off-site audits.
III. Other Services Not Covered By This Agreement
Activities of a non-recurring nature including but not limited to fund
consolidations, mergers, acquisitions, reorganizations, the addition or
deletion of a series, and shareholder meetings/proxies, are not
included herein, and will be quoted separately. To the extent the Trust
should decide to issue multiple/separate classes of shares, additional
fees will apply. Any additional/enhanced services or reports will be
quoted upon request.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-6 Schedule "B"
<PAGE> 17
IV. Interim Fee Arrangement
Notwithstanding the foregoing, during the period from the date hereof
until the Exchange Date of the Reorganization described in the
Agreement and Plan of Reorganization and Liquidation between the Trust
and The Advisors' Inner Circle Fund, Fund/Plan will be compensated at a
rate not to exceed 25% of that to which it would otherwise be entitled
on a monthly basis hereunder.
The Roulston Family of Funds Fund/Plan Services, Inc.
- ------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-7 Schedule "B"
<PAGE> 18
SCHEDULE "C"
Identification of Series
Dated: January 20, 1995
As Amended March 1, 1996
Below are listed the "Series" to which services under this Agreement are to be
performed as of the execution date of this Agreement:
"FAIRPORT FUNDS"
1. FAIRPORT MIDWEST GROWTH FUND
2. FAIRPORT GROWTH AND INCOME FUND
3. FAIRPORT GOVERNMENT SECURITIES FUND
This Schedule "C" may be amended from time to time by agreement of the Parties.
FAIRPORT FUNDS FUND/PLAN SERVICES, INC.
- -------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-8 Schedule "C"
<PAGE> 1
EXHIBIT 99.B (9)(B)
ACCOUNTING SERVICES AGREEMENT
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-9 Schedule "C"
<PAGE> 2
ACCOUNTING SERVICES AGREEMENT
This Agreement, dated as of the 20th day of January, 1995 made by and
between The Roulston Family of Funds, an Ohio Business Trust (the "Trust")
operating as an open end management investment company registered under the
Investment Company Act of 1940, as amended, duly organized and existing under
the laws of the State of Ohio, and Fund/Plan Services, Inc. ("Fund/Plan"), a
corporation duly organized and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Declaration of Trust ("Trust
Instrument") to issue separate series of shares representing interests in
separate investment portfolios (the "Series"), which Series are identified on
Schedule "C" attached hereto and which Schedule "C" may be amended from time to
time by mutual agreement of the Trust and Fund/Plan; and
WHEREAS, the Trust desires to appoint Fund/Plan as Accounting Services
Agent to maintain and keep current the books, accounts, records, journals or
other records of original entry relating to the business of the Trust (the
"Accounts and Records") and to perform certain other functions in connection
with such Accounts and Records; and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform
such functions upon the terms and conditions set forth below; and
WHEREAS, the Trust will provide certain information concerning the
Series to Fund/Plan as set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree as follows:
Section 1. The Trust shall promptly turn over to Fund/Plan such of the
Series' accounts and records previously maintained by or for it as are requested
by Fund/Plan to perform its functions under this Agreement. The Trust authorizes
Fund/Plan to rely on such accounts and records turned over to it and hereby
indemnifies and holds Fund/Plan, its successors and assigns, harmless of and
from any and all expenses, damages, claims, suits, liabilities, actions, demands
and losses whatsoever arising out of or in connection with any error, omission,
inaccuracy or other deficiency of such accounts and records.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-10 Schedule "C"
<PAGE> 3
Fund/Plan shall make reasonable efforts to isolate and correct any
inaccuracies, omissions, discrepancies, or other deficiencies in the accounts
and records delivered to Fund/Plan, to the extent such matters are disclosed to
Fund/Plan or are discovered by it and are relevant to its performance of its
functions under this Agreement; however, Fund/Plan expressly makes no warranty
or representation that any error, omission or deficiency can be satisfactorily
corrected. The Trust shall provide Fund/Plan with such assistance as it may
reasonably request in connection with its efforts to correct such matters. The
Trust agrees to pay Fund/Plan on a current and ongoing basis for its reasonable
time and costs expended on the correction of such matters at an hourly rate of
$50.00, said payment to be in addition to the fees and charges agreed to for the
normal services rendered under this Agreement.
For purposes of this Agreement:
Oral Instructions shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to Fund/Plan in
person or by telephone, telegram, telecopy, or other mechanical or documentary
means lacking a signature, by a person or persons reasonably identified to
Fund/Plan to be a person or persons authorized by a resolution of the Board of
Trustees of the Trust, to give such oral instructions on behalf of the Trust.
Written Instructions shall mean an authorization, instruction,
approval, item or set of data or information of any kind transmitted to
Fund/Plan in original writing containing original signatures or a copy of such
document transmitted by telecopy including transmission of such signature
reasonably identified to Fund/Plan to be the signature of a person authorized by
a resolution of the Board of Trustees of the Trust to give written instructions
on behalf of the Trust.
The Trust shall file with Fund/Plan a certified copy of each resolution
of its Board of Trustees authorizing execution and transmittal of Written
Instructions or the transmittal of Oral Instructions as provided above.
Section 2. To the extent Fund/Plan receives the necessary information
from the Trust or its agents by Written or Oral Instructions, Fund/Plan shall
maintain and keep current the following Accounts and Records relating to the
business of the Trust in such form as may be mutually agreed upon between the
Trust and Fund/Plan:
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-11 Schedule "C"
<PAGE> 4
(a) Cash Receipts Journal
(b) Cash Disbursements Journal
(c) Dividends Paid and Payable Schedule
(d) Purchase and Sales Journals - Portfolio Securities
(e) Subscription and Redemption Journals
(f) Security Ledgers - Transaction Report and Tax Lot Holdings Report
(g) Broker Ledger - Commission Report
(h) Daily Expense Accruals
(i) Daily Interest Accruals
(j) Daily Trial Balance
(k) Portfolio Interest Receivable and Income Journal
(l) Portfolio Dividend Receivable and Income Register
(m) Listing of Portfolio Holdings - showing cost, market value and
percentage of portfolio comprised of each security.
(n) Average Daily Net assets provided on monthly basis.
The necessary information to perform the above functions and the
calculation of the net asset value of each Series as provided below, is to be
furnished by Written or Oral Instructions to Fund/Plan daily (in accordance with
the time frame identified in Section 7) prior to the close of regular trading on
the New York Stock Exchange.
Section 3. Fund/Plan shall perform the ministerial calculations
necessary to calculate each of the Series' net asset value each day that the New
York Stock Exchange is open for business, in accordance with (i) each Series'
current Prospectus and Statement of Additional Information and (ii) procedures
with respect thereto approved by the Board of Trustees of the Trust and supplied
in writing to Fund/Plan's Accounting Services Unit. Portfolio items for which
market quotations are available by Fund/Plan's use of an automated financial
information service (the "Service") shall be based on the closing prices of such
Service except where the Trust has given or caused to be given specific Written
or Oral Instructions to utilize a different value. All of the other portfolio
securities shall be given such values as the Trust provides by Written or Oral
Instructions including all restricted securities and other securities requiring
valuation not readily ascertainable solely by such Service. Fund/Plan shall not
have any responsibility or liability for the accuracy of prices quoted by such
Service; for the accuracy of the information supplied by the Trust; or for any
loss, liability, damage, or cost arising out of any inaccuracy of such data.
Fund/Plan shall have no responsibility or duty to include information or
valuations to be provided by the Trust in any computation unless and until it is
timely supplied to Fund/Plan in usable form. Fund/Plan shall record corporate
action information as received from the Custodian, the Service, or the Trust.
Fund/Plan shall not have any duty to gather or record corporate action
information not supplied by these sources.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-12 Schedule "C"
<PAGE> 5
Fund/Plan will not assume any liability for price changes caused by:
the investment adviser(s), custodian, suppliers of security prices, corporate
action and dividend information, or any party other than Fund/Plan itself.
In the event an error is made by Fund/Plan which creates a price
change, consideration must be given to the effect of the price change as
described below. Notwithstanding the provisions of Section 11, the following
provisions govern Fund/Plan's liability for errors in calculating the net asset
value ("NAV") of the Series:
If the NAV should have been higher for a date or dates in the
past, the error would have the effect of having given more shares to
subscribers and less money to redeemers to which they were entitled.
Conversely, if the NAV should have been lower, the error would have the
effect of having given less shares to subscribers and overpaying
redeemers.
If the error affects the prior business day's NAV only, and
the prior day's work can be rerun before shareholder statements and
checks are mailed, the Trust hereby accepts this manner of correcting
the error.
If the error spans five (5) business days or less, Fund/Plan
shall reprocess shareholder purchases and redemptions where redeeming
shareholders have been underpaid. Fund/Plan shall assume liability to
the Trust for overpayments to shareholders who have fully redeemed.
If the error spans more than five (5) business days, Fund/Plan
will bear the liability to the Trust for, 1) buying in for excess
shares given to shareholders if the NAV should have been higher, or, 2)
funding overpayments to shareholders who have redeemed if the NAV
should have been lower. The cost of any reprocessing required for
shareholders who have been credited with fewer shares than appropriate,
or for redeeming shareholders who are due additional amounts of money
will also be borne by Fund/Plan.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-13 Schedule "C"
<PAGE> 6
Section 4. For all purposes under this Agreement, Fund/Plan is
authorized to act upon receipt of the first of any Written or Oral Instruction
it receives from the Trust or its agents on behalf of the Trust. In cases where
the first instruction is an Oral Instruction that is not in the form of a
document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered, and
in cases where Fund/Plan receives an Instruction, whether Written or Oral, to
enter a portfolio transaction on the records, the Trust shall cause the
broker/dealer to send a written confirmation to the Custodian. Fund/Plan shall
be entitled to rely on the first Instruction received, and for any act or
omission undertaken in compliance therewith shall be free of liability and fully
indemnified and held harmless by the Trust, provided however, that in the event
a Written or Oral Instruction received by Fund/Plan is countermanded by a timely
later Written or Oral Instruction received by Fund/Plan prior to acting upon
such countermanded Instruction, Fund/Plan shall act upon such later Written or
Oral Instruction. The sole obligation of Fund/Plan with respect to any follow-up
or confirmatory Written Instruction or Oral Instruction in documentary or
written form, shall be to make reasonable efforts to detect any such discrepancy
between the original Instruction and such confirmation and to report such
discrepancy to the Trust. The Trust shall be responsible, at the Trust's
expense, for taking any action, including any reprocessing, necessary to correct
any discrepancy or error, and to the extent such action requires Fund/Plan to
act, the Trust shall give Fund/Plan specific Written Instruction as to the
action required.
Section 5. The Trust shall cause its Custodian (the "Custodian") to
forward to Fund/Plan a daily statement of cash and portfolio transactions and,
at the end of each month, the Trust shall cause the Custodian to forward to
Fund/Plan a monthly statement of portfolio positions, which Fund/Plan will
reconcile with its Accounts and Records maintained on behalf of the Trust.
Fund/Plan will report any discrepancies to the Custodian, and report any
unreconciled items to the Trust.
Section 6. Fund/Plan shall promptly supply daily and periodic reports
to the Trust as requested by the Trust and agreed upon by Fund/Plan.
Section 7. The Trust shall provide and shall require each of its agents
(including the Custodian) to provide Fund/Plan as of the close of each business
day, or on such other schedule as the Trust determines is necessary, with
Written or Oral Instructions (to be delivered to Fund/Plan by 11:00 a.m.,
Eastern time, the next following business day) containing all data and
information necessary for Fund/Plan to maintain the Trust's Accounts and
Records, and Fund/Plan may conclusively assume that the information it receives
by Written or Oral Instructions is complete and accurate. Fund/Plan, as Transfer
Agent, accepts responsibility for providing reports of share purchases,
redemptions, and total shares outstanding, on the next business day after each
net asset valuation.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-14 Schedule "C"
<PAGE> 7
Section 8. The Accounts and Records, in the agreed-upon format,
maintained by Fund/Plan shall be the property of the Trust and shall be made
available to the Trust promptly upon request and shall be maintained for the
periods prescribed in Rules 31a-1 and 31a-2 under the Investment Company Act of
1940, as amended. Fund/Plan shall assist the Trust's independent auditors, or
upon approval of the Trust, or upon demand, any regulatory body, in any
requested review of the Trust's Accounts and Records but shall be reimbursed for
all expenses and employee time invested in any such review outside of routine
and normal periodic review and audits. Upon receipt from the Trust of the
necessary information, Fund/Plan shall supply the necessary data for the Trust
or an independent auditor's completion of any necessary tax returns,
questionnaires, periodic reports to Shareholders and such other reports and
information requests as the Trust and Fund/Plan shall agree upon from time to
time.
Section 9. In case of any request or demand for the inspection of the
Share records of the Trust, Fund/Plan, as Accounting Services Agent, shall
endeavor to notify the Trust and to secure instructions as to permitting or
refusing such inspection. Fund/Plan may however, exhibit such records to any
person in any case where it is advised by its counsel that it may be held liable
for failure to do so after notice to the Trust.
Section 10. Fund/Plan and the Trust may from time to time adopt such
procedures as agreed upon in writing, and Fund/Plan may conclusively assume that
any procedure approved by the Trust or directed by the Trust, does not conflict
with or violate any requirements of the Trust's Registration Statements, Trust
Instrument, By-Laws, or any rule or regulation of any regulatory body or
governmental agency. The Trust shall be responsible for notifying Fund/Plan of
any changes in regulations or rules which might necessitate changes in
Fund/Plan's procedures, and for working out with Fund/Plan such changes.
Section 11.
(a) Fund/Plan, its directors, officers, employees,
shareholders, and agents shall only be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of this Agreement that results from willful misfeasance, bad faith,
gross negligence or reckless disregard on the part of Fund/Plan in the
performance of its obligations and duties under this Agreement.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-15 Schedule "C"
<PAGE> 8
(b) Any person, even though also a director, trustee, officer,
employee, shareholder or agent of Fund/Plan, 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 Fund/Plan's duties hereunder), to be rendering such
services to or acting solely for the Trust, and not as a director, officer,
employee, shareholder or agent of, or one under the control or direction of
Fund/Plan even though receiving a salary from Fund/Plan.
(c) Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless Fund/Plan, its directors, officers,
employees, shareholders and agents from and against any and all claims, demands,
expenses and liabilities (whether with or without basis in fact or law) of any
and every nature which Fund/Plan may sustain or incur or which may be asserted
against Fund/Plan by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by Fund/Plan
except matters resulting from willful misfeasance, bad faith, gross negligence
or reckless disregard on the part of Fund/Plan in the performance of its
obligations and duties under this Agreement; or
(ii) in reliance upon any certificate, instrument, order
or stock certificate or other document reasonably believed by it to be genuine
and to be signed, countersigned or executed by any duly authorized person, upon
the Oral Instructions or Written Instructions of an authorized person of the
Trust or upon the written opinion of legal counsel for the Trust or Fund/Plan;
or
(iii) any action taken or omitted to be taken in good
faith by Fund/Plan in connection with its appointment, in reliance upon any law,
act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended, or repealed. Indemnification
under this subparagraph shall not apply, however, to actions or omissions of
Fund/Plan or its directors, officers, employees, shareholders, or agents in
cases of its or their willful misfeasance, bad faith, gross negligence or
reckless disregard its or their duties hereunder.
(d) Fund/Plan shall give written notice to the Trust within thirty
(30) business days of receipt by Fund/Plan of a written assertion or claim of
any threatened or pending legal proceeding which may be subject to this
indemnification. The failure to so notify the Trust of such written assertion or
claim shall not, however, operate in any manner whatsoever to relieve the Trust
of any liability arising from this Section or otherwise, except to the extent
failure to give notice prejudices the Trust.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-16 Schedule "C"
<PAGE> 9
(e) For any legal proceeding giving rise to this indemnification,
the Trust shall be entitled to defend or prosecute any claim in the name of
Fund/Plan at its own expense and through counsel of its own choosing if it gives
written notice to Fund/Plan within thirty (30) business days of receiving notice
of such claim. Notwithstanding the foregoing, Fund/Plan may participate in the
litigation at its own expense through counsel of its own choosing. If the Trust
chooses to defend or prosecute such claim, then the Parties shall cooperate in
the defense or prosecution thereof and shall furnish such records and other
information as are reasonably necessary.
Section 12. All financial data provided to, processed by, and reported
by Fund/Plan under this Agreement shall be stated in United States dollars.
Fund/Plan shall have no obligation to convert to, equate, or deal in foreign
currencies or values, and expressly assumes no liability for any currency
conversion or non-U.S. dollar denominated computations relating to the affairs
of the Trust.
Section 13. The Trust agrees to pay Fund/Plan compensation for its
services, and to reimburse it for expenses, at the rates and amounts as set
forth in Schedule "B" attached hereto, and as shall be set forth in any
amendments to such Schedule "B" agreed upon in writing by the Trust and
Fund/Plan. The Trust agrees and understands that Fund/Plan's compensation will
be comprised of two components, payable on a monthly basis, as follows:
(i) A fixed fee for each Series, together with an asset
based fee which the Trust hereby authorizes Fund/Plan to collect by debiting the
Trust's custody account for invoices which are rendered for the services
performed for the applicable function. The invoices for the services performed
will be sent to the Trust after such debiting with the indication that payment
has been made; and
(ii) reimbursement of any reasonable out-of-pocket
expenses paid by Fund/Plan on behalf of the Trust, which out-of-pocket expenses
will be billed to the Trust within the first ten calendar days of the month
following the month in which such out-of-pocket expenses were incurred. The
Trust agrees to reimburse Fund/Plan for such expenses within ten calendar days
of receipt of such bill.
For the purpose of determining fees payable to Fund/Plan, the value of
the Series' net assets shall be computed at the times and in the manner
specified in Series' Prospectus(es) and Statement(s) of Additional Information
then in effect.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-17 Schedule "C"
<PAGE> 10
During the term of this Agreement, should the Trust seek services or
functions in addition to those outlined above or in the attached Schedule "A", a
written amendment to Agreement Schedule "A" and Schedule "B", as necessary,
specifying the additional services and corresponding compensation shall be
executed by both Fund/Plan and the Trust.
Section 14. Nothing contained in this Agreement is intended to or shall
require Fund/Plan, in any capacity hereunder, to perform any functions or duties
on any holiday, day of special observance or any other day on which the New York
Stock Exchange is closed. Functions or duties normally scheduled to be performed
on such days shall be performed on, and as of, the next succeeding business day
on which the New York Stock Exchange is open. Notwithstanding the foregoing,
Fund/Plan shall compute the net asset value of each Series on each day required
pursuant to (i) Rule 22c-1 promulgated under the Investment Company Act of 1940,
as amended, and (ii) such Series' then-current Prospectus and Statement of
Additional Information.
Section 15.
(a) The initial term of this Agreement shall be for a period
commencing on the date of this Agreement and ending on a date two (2) years
following the Exchange Date of the reorganization described in the Agreement
Fund Plan of Reorganization and Liquidation between the Trust and The Advisors'
Inner Circle Fund ("Initial Term").
(b) The fee schedule set forth in Schedule "B" attached shall
be fixed for the Initial Term of this Agreement. Thereafter, the fee schedule
will be subject to annual review and adjustment not to exceed 10% of those fees
set forth in Schedule "B."
(c) For any period after the Initial Term of this Agreement,
the Trust or Fund/Plan may give written notice to the other of the termination
of this Agreement, such termination to take effect at the time specified in the
notice, which date shall not be less than one hundred eighty (180) days after
the date of giving notice. Upon the effective termination date, the Trust shall
pay to Fund/Plan such compensation as may be due as of the date of termination
and shall likewise reimburse Fund/Plan for any out-of-pocket expenses and
disbursements reasonably incurred by Fund/Plan to such date.
(d) This Agreement also may be terminated at any time for
"cause," after the giving of not less than sixty (60) days' notice.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-18 Schedule "C"
<PAGE> 11
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, negligence or reckless disregard on the part of the
party to be terminated with respect to its obligations and duties set forth
herein; (b) the commencement of a judicial, regulatory or administrative
proceeding by either state or federal authorities in which criminal, illegal or
unethical behavior in the conduct of its business has been alleged against the
party to be terminated; (c) financial difficulties on the part of the party to
be terminated which is evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent, or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time is in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors; (d) any assignment (as
that term is defined in the 1940 Act) of this Agreement by Fund/Plan, including
any direct or indirect transfer or hypothecation of a controlling block of
Fund/Plan's voting securities by a security holder thereof, shall permit the
Trust to terminate for cause; or (e) any circumstance which substantially
impairs the performance of the obligations and duties of the party to be
terminated, or the ability to perform those obligations and duties, as
contemplated herein.
(e) If a successor to any of Fund/Plan's duties or
responsibilities under this Agreement is designated by the Trust by written
notice to Fund/Plan in connection with the termination of this Agreement,
Fund/Plan shall promptly upon such termination and at the expense of the Trust,
transfer all records and shall cooperate in the transfer of such duties and
responsibilities.
Section 16. Except as otherwise provided in this Agreement, any notice
or other communication required by or permitted to be given in connection with
this Agreement shall be in writing, and shall be delivered in person or sent by
first class mail, postage prepaid to the respective parties as follows:
If to The Roulston Family of Funds: If to Fund/Plan:
The Roulston Family of Funds Fund/Plan Services, Inc.
4000 Chester Avenue 2 West Elm Street
Cleveland, OH 44103 Conshohocken, PA 19428
Attention: Scott D. Roulston, Attention: Kenneth J. Kempf,
President President
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-19 Schedule "C"
<PAGE> 12
Section 17. This Agreement may be amended from time to time by
supplemental agreement executed by the Trust and Fund/Plan and the compensation
stated in Schedule "B" attached hereto may be adjusted accordingly as mutually
agreed upon amendment of Schedule "B".
Section 18. The Trust represents and warrants to Fund/Plan that the
execution and delivery of this Agreement by the undersigned officers of the
Trust has been duly and validly authorized by resolution of the Board of
Trustees of the Trust.
Section 19. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 20. 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 without the
written consent of Fund/Plan or by Fund/Plan without the written consent of the
Trust, authorized or approved by a resolution of its respective Boards of
Directors or Trustees.
Section 21. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania and the venue of any action arising under this
Agreement shall be Montgomery County, Commonwealth of Pennsylvania.
Section 22. No provision of this Agreement may be amended or modified,
in any manner except by a written agreement properly authorized and executed by
Fund/Plan and the Trust.
Section 23. If any part, term or provision of this Agreement is held by
any court to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or provision held to
be illegal or invalid, provided that the basic agreement is not thereby
substantially impaired.
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-20 Schedule "C"
<PAGE> 13
Section 24. The Trust is a business trust organized under Chapter 1746,
Ohio Revised Code, and under its Trust Instrument, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all mandments thereto so filed or
hereafter filed. The obligations of "The Roulston Family of Funds" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Series of
the Trust must look solely to the assets of the Trust belonging to such Series
for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting of twelve typewritten pages, together with Schedules "A", "B" and
"C", to be signed by their duly authorized officers as of the day and year first
above written.
The Roulston Family of Funds Fund/Plan Services, Inc.
- -------------------------------- -------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Administration Agreement between The Roulston Family of Funds and Fund/Plan
Services, Inc.
C-21 Schedule "C"
<PAGE> 14
SCHEDULE "A"
FUND ACCOUNTING AND PORTFOLIO VALUATION SERVICES
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
DAILY ACCOUNTING SERVICES
1) Calculate Net Asset Value Per Share:
- Update the daily market value of securities held by the Trust
using Fund/Plan Services' standard agents for pricing domestic
equity and bond securities. The standard domestic equity
pricing services is Quotron Systems, Inc. or Interactive Data
(IDC). Muller Data Corporation and IDC are used for bond
prices.
- If necessary, enter limited number of manual prices supplied by Trust.
- Prepare NAV proof sheet. Review components of change in NAV for
reasonableness.
- Review variance reporting on-line and in hard copy for price
changes in individual securities using variance levels
established by Trust.
- Review for ex-dividend items indicated by pricing sources; trace to
general ledger for agreement.
- Communicate required pricing information (NAV) to Trust, Transfer Agent
and, electronically, to NASDAQ.
2) Determine and Report Cash Availability to Trust by Approximately 9:30 AM
Eastern Time:
- Receive daily cash and transaction statements from the Custodian by
8:30 AM Eastern time.
- Receive daily shareholder activity reports from the Trust's
Transfer Agent by 8:30 AM Eastern time.
- Fax hard copy Cash Availability calculations with all details to Trust.
- Supply Trust with 5-day cash projection report.
- Prepare and complete daily bank cash reconciliations including
documentation of any reconciling items and notify the Custodian/Trust.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-1 Schedule "A"; Page 1
<PAGE> 15
3) Reconcile and Record All Daily Expense Accruals:
- Accrue expenses based on Trust supplied budget either as
percentage of Trust's net assets or specific dollar amounts.
- If applicable, monitor expense limitations established by Trust.
- If applicable, accrue daily amortization of Organizational Expense.
- If applicable, complete daily accrual of 12(b)1 expenses.
4) Verify and Record All Daily Income Accruals for Debt Issues:
- Review and verify all system generated Interest and Amortization
reports.
- Establish unique security codes for bond issues to permit segregated
Trial Balance income reporting.
5) Monitor Domestic Securities Held for Cash Dividends, corporate actions and
capital changes such as splits, mergers, spinoffs, etc. and process
appropriately.
- Monitor electronically received information from Muller Data
Corporation for all domestic securities.
- Review current daily security trades for dividend activity.
- Interface with custodian to monitor timely collection and postings of
corporate actions, dividends and interest.
6) Enter All Security Trades on Investment Accounting System (IAS) based on
written instructions from Trust.
- Review system verification of trade and interest calculations.
- Verify settlement through the Custodian statements.
- Maintain security ledger transaction reporting.
- Maintain tax lot holdings.
- Determine realized gains or losses on security trades.
- Provide complete broker commission reporting.
7) Enter All Trust Share Transactions on IAS:
- Process activity identified on the Transfer Agent reports.
- Verify settlement through the Custodian statements.
- Reconcile to the Fund/Plan Services' Transfer Agent report balances.
8) Prepare and Reconcile/Prove Accuracy of the Daily Trial Balance (listing
all asset, liability, equity, income and expense accounts)
- Post manual entries to the general ledger.
- Post custodian bank activity.
- Post shareholder and security transactions.
- Post and verify system generated activity, i.e., income and expense
accruals.
- Prepare general ledger net cash proof used in NAV calculation
9) Review and Reconcile With Custodian Statements:
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-2 Schedule "A"; Page 2
<PAGE> 16
- Verify all posted interest, dividends, expenses, and shareholder and
security payments/receipts, etc. (Discrepancies will be reported to
and resolved by the Custodian.)
- Post all cash settlement activity to the Trial Balance.
- Reconcile to ending cash balance accounts.
- Clear IAS subsidiary reports with settled amounts.
- Track status of past due items and failed trades handled by the
Custodian.
10) Submission of Daily Accounting Reports to Roulston: (Additional reports
readily available.)
- Trial Balance.
- Portfolio Valuation (listing inclusive of holdings, costs, market
values, unrealized appreciation/depreciation and percentage of
portfolio comprised of each security).
- NAV Calculation Report.
- Cash Availability and 5 day Cash Projection Report.
MONTHLY ACCOUNTING SERVICES
1) Full Financial Statement Preparation (automated Statements of Assets
and Liabilities, of Operations and of Changes in Net Assets) and
submission to Trust by 10th business day.
2) Submission of Monthly Automated IAS Reports to Trust:
- Security Purchase/Sales Journal.
- Interest and Maturity Report.
- Brokers Ledger (Commission Report).
- Security Ledger Transaction Report with Realized Gains/Losses.
- Security Ledger Tax Lot Holdings Report.
- Additional reports available upon request.
3) Reconcile Accounting Asset Listing to Custodian Asset Listing:
- Report any security balance discrepancies to the Custodian/Trust.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-3 Schedule "A"; Page 3
<PAGE> 17
4) Provide Monthly Analysis and Reconciliation of Additional Trial Balance
Accounts, such as:
- Security cost and realized gains/losses.
- Interest/dividend receivable and income.
- Payable/receivable for securities purchased and sold.
- Payable/receivable for fund shares; issued and redeemed.
- Expense payments and accruals analysis.
5) If Appropriate, Prepare and Submit to Trust:
- SEC yield reporting (non-money market funds with domestic and ADR
securities only).
- Income by state reporting.
- Standard Industry Code Valuation Report.
- Alternative Minimum Tax Income segregation schedule.
ANNUAL (AND SEMI-ANNUAL) ACCOUNTING SERVICES
1) Assist and supply auditors with schedules supporting securities and
shareholder transactions, income and expense accruals, etc. during the year
in accordance with standard audit assistance requirements.
2) Provide NSAR Reporting (Accounting Questions):
If applicable, answer the following items:
2, 12B, 20, 21, 22, 23, 28, 30A, 31, 32, 35, 36, 37, 43, 53, 55, 62, 63,
64B, 71, 72, 73, 74, 75, 76
NOTE: Complete NSAR reporting is provided by Fund Plan's Administration
Group.
The Roulston Family of Funds Fund/Plan Services, Inc.
- --------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-4 Schedule "A"; Page 4
<PAGE> 18
ACCOUNTING SERVICES UNIT BASIC ASSUMPTIONS FOR
THE ROULSTON FAMILY OF FUNDS
The Fund/Plan Accounting Services Unit (ASU) is pleased to offer The Roulston
Family of Funds (the "Trust") the comprehensive level of service necessary for
proper portfolio accounting and valuation.
The Accounting Fees as proposed, are based on certain assumptions made upon
review of the February 28, 1994 Prospectus and Statement of Additional
Information, October 31, 1993 annual report, April 30, 1994 semi-annual reports
as well as trade volumes and account information and information of the Trust's
predessor received from Kathy Balazs. To the extent these assumptions and
requirements should change, fee revisions may be necessary.
BASIC ASSUMPTIONS:
1) Fund Plan as Administrator will complete all necessary compliance
reports (Sub- Chapter "M"), as well as monitoring of the various
prospectus limitations and restrictions.
2) The Trust's security trading activity will remain comparable to the
statistics identified by Kathy Balazs, i.e., approximately 12 trades
per month in the Midwest Growth Fund and 17 trades per month in the
Growth and Income Fund and 2 trades per month in the Government
Securities Fund (inclusive of domestic and money market transaction).
3) The number of securities and portfolio asset composition in each series
of the Trust will remain comparable to that identified in the annual
and semi-annual reports described above.
4) Each series of the Trust has a tax year-end which coincides with its fiscal
year-end. No additional accounting requirements are necessary to identify
or maintain book-tax differences.
To the extent tax accounting for certain securities differs from the
book accounting, it will be done by Fund/Plan as Administrator or the
Trust's Independent Accountant. We would recommend book/tax differences be
minimized.
5) The Trust foresees no difficulty in using Fund/Plan's standard current
pricing agents for domestic equity, bond, and ADR securities. We currently
use Quotron Systems, Inc. or Interactive Data Corporation (IDC) for
domestic equities and listed ADR's. Muller Data Corporation, Telerate
Systems, Inc. and IDC are used for bonds, and money market issues.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-5 Schedule "A"; Page 5
<PAGE> 19
It is assumed that the Accounting Unit will work closely with Trust to
ensure the accuracy of the Trust's NAV, and to obtain the most satisfactory
pricing sources and specific methodologies prior to the actual conversion
date.
6) To the extent the Trust require daily security prices (limited in
number) from specific brokers for domestic securities, these manual prices
will be obtained by the Trusts' Investment Adviser (or brokers) and faxed
to ASU by approximately 4:00 PM Eastern time for inclusion in the NAV
calculations. Trust will supply ASU with the appropriate pricing contacts
for these manual quotes.
Based on our current clients' experience, we believe the Trust's Investment
Adviser will have better success in obtaining accurate and a timely broker
quotes on a more consistent basis than Fund/Plan Services.
7) To the extent the Trust should ever purchase/hold open-end registered
investment companies (RIC's), procedural discussions should take place
between ASU and Trust management clarifying the appropriate pricing and
dividend rate sources. Depending on the methodologies selected by the Trust
additional fees may apply.
8) ASU will supply daily Portfolio Valuation Reports to the Trust's
Investment Adviser or manager identifying current security positions,
original/amortized cost, security market values and changes in unrealized
appreciation/depreciation.
It will be the responsibility of the Trust's Investment Adviser to review
these reports and to promptly notify ASU of any possible problems, trade
discrepancies, incorrect security prices, corporate action/capital change
information that could result in a misstated Trust NAV.
9) The Trust does not expect to invest in Futures, Swaps, Hedges,
Derivatives or Foreign (non-US dollar denominated) Securities. To the
extent these investment strategies should change, additional fees will
apply after the appropriate procedural discussions have taken place between
ASU and Trust management. (Advance notice is required should the Trust
commence trading in these investments).
10) It is assumed for all debt issues that the Adviser will supply the
Accounting Unit with critical income information such as accrual methods,
interest payment frequency details, coupon payment dates, floating rate
reset dates, and complete security descriptions with issue types and cusip
numbers. If applicable, for proper income accrual accounting, ASU will look
to the Trust's Adviser to supply PSA, Y.T.M., and related cash flow models
for any mortgage asset-backed securities and IO/PO positions held in the
Trust.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-6 Schedule "A"; Page 6
<PAGE> 20
11) It is assumed that the Custodian will provide the Accounting Unit with
daily Custodian statements and on-line access to the custody system
reflecting all prior day cash activity on behalf of each portfolio by 8:30
AM Eastern time. Complete and clear descriptions of any postings, inclusive
of CUSIP numbers, interest/dividend payment dates, capital stock details,
expense authorizations, beginning/ending balances, etc. will be provided by
the Custodian's reports or system.
12) It is assumed that the Custodian will handle and report on all
settlement problems, failed trades and resolve unsettled
dividends/interest/paydowns and capital changes. Additionally, the
Custodian will process all applicable capital change paperwork based upon
advice from Trust. ASU will supply segregated Trial Balance reporting and
supplemental reports to assist in this process.
13) With respect to Mortgage/Asset-Backed securities such as GNMA's,
FHLMC's, FNMA's, CMO's, ARM's, IO's, PO's etc., the Custodian (or a Trust
supplied source) will provide ASU with current principal repayment factors
on a timely basis in accordance with the appropriate securities' schedule.
Income accrual adjustments (to the extent necessary) based upon initial
estimates will be completed by ASU when actual principal/income payments
are collected by the Custodian.
14) To the extent applicable, Accounting will maintain US dollar
denominated qualified covered call options and index options reporting on
the daily Trial Balance and value the respective options and underlying
positions daily. To the extent tax classifications are required, they will
be done by Fund/Plan as Administrator or the Funds' Independent Accountant.
The Trust does not currently expect to invest in domestic options or
designated hedges. (Advance notice is requested should the Trust commence
trading in the above investments to clarify operational procedures between
ASU and the advisor.)
15) To the extent the Trust should establish a Line of Credit in segregated
accounts with the custodian for temporary administrative purposes, and/or
leveraging/hedging the portfolio, the investment adviser will complete the
appropriate paperwork/monitoring for segregation of assets and adequacy of
collateral. Accounting will reflect appropriate Trial Balance account
entries and interest expense accrual charges on the daily Trial Balance
adjusting as necessary at month-end.
16) The Trust does not currently expect to participate in Security Lending,
Leveraging, or Short Sales within their portfolio securities. To the extent
they do so in the future, additional fees will apply. (Advance notice is
required should the Trust desire to participate in the above.)
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-7 Schedule "A"; Page 7
<PAGE> 21
17) Trust management or Fund/Plan as Administrator will supply ASU with
portfolio specific expense accrual procedures and monitor the expense
accrual balances for adequacy based on outstanding liabilities monthly.
Fund/Plan as Administrator will promptly communicate to the Accounting
Unit any adjustments needed.
18) Specific deadlines and complete Trust supplied information will be
identified for all security trades in order to minimize any settlement
problems, NAV miscalculations or income accrual adjustments.
Trade Authorization Forms, with the appropriate officer's signature,
should be supplied to the ASU on all security trades placed by the
Trust no later than settlement/value date by 12:30 PM Eastern time for
money market securities (it is assumed trade date equals settlement
date for money market issues), and by 11:00 AM Eastern time on trade
date plus one for non-money market securities. Receipt of trade
information within these identified deadlines may be via telex, fax, or
on-line system access. To the extent applicable, the Investment Adviser
will also communicate all trade information directly to the Fund/Plan
Custody Administrator. The Fund/Plan Custody Administrator will then
supply ASU with the trade details in accordance with the above stated
deadlines.
CUSIP numbers and/or ticker symbols for all US dollar denominated
trades will be supplied by the Investment Adviser via the Trade
Authorization, telex or on-line support. If appropriate, Accounting
will supply the Investment Adviser with recommended trade ticket
documents to minimize receipt of incomplete information. We would find
it difficult to be responsible for NAV changes that resulted from
incomplete information about a trade.
19) To the extent Trust utilizes Purchases In-Kind (U.S. dollar denominated
securities) as a method for shareholder subscriptions, ASU will provide
Trust with recommended procedures to properly handle and process
security in-kinds. Should Trust prefer procedures other than those
provided by Fund/Plan Services, additional fees may apply. (Discussions
must take place in advance between Fund/Plan Services and Trust to
clarify the appropriate In-Kind operational procedures to be followed.)
20) It is assumed that the Trust's Investment Adviser or Fund/Plan as
Administrator will complete the applicable performance and rate of
return calculations as required by the SEC for the Trust.
21) With respect to amortization and accretion requirements for the debt
issues in the Trust, the ASU Investment Accounting System (IAS) offers
a very comprehensive and fully automated level of support. Market
discounts and acquisition premiums are calculated either utilizing the
straight-line or yield-to-maturity (scientific) method.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-8 Schedule "A"; Page 8
<PAGE> 22
It is extremely important that the Trust's requirements and proper
amortization procedures be clarified prior to conversion. ASU, Trust
management, and the Trust's independent accountant should review
pre-conversion system reports to ensure that IAS calculated
amortization amounts are in agreement with any tax schedules prepared
by the auditors for all appropriately held debt issues as of the date
last calculated.
It is assumed that the Trust will not hold any issues with Original
Issue Discounts (OID). It is our position that OID is a tax requirement
and, as such, not necessarily reflected on the books of the Trust.
ASU's current clients have not required any OID support. To the extent
the Trust should, in the future, own securities with OID, it is
expected that the Trust's auditors will complete the necessary OID
adjustments for financial statements and/or tax reporting.
22) The Trust is not currently expected to issue separate classes of shares.
To the extent it does so, additional fees will be negotiated.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-9 Schedule "A"; Page 9
<PAGE> 23
SCHEDULE "B"
FUND ACCOUNTING AND PORTFOLIO VALUATION SERVICES FEE SCHEDULE
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
This Fee Schedule is fixed for the Initial Term as that term is defined in
the Agreement.
The Accounting Fees as set forth below are based on the "Basic Assumptions"
as set forth in Schedule "A." To the extent that those assumptions are
inaccurate or requirements change, fee revisions may be necessary.
FUND ACCOUNTING AND PORTFOLIO VALUATION SERVICES
I. Annual Fee Schedule Per Domestic Portfolio: (1/12th payable monthly)
(U.S. dollar denominated securities only)
$24,000 Minimum to $ 20 Million of Average Net Assets
.0004 On the Next $ 30 Million of Average Net Assets
.0003 On the Next $ 50 Million of Average Net Assets
.0001 Over $100 Million of Average Net Assets
II. Pricing Services Quotation Fees: (based on individual cusip or security
identification numbers.)
Respective Fees will be billed monthly. Specific costs will be identified
based upon options selected by the client.
A) MULLER DATA CORPORATION* (if applicable)
*Based on current vendor costs, subject to change
Government//Mortgage Backed/Corporate
Short & Long Term Quotes $ .50 per Quote per Issue
Tax-Exempt Short & Long Term Quotes $ .55 per Quote per Issue
CMOs/ARMs/ABS $1.00 per Quote per Issue
Mortgage Backed Factors $1.00 per Issue per Month
Minimum Weekly File Transmission is Assumed
There are currently no charges for the domestic dividend and
capital change information transmitted daily to Fund/Plan
services from Muller Data Corporation.*
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-1 Schedule "B"; Page 1
<PAGE> 24
B) FUTURES $2.00 per Issue per Day
C) TELERATE SYSTEMS, INC.* (if applicable)
*Based on current vendor costs, subject to change.
Specific costs will be identified based upon options
selected by Trust and will be billed monthly.
D) QUOTRON SYSTEMS, INC.*
*Based on current vendor costs, subject to change.
There are currently no charges for the domestic security prices
supplied by Quotron Systems, Inc.
E) INTERACTIVE DATA CORP.* (if applicable)
*Based on current vendor costs, subject to change.
Domestic Equities and Options $ .15 per Quote per Issue
Corporate/Government/Agency Bonds
including Mortgage-Backed
Securities (evaluated, seasoned,
and/or closing) $ .50 per Quote per Issue
US Municipal Bonds and Collateralized
Mortgage Obligations $ .80 per Quote per Issue
Domestic Dividends and Capitalization
Changes $3.50 per Month per Holding
Interactive Data also charges monthly transmission costs and
disk storage charges.
III. Out-Of-Pocket Expenses
The Trust will reimburse Fund/Plan Services, Inc. monthly for all
out-of-pocket expenses, including telephone, postage,
telecommunications, special reports, record retention, special
transportation, and copying and sending materials to auditors for
audits.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-2 Schedule "B"; Page 2
<PAGE> 25
IV. Other Services Not Covered By This Agreement
To the extent the Trust commences the use of investment techniques such
as Security Lending, Short Sales, Derivatives, Swaps, Futures,
Leveraging, Precious Metals or non-US dollar denominated
securities/currency, additional fees will apply.
Activities of a non-recurring nature such as fund consolidations,
mergers, or reorganizations will be subject to negotiation. Any
additional enhanced services, programming requests or reports will be
quoted upon request.
To the extent the Trust should decide to issue separate/multiple
classes of shares, additional fees shall apply.
V. Interim Fee Arrangement
Notwithstanding the foregoing, during the period from the date hereof
until the Exchange Date of the Reorganization described in the
Agreement and Plan of Reorganization and Liquidation between the Trust
and The Advisors' Inner Circle Fund, Fund/Plan will be compensated at a
rate not to exceed 25% of that to which it would otherwise be entitled
on a monthly basis hereunder.
The Roulston Family of Funds Fund/Plan Services, Inc.
- --------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-3 Schedule "B"; Page 3
<PAGE> 26
SCHEDULE "C"
Identification of Series
Dated: January 20, 1995
As Amended March 1, 1996
Below are listed the "Series" to which services under this Agreement are to be
performed as of the execution date of this Agreement:
"FAIRPORT FUNDS"
1. FAIRPORT MIDWEST GROWTH FUND
2. FAIRPORT GROWTH AND INCOME FUND
3. FAIRPORT GOVERNMENT SECURITIES FUND
This Schedule "C" may be amended from time to time by agreement of the Parties.
FAIRPORT FUNDS FUND/PLAN SERVICES, INC.
- -------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-4 Schedule "C"
<PAGE> 1
EXHIBIT 99.B (9)(C)
TRANSFER AGENT SERVICES AGREEMENT
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-5 Schedule "C"
<PAGE> 2
TRANSFER AGENT SERVICES AGREEMENT
This Agreement, dated as of the 20th day of January, 1995, made by and
between The Roulston Family of Funds, an Ohio Business Trust (the "Trust")
operating as a registered investment company under the Investment Company Act of
1940, as amended (the "Act"), and duly organized and existing under the laws of
the State of Ohio, and Fund/Plan Services, Inc. ("Fund/Plan"), a corporation
duly organized and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Declaration of Trust ("Trust
Instrument") to issue separate series of shares representing interests in
separate investment portfolios (the "Series"), which Series are identified on
Schedule "C" attached hereto and which Schedule "C" may be amended from time to
time by mutual agreement of the Trust and Fund/Plan; and
WHEREAS, the Trust desires to retain Fund/Plan to perform share
transfer agency, redemption and dividend disbursing services as set forth in
this Agreement and in Schedule "A" attached hereto, and to perform certain other
functions in connection with these duties; and
WHEREAS, Fund/Plan is registered with the Securities and Exchange
Commission as a Transfer Agent as required under Section 17(A)(c) of the
Securities Exchange Act of 1934, as amended ("1934 Act"); and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform
such functions upon the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree as follows:
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context otherwise requires.
Share Certificates shall mean the certificates representing shares of
stock of the Series.
Shareholders shall mean the registered owners of the Shares of the
Series in accordance with the share registry records maintained by Fund/Plan for
the Trust.
Shares shall mean the issued and outstanding shares of the Series.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-6 Schedule "C"
<PAGE> 3
Signature Guarantee shall mean the guarantee of signatures by an
"eligible guarantor institution" as defined in rule 17Ad-15 under the 1934 Act.
Eligible guarantor institutions include banks, brokers, dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations. Broker-dealers guaranteeing signatures must
be members of a clearing corporation or maintain net capital of at least
$100,000. Signature guarantees will be accepted from any eligible guarantor
institution which participates in a signature guarantee program.
Oral Instruction shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to Fund/Plan in
person or by telephone, telegram, telecopy or other mechanical or documentary
means lacking original signature, by a person or persons reasonably identified
to Fund/Plan to be a person or persons so authorized by a resolution of the
Board of Trustees of the Trust.
Written Instruction shall mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to Fund/Plan in an
original writing containing an original signature or a copy of such document
transmitted by telecopy including transmission of such signature reasonably
identified to Fund/Plan to be the signature of a person or persons so authorized
by a resolution of the Board of Trustees of the Trust to give Written
Instructions to Fund/Plan.
TRANSFER AGENCY SERVICES
Section 2. Fund/Plan as Transfer Agent shall make original issues of
Shares in accordance with Section 9 and 10 below and with each Series'
Prospectus and Statement of Additional Information upon the written request of
the Trust, and upon being furnished with (i) a certified copy of a resolution or
resolutions of the Board of Trustees of the Trust authorizing such issue; (ii)
an opinion of counsel as to the validity of such Shares; and (iii) necessary
funds for the payment of any original issue tax applicable to such additional
Shares.
Section 3. Subject to the terms of the applicable prospectus then in
effect transfers of Shares shall be registered and new Shares issued by
Fund/Plan upon redemption of outstanding Shares, (i) in the form deemed by
Fund/Plan to be properly endorsed for transfer, (ii) with all necessary
endorser's signatures guaranteed pursuant to Rule 17Ad-15 under the 1934 Act, as
amended, accompanied by, (iii) such assurances as Fund/Plan shall deem necessary
or appropriate to evidence the genuineness and effectiveness of each necessary
endorsement, and (iv) satisfactory evidence of compliance with all applicable
laws relating to the payment or collection of taxes.
Section 4. In registering transfers, Fund/Plan as Transfer Agent may
rely upon the applicable commercial code or any other applicable law which, in
the written opinion (a copy of which shall previously have been furnished to the
Trust) of counsel, protect Fund/Plan and the Trust in not requiring complete
documentation, in registering transfer without inquiry into adverse claims, in
delaying registration for purposes of such inquiry, or in refusing registration
where in its judgment an adverse claim requires such refusal.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-7 Schedule "C"
<PAGE> 4
Section 5. With respect to confirmed trades received by Fund/Plan as
Transfer Agent for the Series, Fund/Plan shall periodically notify the Trust of
the current status of outstanding confirmed trades. Fund/Plan is authorized to
cancel confirmed trades which have been outstanding for thirty (30) days. Upon
such cancellation, Fund/Plan shall instruct the accounting agent to adjust the
books of the Trust accordingly.
Section 6. Fund/Plan will maintain stock registry records in the usual
form in which it will note the issuance, transfer and redemption of Shares.
Fund/Plan is responsible to provide reports of Share purchases, redemptions, and
total Shares outstanding on the next business day after each net asset
valuation. Fund/Plan is authorized to keep records, which will be part of the
stock transfer records, in which it will note the names and registered address
of Shareholders and the number of Shares and fractions thereof owned by them.
Section 7. Fund/Plan in its capacity as Transfer Agent will, in
addition to the duties and functions above-mentioned, perform the usual duties
and functions of a stock transfer agent for an investment company as listed in
Schedule "A" attached hereto. Fund/Plan may rely conclusively and act without
further investigation upon any list, instruction, certification, authorization
or other instrument or paper believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any officer of the
Trust, or upon the advice of counsel for the Trust or for Fund/Plan. Fund/Plan
may record any transfer of Shares which is reasonably believed by it to have
been duly authorized or may refuse to record any transfer of Shares if in good
faith Fund/Plan in its capacity as Transfer Agent reasonably deems such refusal
necessary in order to avoid any liability either of the Trust or Fund/Plan. The
Trust agrees to indemnify and hold harmless Fund/Plan from and against any and
all losses, costs, claims, and liability which it may suffer or incur by reason
of so relying or acting or refusing to act. Fund/Plan shall maintain and
reconcile all operating bank accounts necessary to facilitate all transfer
agency processes; including, but not limited to, distribution disbursements,
redemptions and payment clearance accounts.
Section 8. In case of any request or demand for the inspection of the
Share records of a Series, Fund/Plan as Transfer Agent shall endeavor to notify
the Trust and to secure instructions as to permitting or refusing such
inspection. Fund/Plan may, however, exhibit such records to any person in any
case where it is advised by its counsel that it may be held liable for failure
to do so.
ISSUANCE OF SHARES
Section 9. Prior to the daily determination of net asset value in
accordance with the Series' Prospectus and Statement of Additional Information,
Fund/Plan shall process all purchase orders received since the last
determination of the Series' net asset value.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-8 Schedule "C"
<PAGE> 5
Fund/Plan shall calculate daily the amount available for investment in
Shares at the net asset value determined by the Series' pricing agent as of the
close of regular trading on the New York Stock Exchange, the number of Shares
and fractional Shares to be purchased and the net asset value to be deposited
with the Custodian. Fund/Plan as agent for the Shareholders shall place a
purchase order daily with the appropriate Series for the proper number of Shares
and fractional Shares to be purchased and confirm such number to the Trust, in
writing.
Section 10. Fund/Plan having made the calculations provided for in
Section 9, shall thereupon pay over the net asset value of Shares purchased to
the Custodian. The proper number of Shares and fractional Shares shall then be
issued daily and credited by Fund/Plan to the Shareholder Registration Records.
The Shares and fractional Shares purchased for each Shareholder will be credited
by Fund/Plan to that Shareholder's separate account. Fund/Plan shall mail to
each Shareholder a confirmation of each purchase, with copies to the Trust, if
requested. Such confirmations will show the prior Share balance, the new Share
balance, the amount invested and the price paid for the newly purchased Shares.
REDEMPTIONS
Section 11. Fund/Plan shall, prior to the daily determination of net
asset value in accordance with the Series' Prospectus and Statement of
Additional Information, process all requests from Shareholders to redeem Shares
and determine the number of Shares required to be redeemed to make monthly
payments, automatic payments or the like. Thereupon, Fund/Plan shall advise the
Trust of the total number of Shares available for redemption and the number of
Shares and fractional Shares requested to be redeemed. Fund/Plan as pricing
agent shall then determine the applicable net asset value, whereupon Fund/Plan
shall furnish the Trust with an appropriate confirmation of the redemption and
process the redemption by filing with the Custodian an appropriate statement and
make the proper distribution and application of the redemption proceeds in
accordance with each Series' Prospectus and Statement of Additional Information
then in effect. The stock registry books recording outstanding Shares, the
Shareholder Registration Records and the individual account of the Shareholder
shall be properly debited.
Section 12. The proceeds of redemption shall be remitted by Fund/Plan
in accordance with the appropriate Series' Prospectus and Statement of
Additional Information, by check mailed to the Shareholder at the Shareholder's
registered address or wired to an authorized bank account.
For the purposes of redemption of Shares which have been purchased
within 15 days of a redemption request, the Trust shall provide Fund/Plan, from
time to time, with Written Instructions concerning the time within which such
requests may be honored.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-9 Schedule "C"
<PAGE> 6
DIVIDENDS
Section 13. The Trust shall notify Fund/Plan of the date of each
dividend declaration or capital gains distribution. In addition, the Trust shall
provide to Fund/Plan five business days' prior written notice of the record date
for determining the Shareholders entitled to payment. The per-share payment
amount of any dividend or capital gain shall be determined by the Trust after
receipt of necessary information from and consultation with Fund/Plan.
Section 14. On or before each payment date, the Trust will notify
Fund/Plan in its capacity as dividend disbursing agent of the total amount of
the dividend or distribution currently payable. Fund/Plan will, on the
designated payment date, automatically reinvest all dividends in additional
Shares except in cases where Shareholders have elected to receive distribution
in cash, in which case Fund/Plan will mail distribution checks to the
Shareholders for the proper amounts payable to them from monies transferred by
the Custodian to Fund/Plan for that purpose.
FEES
Section 15. The Trust agrees to pay Fund/Plan compensation for its
services and to reimburse it for expenses, at the rates and amounts as set forth
in Schedule "B" attached hereto, and as shall be set forth in any amendments to
such Schedule "B" approved by the Trust and Fund/Plan. The Trust agrees and
understands that Fund/Plan's compensation will be comprised of two components,
payable on a monthly basis, as follows:
(i) An annual Shareholder account maintenance fee
calculated by multiplying the monthly average number of accounts in each Series
by one twelfth (1/12th) the per account fee as stated in Schedule "B", subject
to a minimum fee per Series, which fee the Trust hereby authorizes Fund/Plan to
collect by debiting the Trust's custody account for invoices which are rendered
for such services performed. The invoices for the services performed will be
sent to the Trust after such debiting with the indication that payment has been
made; and
(ii) reimbursement of any reasonable out-of-pocket
expenses paid by Fund/Plan on behalf of the Trust, which out-of-pocket expenses
will be billed to the Trust within the first ten calendar days of the month
following the month in which such out-of-pocket expenses were incurred. The
Trust agrees to reimburse Fund/Plan for such expenses within ten calendar days
of receipt of such bill.
For the purpose of determining fees payable to Fund/Plan, the value of
each Series' net assets shall be computed at the times and in the manner
specified in each Series' Prospectus and Statement of Additional Information
then in effect.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-10 Schedule "C"
<PAGE> 7
During the term of this Agreement, should the Trust seek services or
functions in addition to those outlined above or in Schedule "A" attached, a
written amendment to Agreement Schedule "A" and Schedule "B", as necessary,
specifying the additional services and corresponding compensation shall be
executed by both Fund/Plan and the Trust.
GENERAL PROVISIONS
Section 16. Fund/Plan shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of
Shares, and the disbursement of dividends and dividend reinvestments, in which
will be noted the transactions effected for each Shareholder and the number of
Shares and fractional Shares owned by each Shareholder. Fund/Plan agrees to make
available upon request and to preserve for the periods prescribed in Rule 31a-2
under the Act, any records relating to services provided under this Agreement
which are required to be maintained by Rule 31a-1 under the Act.
Section 17. In addition to the services as Transfer Agent and dividend
disbursing agent set forth above, Fund/Plan will perform other services for the
Trust as agreed upon from time to time, including but not limited to,
preparation of and mailing Federal Tax Information Forms and mailing semi-annual
reports to shareholders of the Trust.
Section 18. Nothing contained in this Agreement is intended to or shall
require Fund/Plan in any capacity hereunder, to perform any functions or duties
on any holiday, day of special observance or any other day on which the
Custodian or the New York Stock Exchange are closed. Functions or duties
normally scheduled to be performed on such days shall be performed on, and as
of, the next business day on which both the New York Stock Exchange and the
Custodian are open.
Section 19.
(a) Fund/Plan, its directors, officers, employees,
shareholders and agents shall only be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust, in connection with the
performance of this Agreement that result from willful misfeasance, bad faith,
gross negligence or reckless disregard on the part of Fund/Plan in the
performance of its obligations and duties under this Agreement.
(b) Any person, even though also a director, officer,
employee, shareholder or agent of Fund/Plan, who may be or become an officer,
trustee, employee, or agent of the Trust, shall be deemed, when rendering
services to such entity or acting on any business of the Trust (other than
services or business in connection with Fund/Plan's duties hereunder), to be
rendering such services to or acting solely for the Trust and not as a director,
officer, employee, shareholder or agent of, or one under the control or
direction of Fund/Plan even though that person is being paid salary by
Fund/Plan.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-11 Schedule "C"
<PAGE> 8
(c) Notwithstanding any other provision of this Agreement, the
Trust shall indemnify and hold harmless Fund/Plan, its directors, officers,
employees, shareholders and agents from and against any and all claims, demands,
expenses and liabilities (whether with or without basis in fact or law) of any
and every nature which Fund/Plan may sustain or incur or which may be asserted
against Fund/Plan by any person by reason of, or as a result of (i) any action
taken or omitted to be taken by Fund/Plan in good faith hereunder; (ii) any
action taken or omitted to be taken by Fund/Plan in good faith in reliance upon
any certificate, instrument, order, or stock certificate or other document
reasonably believed by it to be genuine and to be signed, countersigned or
executed by any duly authorized person, upon the Oral Instructions or Written
Instructions of an authorized person of the Trust or upon the opinion of legal
counsel to the Trust, or its own counsel; or (iii) any action taken or omitted
to be taken by Fund/Plan in connection with its appointment under this
Agreement, which action or omission was taken in good faith in reliance upon any
law, act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended, or repealed. Indemnification
under this subparagraph, however, shall not apply to actions or omissions of
Fund/Plan or its directors, officers, employees, shareholders, or agents in
cases of its or their willful misfeasance, bad faith, gross negligence or
reckless disregard of its or their duties hereunder.
(d) Fund/Plan shall give written notice to the Trust within
thirty (30) business days of receipt by Fund/Plan of a written assertion or
claim of any threatened or pending legal proceeding which may be subject to this
indemnification. The failure to notify the Trust of such written assertion or
claim shall not, however, operate in any manner whatsoever to relieve the Trust
of any liability arising under this Section or otherwise, except to the extent
that failure to give notice prejudices the Trust.
(e) For any legal proceeding giving rise to this
indemnification, the Trust shall be entitled to defend or prosecute any claim in
the name of Fund/Plan at its own expense and through counsel of its own choosing
if it gives written notice to Fund/Plan within thirty (30) business days of
receiving notice of such claim. Notwithstanding the foregoing, Fund/Plan may
participate in the litigation at its own expense through counsel of its own
choosing. In the event the Trust chooses to defend or prosecute such claim, the
parties shall cooperate in the defense or prosecution thereof and shall furnish
such records and other information as are reasonably necessary.
(f) The Trust shall not settle any claim under Section 19(d)
and 19(e) without Fund/Plan's express written consent, which consent shall not
be unreasonably withheld. Fund/Plan shall not settle any such claim without the
Trust's express written consent, which likewise shall not be unreasonably
withheld.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-12 Schedule "C"
<PAGE> 9
Section 20. Fund/Plan is authorized, upon receipt of Written
Instructions from the Trust, and as described in the prospectus to make payment
upon redemption of Shares without a signature guarantee. The Trust hereby agrees
to indemnify and hold Fund/Plan, its successors and assigns, harmless of and
from any and all expenses, damages, claims, suits, liabilities, actions,
demands, losses whatsoever arising out of or in connection with a payment by
Fund/Plan upon redemption of Shares pursuant to Written Instructions and without
a signature guarantee; upon the request of Fund/Plan, the Trust shall assume the
entire defense of any action, suit or claim subject to the foregoing indemnity.
Fund/Plan shall notify the Trust of any such action, suit or claim within thirty
(30) days after receipt by Fund/Plan of notice thereof.
Section 21.
(a) The initial term of this Agreement shall be for a period
commencing on the date of this Agreement and ending on a date two (2) years
following the Exchange Date of the reorganization described in the Agreement and
Plan of Reorganization and Liquidation between the Trust and The Advisors' Inner
Circle Fund ("Initial Term").
(b) The fee schedule set forth in Schedule "B" attached shall
be fixed for the Initial Term of this Agreement. Thereafter, the fee schedule
will be subject to review and adjustment, not to exceed 10% of those fees set
forth in Schedule "B."
(c) For any period after the Initial Term of this Agreement,
the Trust or Fund/Plan may give written notice to the other of the termination
of this Agreement, such termination to take effect at the time specified in the
notice, which date shall not be less than one hundred eighty (180) days after
the date of giving notice. Upon the effective termination date, the Trust shall
pay to Fund/Plan such compensation as may be due as of the date of termination
and shall likewise reimburse Fund/Plan for any out-of-pocket expenses and
disbursements reasonably incurred by Fund/Plan to such date.
(d) This Agreement also may be terminated at any time for
"cause," after the giving of not less than sixty (60) days' notice.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-13 Schedule "C"
<PAGE> 10
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, negligence or reckless disregard on the part of the
party to be terminated with respect to its obligations and duties set forth
herein; (b) the commencement of a judicial, regulatory or administrative
proceeding by either state or federal authorities in which criminal, illegal or
unethical behavior in the conduct of its business has been alleged against the
party to be terminated; (c) financial difficulties on the part of the party to
be terminated which is evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent, or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time is in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors; (d) any assignment (as
that term is defined in the 1940 Act) of this Agreement by Fund/Plan, including
any direct or indirect transfer or hypothecation of a controlling block of
Fund/Plan's voting securities by a security holder thereof, shall permit the
Trust to terminate for cause; or (e) any circumstance which substantially
impairs the performance of the obligations and duties of the party to be
terminated, or the ability to perform those obligations and duties, as
contemplated herein.
(e) If a successor to any of Fund/Plan's duties or
responsibilities under this Agreement is designated by the Trust by written
notice to Fund/Plan in connection with the termination of this Agreement,
Fund/Plan shall promptly upon such termination and at the expense of the Trust,
transfer all records and shall cooperate in the transfer of such duties and
responsibilities.
Section 22. The Trust shall file with Fund/Plan a certified copy of
each resolution of its Board of Trustees authorizing the execution and
transmittal of Written Instructions or the transmittal of Oral Instructions, as
provided in Section 1 of this Agreement.
Section 23. The Trust shall promptly turn over to Fund/Plan such of the
Series' accounts and records previously maintained by or for it as are requested
by Fund/Plan to perform its functions under this Agreement. The Trust authorizes
Fund/Plan to rely on such Accounts and Records turned over to it and hereby
indemnifies and holds Fund/Plan, its successors and assigns, harmless of and
from any and all expenses, damages, claims, suits, liabilities, actions, demands
and losses whatsoever arising out of or in connection with any error, omission,
inaccuracy or other deficiency of such accounts and records.
Fund/Plan shall make reasonable efforts to isolate and correct any
inaccuracies, omissions, discrepancies, or other deficiencies in the Accounts
and Records delivered to Fund/Plan, to the extent such matters are disclosed to
Fund/Plan or are discovered by it and are relevant to its performance of it
functions under this Agreement; however, Fund/Plan expressly makes no warranty
or representation that any error, omission or deficiency can be satisfactorily
corrected. The Trust shall provide Fund/Plan with such assistance as it may
reasonably request in connection with its efforts to correct such matters. The
Trust agrees to pay Fund/Plan on a current and ongoing basis for its reasonable
time and costs expended on the correction of such matters at an hourly rate of
$50.00, said payment to be in addition to the fees and charges agreed to for the
normal services rendered under this Agreement.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-14 Schedule "C"
<PAGE> 11
Section 24. This Agreement may be amended from time to time by a
written agreement executed by the Trust and Fund/Plan.
Section 25. Except as otherwise provided in this Agreement, any notice
or other communication required by or permitted to be given in connection with
this Agreement shall be in writing, and shall be delivered in person or sent by
first class mail, postage prepaid, to the respective parties as follows:
If to the Trust: If to Fund/Plan:
The Roulston Family of Funds Fund/Plan Services, Inc.
4000 Chester Avenue 2 West Elm Street
Cleveland, OH 44103 Conshohocken, PA 19428
Attention: Scott D. Roulston, Attention: Kenneth J. Kempf,
President President
Section 26. The Trust represents and warrants to Fund/Plan that the
execution and delivery of this Agreement by the undersigned officers of the
Trust has been duly and validly authorized by resolution of the Board of
Trustees of the Trust.
Section 27. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 28. This Agreement shall extend to and shall be binding upon
the Parties and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of Fund/Plan or by Fund/Plan without the written consent of the Trust,
authorized or approved by a resolution of their respective Boards of Directors
or Trustees.
Section 29. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania and the venue of any action arising under this
Agreement shall be Montgomery County, Commonwealth of Pennsylvania.
Section 30. No provision of this Agreement may be amended or modified,
in any manner except in writing, properly authorized and executed by Fund/Plan
and the Trust.
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-15 Schedule "C"
<PAGE> 12
Section 31. If any part, term or provision of this Agreement is held by
any court to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or provision held to
be illegal or invalid, provided that the basic agreement is not thereby
substantially impaired.
Section 32. The Trust is a business trust organized under Chapter 1746,
Ohio Revised Code, and under its Trust Instrument, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Roulston Family of Funds" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Series of
the Trust must look solely to the assets of the Trust belonging to such Series
for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting in its entirety, of twelve typewritten pages, together with Schedules
"A," "B" and "C," to be signed by their duly authorized officers as of the day
and year first above written.
The Roulston Family of Funds Fund/Plan Services, Inc.
- -------------------------------- -------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Accounting Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-16 Schedule "C"
<PAGE> 13
SCHEDULE "A"
TRANSFER AGENT/SHAREHOLDER SERVICES
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
THE FOLLOWING IS A LIST OF TRANSFER AGENCY SERVICES TO BE PROVIDED UNDER THIS
AGREEMENT:
- - Opening new accounts and entering demographic data into shareholder base.
- - Real-time Customer Information File (CIF) to link accounts within a Series
and across all Series.
- - 100% Quality Control of new accounts opened on a same-day/next day basis.
- - Account Maintenance
- - Processing all investments including:
- initial investments
- subsequent investments through lock box computer interface
- pre-authorized investments through ACH
- government allotments through ACH
- - Processing tax ID certifications and Non-Resident Alien (NRA) and
reporting back-up withholding.
- - Processing legal transfers of accounts.
- - Automated exchange processing.
- - Recording and retaining on tape all shareholder calls.
- - Research and respond to shareholder calls and written inquiries.
- - Processing reinvestment of dividends of one fund into another fund.
(If Applicable)*
- - Processing sweep purchases and redemptions for brokerage, bank, or other
accounts via tape or transmission.*
- - Generating account statements with copies to appropriate interested
parties. (Up to four statements.)
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-1 Schedule "A", Page 1
<PAGE> 14
- - Combined shareholder statements.*
- - Redemption processing includes:
- complete and partial redemptions
- selected group redemptions*
- check redemption processing (if applicable)
- - Distribution options:
- federal wires*
- mailing checks
- ACH*
- - Certificate issuance and cancellation.
- - Replacement of certificates through surety bonds.*
- - Process dividends.
- - Produce daily and monthly Blue Sky reports.
- - Producing daily and monthly reports of shareholder activity.
DAILY REPORTS
<TABLE>
<CAPTION>
Report Number Report Description
------------- ------------------
<S> <C>
(no report number) Daily Transaction Journal
024 Tax Reporting Proof
051 Cash Receipts and Disbursement Proof
053 Daily Share Proof
091 Daily Gain/Loss Report
104 Maintenance Register
044 Transfer/Certificate Register
056 Blue Sky Warning Report
</TABLE>
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-2 Schedule "A", Page 2
<PAGE> 15
MONTHLY REPORTS
Report Description
Blue Sky
Certificate Listing
State Sales and Redemption
Monthly Statistical
Account Demographic Analysis
MTD Sales - Demographics by Account Group
Account Analysis by Type
- - Producing shareholder lists, labels, ad hoc reports to management, etc. *
- - Addressing, mailing, and tabulation of proxy cards, as necessary.*
- - Preparation of federal tax information forms to include 1099-DIV's,
1099-B's, 1042's, etc. to shareholders with tape to IRS.
- - Microfilming and indexing in PC system of all application, correspondence
and other pertinent shareholder documents to provide automated location of
these records.
- - Microfilming all checks presented for investment and check redemptions.
- - System access by PC dial-up or by dedicated line. (If Applicable)*
- - Retirement Plan processing.* (IRA, SEP, Omnibus Qualified Plans)
- Systematic tracking of current, prior year and rollover contributions
- 5498 tax reporting
- 1099R reporting on distributions
- Processing transfer of assets between custodians
- PC based recalculation of required minimum distributions for IRA SWP's for
shareholders over 59 1/2 years of age.
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-3 Schedule "A", Page 3
<PAGE> 16
- - Institutional Servicing -
Institutional customers are assigned a specific representative within
the unit providing daily availability and settlement information, and
coordinating sweep activity. In addition, this representative interacts
with the Retail Operations area to endure proper handling and coding of
accounts.
* Separate fees will apply for these services.
The Roulston Family of Funds Fund/Plan Services, Inc.
- --------------------------------- -------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-4 Schedule "A", Page 4
<PAGE> 17
SCHEDULE "B"
SHAREHOLDER SERVICES AND TRANSFER AGENT FEE SCHEDULE
FOR
THE ROULSTON FAMILY OF FUNDS
Dated: January 20, 1995
This Fee Schedule is fixed for the Initial Term as that term is
defined in the Agreement.
I. A) Base Fee
$9.00 per Account per Year Annual Maintenance Fee subject to a minimum
monthly fee of $2,000 for each Series.
B) IRA's, 403(b) Plans, Defined Contribution/Benefit Plans:
$12.00 per Account per Year Annual Maintenance Fee
II. Conversion Fee
Existing records will be converted from prior agents for a total of $3,500.
III. Out of Pocket Expenses:
The Trust will reimburse Fund/Plan Services monthly for all reasonable
out-of-pocket expenses, including postage, stationery (statements),
telecommunications (telephone, fax, dedicated 800 line, on-line
access), special reports, transmissions, records retention, tapes,
couriers and any pre-approved travel expenses.
IV. Other Services Not Covered By This Agreement
Activities of a non-recurring nature including but not limited to fund
consolidations, mergers, acquisitions, reorganizations, the addition or
deletion of a series, and shareholder meetings/proxies are not included
herein, and will be quoted separately. To the extent the Fund should
decide to issue multiple/separate classes of shares, additional fees
will apply. Any enhanced services, programming requests or reports will
be quoted upon request.
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-1 Schedule "B"
<PAGE> 18
V. Interim Fee Arrangement
Notwithstanding the foregoing, during the period from the date hereof
until the Exchange Date of the Reorganization described in the
Agreement and Plan of Reorganization and Liquidation between the Trust
and The Advisors' Inner Circle Fund, Fund/Plan will be compensated at a
rate not to exceed 25% of that to which it would otherwise be entitled
on a monthly basis hereunder.
The Roulston Family of Funds Fund/Plan Services, Inc.
--------------------------------- --------------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-2 Schedule "C"
<PAGE> 19
SCHEDULE "C"
Identification of Series
Dated: January 20, 1995
As Amended March 1, 1996
Below are listed the "Series" to which services under this Agreement are to be
performed as of the execution date of this Agreement:
"FAIRPORT FUNDS"
1. FAIRPORT MIDWEST GROWTH FUND
2. FAIRPORT GROWTH AND INCOME FUND
3. FAIRPORT GOVERNMENT SECURITIES FUND
This Schedule "C" may be amended from time to time by agreement of the Parties.
FAIRPORT FUNDS FUND/PLAN SERVICES, INC.
- ----------------------------- -----------------------------
By: Scott D. Roulston, President By: Kenneth J. Kempf, President
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-3
<PAGE> 1
EXHIBIT 99.B (11)(A)
CONSENT OF INDEPENDENT AUDITORS
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-4
<PAGE> 2
CONSENT OF
ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references made to our firm under the captions "Financial
Highlights" in the Prospectus and "Legal Counsel and Independent Auditors" in
the Statement of Additional Information and to the use, in this Post-Effective
Amendment Number 2 to Registration Statement (Form N-1A, Number 33-84186) of the
Fairport Funds (formerly The Roulston Family of Funds), of our report dated
November 27, 1995.
ERNST & YOUNG LLP
Cleveland, Ohio
February 23, 1996
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-5
<PAGE> 1
EXHIBIT 99.B (15)
AMENDED DISTRIBUTION (12B-1) PLAN
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-6
<PAGE> 2
SCHEDULE C
to the
DISTRIBUTION AGREEMENT
between FAIRPORT FUNDS and
ROULSTON RESEARCH CORP.
Dated as of January 20, 1995
As amended May 8, 1995
As Amended March 1, 1996
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
This Plan (the "Plan") constitutes a distribution and shareholder
service plan of The Roulston Family of Funds, an Ohio business trust (the
"Trust"), adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"). The Plan relates to shares of those
investment portfolios identified on Schedule B to the Trust's Distribution
Agreement, as such schedule may be amended from time to time (the "Plan Funds").
Section 1. Each Plan Fund shall pay to the principal underwriter (the
"Distributor") of the Trust's shares of beneficial interest (the "Shares"),
currently Roulston Research Corp., an Ohio corporation, or its designee, a fee
in an amount not to exceed on an annual basis .25% of the average daily net
asset value of such Plan Fund (the "Plan Fee") for: (a) payments Distributor
makes or agrees to have made to broker/dealers, banks and other institutions (a
"Participating Organization") for distribution assistance and/or Shareholder
service pursuant to an agreement with the Participating Organization or for
distribution assistance and/or Shareholder service provided by Distributor
pursuant to the Plan; or (b) reimbursement of expenses incurred by a
Participating Organization pursuant to an agreement in connection with
distribution assistance and/or Shareholder service including, but not limited
to, the reimbursement of expenses relating to printing and distributing
prospectuses to persons other than Shareholders of a Plan Fund, printing and
distributing advertising and sales literature and reports to Shareholders used
in connection with the sale of Shares, and personnel and communication equipment
used in servicing Shareholder accounts and prospective shareholder inquiries.
For purposes of the Plan, a Participating Organization may include the
Distributor and the Distributor's affiliates and subsidiaries.
Section 2. The Plan Fee shall be paid by the Plan Funds to Distributor
only to compensate Distributor for assistance or services provided, or to
reimburse Distributor for payments or expenses incurred, pursuant to Section 1.
Section 3. The Plan shall not take effect with respect to a Plan Fund
until it has been approved by the vote of the initial Shareholder of such Fund.
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-7
<PAGE> 3
Section 4. The Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
1940 Act or the rules and regulations thereunder) of both (a) the Trustees of
the Trust, and (b) the Independent Trustees of the Trust cast in person at a
meeting called for the purpose of voting on the Plan or such agreement.
Section 5. The Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of the Plan in
Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Plan Funds pursuant to the Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
Section 7. The Plan may be terminated as to a Plan Fund at any time,
without the payment of any penalty, by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding Shares of a Plan Fund .
Section 8. All agreements with any person relating to implementation of
the Plan shall be in writing, and any agreement related to the Plan shall
provide:
(a) That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Independent
Trustees or by vote of a majority of the outstanding voting securities
of the Plan Fund, on not more than 60 days' written notice to any other
party to the agreement; and
(b) That such agreement shall terminate automatically in
the event of its assignment.
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-8
<PAGE> 4
Section 9. The Plan may not be amended to increase materially the
amount of distribution expenses of a Plan Fund permitted pursuant to Section 1
hereof without approval by a vote of at least a majority of the outstanding
voting securities of such Plan Fund, and all material amendments to the Plan
shall be approved in the manner provided for approval of the Plan in Section 4.
Section 10. As used in the Plan, (a) the term "Independent Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of the
Plan or any agreements related to it, and (b) the terms "assignment",
"interested person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
Effective: January 20, 1995
Amended: May 8, 1995
March 1, 1996
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-9
<PAGE> 1
EXHIBIT 99.B (16)
PERFORMANCE COMPUTATIONS
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-10
<PAGE> 2
<TABLE>
<CAPTION>
Roulston Growth & Income
SEC 30 Day Yield Calculation
For the Period 10/01/95 - 10/31/95
<S> <C>
SEC Yield = 2 {((a-b)+1)to the power of 6-1}
------
21(cd)
a= interest
b= expenses
c= average shares
d= NAV @ 10/31
Roulston Growth & Income
a= 51,661.93 SEC Yield = (51,661.93-28734.45)
b= 28,734.45 (1,882,313.278*12.29)
c= 1,882,313.278
d= 12.29
22,927.48
23,133,630.19
0.0009911
1.0059613
0.0059613
0.0119226
SEC Yield = 1.19%
Roulston Government Securities
SEC 30 Day Yield Calculation
For the Period 10/01/95 - 10/31/95
SEC Yield = 2 {((a-b)+1) to the power of 21 6-1}
------
(cd)
a= interest
b= expenses
c= average shares
d= NAV @ 10/31
Roulston Government Securities
a= 41,848.20 SEC Yield = (41,848.20-6,338.28)
b= 6,338.28 (876,082.354*9.84)
c= 876,082.354
d= 9.84
35,509.92
8,620,650.36
0.0041192
1.0249709
0.0249709
0.0499419
SEC Yield = 4.99%
Roulston Midwest Growth
SEC 30 Day Yield Calculation
For the Period 10/01/95 - 10/31/95
SEC Yield = 2 {((a-b)+1) to the power of 6-1}
------
(cd)
a= interest
b= expenses
c= average shares
d= NAV @ 10/31
Roulston Midwest Growth
a= 65,899.45 SEC Yield = (65,899.45-57,447.63)
b= 57,447.63 (3,646,151.532*13.55)
c= 3,646,151.532
d= 13.55
8,451.82
49,405,353.26
0.0001711
1.0010269
0.0010269
0.0020537
SEC Yield = 0.21%
</TABLE>
<PAGE> 1
EXHIBIT 99.B (18)(B)
FORM OF POWER OF ATTORNEY
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-11
<PAGE> 2
[FORM OF POWER OF ATTORNEY]
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and
appoints Joseph M. O'Donnell, Esq., Gerald J. Holland, Deborah Ann Potter and
William J. Baltrus and each of them, with full power to act without the other,
as his/her true and lawful attorney-in-fact and agent, with full and several
power of substitution, to take any appropriate action to execute any amendment
to the Trust's registration statement, file for exemptive orders or to qualify
or register all or part of the securities of Roulston Family of Funds (the
"Funds") for sale in various states, to perform on behalf of the Funds any and
all such acts as such attorneys-in-fact may deem necessary or advisable in order
to comply with the applicable laws of any such state, and in connection
therewith to execute and file all requisite papers and documents, including but
not limited to, applications, reports, surety bonds, irrevocable consents and
appointments of attorneys for service of process; granting to such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act requisite and necessary to be done in connection
therewith, as fully as he/she might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the
___ day of _____________, 199__.
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-12
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT (27)
FINANCIAL DATA SCHEDULES
Transfer Agent Services Agreement between The Roulston Family of Funds and
Fund/Plan Services, Inc.
C-13
<ARTICLE> 6
<CIK> 0000930363
<NAME> THE ROULSTON FAMILY OF FUNDS
<SERIES>
<NUMBER> 3
<NAME> ROULSTON GOVERNMENT SECURITIES FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 8537
<INVESTMENTS-AT-VALUE> 8541
<RECEIVABLES> 90
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8664
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17
<TOTAL-LIABILITIES> 17
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8617
<SHARES-COMMON-STOCK> 879
<SHARES-COMMON-PRIOR> 843
<ACCUMULATED-NII-CURRENT> 37
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4
<NET-ASSETS> 8647
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 484
<OTHER-INCOME> 0
<EXPENSES-NET> 72
<NET-INVESTMENT-INCOME> 412
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 699
<NET-CHANGE-FROM-OPS> 1109
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 411
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 167
<NUMBER-OF-SHARES-REDEEMED> 160
<SHARES-REINVESTED> 29
<NET-CHANGE-IN-ASSETS> 1033
<ACCUMULATED-NII-PRIOR> 36
<ACCUMULATED-GAINS-PRIOR> (9)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 7977
<PER-SHARE-NAV-BEGIN> 9.03
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> .81
<PER-SHARE-DIVIDEND> .49
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.84
<EXPENSE-RATIO> .90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<ARTICLE> 6
<CIK> 0000930363
<NAME> THE ROULSTON FAMILY OF FUNDS
<SERIES>
[NUMBER] 2
<NAME> ROULSTON GROWTH AND INCOME FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
[INVESTMENTS-AT-COST] 20018
[INVESTMENTS-AT-VALUE] 23220
[RECEIVABLES] 46
[ASSETS-OTHER] 20
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 23286
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 204
[TOTAL-LIABILITIES] 204
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 19634
[SHARES-COMMON-STOCK] 1878
[SHARES-COMMON-PRIOR] 1702
[ACCUMULATED-NII-CURRENT] 66
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 180
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3202
[NET-ASSETS] 23082
[DIVIDEND-INCOME] 552
[INTEREST-INCOME] 40
[OTHER-INCOME] 0
[EXPENSES-NET] 305
[NET-INVESTMENT-INCOME] 257
[REALIZED-GAINS-CURRENT] 279
[APPREC-INCREASE-CURRENT] 2752
[NET-CHANGE-FROM-OPS] 3288
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 207
[DISTRIBUTIONS-OF-GAINS] 167
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 503
[NUMBER-OF-SHARES-REDEEMED] 355
[SHARES-REINVESTED] 28
[NET-CHANGE-IN-ASSETS] 4905
[ACCUMULATED-NII-PRIOR] 16
[ACCUMULATED-GAINS-PRIOR] 68
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 176
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 364
[AVERAGE-NET-ASSETS] 20309
[PER-SHARE-NAV-BEGIN] 10.68
[PER-SHARE-NII] .15
[PER-SHARE-GAIN-APPREC] 1.68
[PER-SHARE-DIVIDEND] .12
[PER-SHARE-DISTRIBUTIONS] .10
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.29
[EXPENSE-RATIO] 1.50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<CIK> 0000930363
<NAME> THE ROULSTON FAMILY OF FUNDS
<SERIES>
[NUMBER] 1
<NAME> ROULSTON MIDWEST GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
[INVESTMENTS-AT-COST] 43258
[INVESTMENTS-AT-VALUE] 49593
[RECEIVABLES] 40
[ASSETS-OTHER] 20
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 49653
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 245
[TOTAL-LIABILITIES] 245
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 42554
[SHARES-COMMON-STOCK] 3647
[SHARES-COMMON-PRIOR] 2420
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 2
[ACCUMULATED-NET-GAINS] 521
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 6335
[NET-ASSETS] 49408
[DIVIDEND-INCOME] 510
[INTEREST-INCOME] 173
[OTHER-INCOME] 0
[EXPENSES-NET] 566
[NET-INVESTMENT-INCOME] 117
[REALIZED-GAINS-CURRENT] 1330
[APPREC-INCREASE-CURRENT] 5113
[NET-CHANGE-FROM-OPS] 6560
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 130
[DISTRIBUTIONS-OF-GAINS] 2077
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1340
[NUMBER-OF-SHARES-REDEEMED] 300
[SHARES-REINVESTED] 187
[NET-CHANGE-IN-ASSETS] 19720
[ACCUMULATED-NII-PRIOR] 11
[ACCUMULATED-GAINS-PRIOR] 1268
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 342
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 627
[AVERAGE-NET-ASSETS] 39907
[PER-SHARE-NAV-BEGIN] 12.27
[PER-SHARE-NII] .04
[PER-SHARE-GAIN-APPREC] 2.04
[PER-SHARE-DIVIDEND] .04
[PER-SHARE-DISTRIBUTIONS] .76
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.55
[EXPENSE-RATIO] 1.41
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
